Bill Text: TX SB2259 | 2019-2020 | 86th Legislature | Introduced
Bill Title: Relating to the creation of the business court and the Court of Business Appeals to hear certain cases; authorizing fees.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2019-03-21 - Referred to State Affairs [SB2259 Detail]
Download: Texas-2019-SB2259-Introduced.html
86R15747 CAE-F | ||
By: Hughes | S.B. No. 2259 |
|
||
|
||
relating to the creation of the business court and the Court of | ||
Business Appeals to hear certain cases; authorizing fees. | ||
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: | ||
SECTION 1. Subtitle A, Title 2, Government Code, is amended | ||
by adding Chapter 24A to read as follows: | ||
CHAPTER 24A. BUSINESS COURT | ||
SUBCHAPTER A. GENERAL PROVISIONS | ||
Sec. 24A.001. DEFINITIONS. In this chapter: | ||
(1) "Controlling person" means a person who directly | ||
or indirectly controls a governing person, officer, or | ||
organization. | ||
(2) "Governing documents" means the instruments, | ||
documents, or agreements adopted under an organization's governing | ||
law to govern the organization's formation and internal affairs. | ||
The term includes: | ||
(A) a certificate of formation, articles of | ||
incorporation, and articles of organization; | ||
(B) bylaws; | ||
(C) a partnership agreement; | ||
(D) a company agreement or operating agreement; | ||
(E) a shareholder agreement; | ||
(F) a voting agreement or voting trust agreement; | ||
and | ||
(G) an agreement among owners restricting the | ||
transfer of ownership interests. | ||
(3) "Governing law" means the law governing the | ||
formation and internal affairs of an organization. | ||
(4) "Governing person" means a person who is entitled, | ||
alone or as part of a group, to manage and direct an organization's | ||
affairs under the organization's governing documents and governing | ||
law. The term includes: | ||
(A) a member of the board of directors of a | ||
corporation or other organization; | ||
(B) a general partner of a general or limited | ||
partnership; | ||
(C) a manager of a limited liability company that | ||
is managed by its managers; | ||
(D) a member of a limited liability company that | ||
is managed by its members; | ||
(E) a trust manager of a real estate investment | ||
trust; and | ||
(F) a trustee of a business trust. | ||
(5) "Governmental entity" means: | ||
(A) the state; or | ||
(B) a political subdivision of the state, | ||
including a municipality, a county, or any kind of district. | ||
(6) "Internal affairs" means: | ||
(A) the rights, powers, and duties of an | ||
organization's governing persons, officers, owners, and members; | ||
and | ||
(B) matters relating to the organization's | ||
membership or ownership interests. | ||
(7) "Managerial official" means a governing person or | ||
officer. | ||
(8) "Officer" means a person elected, appointed, or | ||
designated as an officer of an organization by the organization's | ||
governing persons or by the organization's governing documents. | ||
(9) "Organization" means a foreign or domestic entity | ||
or association that is for profit or nonprofit. The term includes: | ||
(A) a corporation; | ||
(B) a limited partnership; | ||
(C) a general partnership; | ||
(D) a limited liability partnership; | ||
(E) a limited liability company; | ||
(F) a business trust; | ||
(G) a real estate investment trust; | ||
(H) a joint venture; | ||
(I) a joint stock company; | ||
(J) a cooperative; | ||
(K) a bank; | ||
(L) a credit union; | ||
(M) a savings and loan association; | ||
(N) an insurance company; and | ||
(O) a series of a limited liability company or of | ||
another entity. | ||
(10) "Owner" means an owner of an organization. The | ||
term includes: | ||
(A) a shareholder or stockholder of a corporation | ||
or other organization; | ||
(B) a general or limited partner of a partnership | ||
or an assignee of a partnership interest in a partnership; | ||
(C) a member of, or an assignee of a membership | ||
interest in, a limited liability company; and | ||
(D) a member of a nonprofit organization. | ||
(11) "Ownership interest" means an owner's interest in | ||
an organization, including an owner's economic, voting, and | ||
management rights. | ||
(12) "Qualified transaction" means a qualified | ||
transaction as that term is defined in Section 271.001, Business & | ||
Commerce Code. | ||
Sec. 24A.002. ADVISORY COUNCIL. (a) The governor shall | ||
appoint a Business Court Nominations Advisory Council consisting of | ||
seven members. A member of the council serves at the pleasure of | ||
the governor. | ||
(b) Members of the council must meet the requirements of | ||
Section 24A.054 for judges of the business court and be experienced | ||
in the areas of law in the jurisdiction of the business court. | ||
(c) Not more than four members of the council may be | ||
associated with the same political party as the governor. | ||
(d) To fill a position of a business court judge on the | ||
creation of the business court, the position of a court of business | ||
appeals justice on the creation of the court of business appeals, or | ||
on the occurrence of any subsequent vacancy on the business court or | ||
court of business appeals, including a vacancy created by the | ||
expiration of a judge's or justice's term of office, the council | ||
shall provide the governor with a list of at least five candidates | ||
for each vacancy. Each candidate must be well qualified to serve as | ||
