Although Texas has long championed itself as the best state for businesses—based on surveys, number of corporate relocations, and the number of Fortune 500 companies in Texas—Texas lagged other business-friendly states (namely Delaware) in having a specialized business court system. Approximately half of states have some form of specialized business court (including the well-known Delaware Court of Chancery). The Texas Legislature believed that establishing specialized business courts would lead to more consistent, timing rulings and efficient, cost-effective (relatively speaking) litigation, thus, creating another reason for businesses to relocate to Texas. Accordingly, the Texas Legislature enacted House Bill 19 in 2023, creating the Business Courts, dedicated to a narrow subset of complex, civil litigation involving business disputes (e.g., shareholder derivative suits, corporate governance, securities claims, fraudulent real estate transactions, UCC claims, and many more) with a lot at stake (a minimum amount in controversy between $5 and $10 million depending on the cause of action). However, there is one notable exception: There is no amount in controversy requirement for lawsuits involving public companies concerning more internally focused business disputes (e.g., derivative suits, receiverships, corporate governance, fiduciary duties, etc.). Tex. Gov’t Code Ann. Section 25A.004(b). HB 19 marks one of the largest reforms of the Texas court system in a generation. It affects all litigation filed after Sept. 1.
In most counties, a Texas district court judge must be a generalist out of necessity because they cover civil, family, probate and criminal cases. (We vividly remember arguing a hearing regarding a complex “tag along rights” transaction in a private equity deal to a judge with a general docket, whose pre-judicial career was exclusively in family law.)