a judge or justice of the business court or the court of business | ||
appeals. | ||
(e) The governor may request that the council enlarge the | ||
list for any vacancy by adding not to exceed five additional | ||
qualified candidates. | ||
(f) The governor must appoint a judge or justice to fill a | ||
vacancy from the list of candidates submitted by the council. | ||
SUBCHAPTER B. BUSINESS COURT | ||
Sec. 24A.051. JURISDICTION. (a) The business court has | ||
civil jurisdiction concurrent with district courts in: | ||
(1) a derivative action on behalf of an organization; | ||
(2) an action arising out of or relating to a qualified | ||
transaction in which the amount in controversy exceeds $10 million, | ||
excluding interest, statutory damages, exemplary damages, | ||
penalties, attorney's fees, and costs; | ||
(3) an action regarding the governance or internal | ||
affairs of an organization; | ||
(4) an action in which a claim under a state or federal | ||
securities or trade regulation law is asserted against: | ||
(A) an organization; | ||
(B) a governing person of an organization for an | ||
act or omission by the organization or by the person in the person's | ||
capacity as a governing person; | ||
(C) a person directly or indirectly controlling | ||
an organization for an act or omission by the organization; or | ||
(D) a person directly or indirectly controlling a | ||
governing person for an act or omission by the governing person; | ||
(5) an action by an organization, or an owner or a | ||
member of an organization, if the action: | ||
(A) is brought against an owner, managerial | ||
official, or controlling person of the organization; and | ||
(B) alleges an act or omission by the person in | ||
the person's capacity as an owner, managerial official, or | ||
controlling person of the organization; | ||
(6) an action alleging that an owner, managerial | ||
official, or controlling person breached a duty, by reason of the | ||
person's status as an owner, managerial official, or controlling | ||
person, including the duty of care, loyalty, or good faith; | ||
(7) an action seeking to hold an owner of an | ||
organization, a member of an organization, or a governing person | ||
liable for an obligation of the organization, other than on account | ||
of a written contract signed by the person to be held liable in a | ||
capacity other than as an owner, member, or governing person; | ||
(8) an action in which the amount in controversy | ||
exceeds $10 million excluding interest, statutory damages, | ||
exemplary damages, penalties, attorney's fees, and costs that: | ||
(A) arise against, between, or among | ||
organizations, governing authorities, governing persons, members, | ||
or owners, relating to a contract transaction for business, | ||
commercial, investment, agricultural, or similar purposes; or | ||
(B) involve violations of the Finance Code or | ||
Business & Commerce Code; | ||
(9) an action brought under Chapter 37, Civil Practice | ||
and Remedies Code, involving: | ||
(A) the Business Organizations Code; | ||
(B) an organization's governing documents; or | ||
(C) a dispute based on claims that fall within | ||
the provisions of this subsection; and | ||
(10) an action arising out of the Business | ||
Organizations Code. | ||
(b) The business court has statewide jurisdiction of an | ||
action described in Subsection (a) and all matters arising out of or | ||
related to an action described in Subsection (a). | ||
(c) The business court may grant any relief available in a | ||
district court. | ||
(d) Notwithstanding Subsections (a) and (b), the business | ||
court: | ||
(1) does not have jurisdiction of a civil | ||
action brought by or against a governmental entity, unless the | ||
governmental entity invokes or consents to the jurisdiction of the | ||
business court; and | ||
(2) must sever any claim in which a party seeks | ||
recovery of monetary damages for personal injury or death or any | ||
claim arising under Chapter 17, Business & Commerce Code, the | ||
Estates Code, the Family Code, or Title 9, Property Code, unless all | ||
parties and the business court judge agree that the claim may | ||
proceed in the business court. | ||
(e) If a claim is severed as provided by Subsection (d)(2), | ||
the business court has discretion to stay or abate its own | ||
proceedings pending resolution of the severed claim. | ||
Sec. 24A.052. INITIAL FILING; REMOVAL AND REMAND; TRANSFER. | ||
(a) An action in the jurisdiction of the business court may be | ||
filed in the business court. If the business court does not have | ||
subject matter jurisdiction of the action, or part of the action, | ||
the court shall dismiss without prejudice to refiling the whole or | ||
part of the action. A claim that is dismissed under this subsection | ||
may be refiled in a court with jurisdiction by the party who filed | ||
the claim in the business court not later than the 30th day after | ||
the date the claim was dismissed by the business court, | ||
notwithstanding the expiration of a period of limitation provided | ||
by statute. | ||
(b) A party to an action filed in a district court or county | ||
court at law that is in the subject matter jurisdiction of the | ||
business court may remove the action to the business court by filing | ||
a notice of removal with the business court and the court in which | ||
the action was originally filed. If the business court does not | ||
have jurisdiction of the action or part of the action, the business | ||
court shall remand the action, or the part in which the business | ||
court does not have jurisdiction, to the court from which the action | ||
was removed. A party may appeal an interlocutory order of the | ||
business court that grants or refuses a remand under this | ||
subsection to the court of business appeals. | ||
(c) Removal of a case to the business court is not subject to | ||
the statutes or rules governing the due order of pleading. | ||
(d) Removal of a case does not waive a defect in venue or | ||
constitute an appearance to determine personal jurisdiction. | ||
(e) Any claim in which the business court does not have | ||
jurisdiction under Section 24A.051(d) must be transferred to a | ||
district court in a county in which the claim could have been | ||
originally filed. If the claim could have been filed in more than | ||
one county, the party bringing the claim may elect the county to | ||
which the claim is transferred. | ||
(f) A cause of action filed in the business court shall be | ||
assigned to the docket of a judge on a rotating basis. | ||
(g) The supreme court shall promulgate rules of civil | ||
procedure providing for the timely and efficient removal and remand | ||
of cases to and from the business court. | ||
Sec. 24A.053. POWERS AND DUTIES. (a) The business court may | ||
issue any writ necessary for the enforcement of the court's | ||
jurisdiction, including a: | ||
(1) writ of injunction; | ||
(2) writ of mandamus; | ||
(3) writ of sequestration; | ||
(4) writ of attachment; | ||
(5) writ of garnishment; and | ||
(6) writ of supersedeas. | ||
(b) The business court may answer a question regarding a | ||
matter in the court's jurisdiction that is certified to the | ||
business court by another court. | ||
Sec. 24A.054. QUALIFICATIONS OF JUDGE. A judge of the | ||
business court must: | ||
(1) be at least 35 years of age; | ||
(2) be a United States citizen; | ||
(3) be a resident of this state for at least two years | ||
before appointment; and | ||
(4) be a licensed attorney in this state and have 10 or | ||
more years of experience in: | ||
(A) practicing complex civil business | ||
litigation; | ||
(B) practicing complex business transaction law; | ||
(C) teaching courses in complex civil business | ||
litigation or complex business transaction law at an accredited law | ||
school in this state; | ||
(D) serving as a judge of a court in this state | ||
with civil jurisdiction; or | ||
(E) any combination of experience described by | ||
Paragraphs (A)-(D). | ||
Sec. 24A.055. COMPOSITION OF COURT. (a) The business court | ||
is composed of seven judges appointed by the governor with the | ||
advice and consent of the senate. | ||
(b) A business court judge may be reappointed. | ||
(c) The governor may not appoint: | ||
(1) more than three judges who reside in the same | ||
county; or | ||
(2) more than a majority of judges associated with the | ||
same political party. | ||
Sec. 24A.056. TERMS OF OFFICE. The judges of the business | ||
court shall serve staggered six-year terms of office. | ||
Sec. 24A.057. VACANCY. If a vacancy occurs on the business | ||
court, the governor, with the advice and consent of the senate, | ||
shall appoint, in the same manner as the original appointment, | ||
another person to serve for the remainder of the unexpired term. | ||
Sec. 24A.058. JUDICIAL AUTHORITY. A business court judge | ||
has all powers, duties, immunities, and privileges of a district | ||
judge. | ||
Sec. 24A.059. JUDGE'S SALARY. (a) A business court judge | ||
shall be paid a total annual salary from the state that is the sum | ||
of: | ||
(1) the salary paid to a district judge by the state | ||
under Section 659.012; and | ||
(2) the maximum amount of county contributions and | ||
supplements allowed by law to be paid to a district judge under | ||
Section 659.012. | ||
(b) The salary shall be paid in equal monthly installments. | ||
Sec. 24A.060. REMOVAL; DISQUALIFICATION AND RECUSAL. (a) | ||
A business court judge may be removed from office in the same manner | ||
and for the same reasons as a district judge. | ||
(b) A business court judge is disqualified or shall recuse | ||
himself or herself in a particular case for the same reasons as a | ||
district judge. Disqualification or recusal of a business court | ||
judge shall be governed by the same procedure as disqualification | ||
or recusal of a district judge. | ||
Sec. 24A.061. PRIVATE PRACTICE OF LAW. A business court | ||
judge shall diligently discharge the duties of the office on a | ||
full-time basis and may not engage in the private practice of law. | ||
Sec. 24A.062. VISITING JUDGE. (a) A retired or former | ||
judge or justice may be assigned as a visiting judge of the business | ||
court by the chief justice of the supreme court. A visiting judge | ||
of the business court is subject to objection, disqualification, or | ||
recusal in the same manner as a retired or former judge or justice | ||
is subject to objection, disqualification, or recusal if appointed | ||
as a visiting district judge. | ||
(b) A visiting judge must meet the qualifications of a | ||
business court judge as provided by Section 24A.054. | ||
(c) Before accepting an assignment as a visiting judge of | ||
the business court, a retired or former judge or justice shall take | ||
the constitutional oath of office required of appointed officers of | ||
this state and file the oath with the supreme court. | ||
Sec. 24A.063. JURY PRACTICE AND PROCEDURE. (a) A party in | ||
an action pending in the business court has the right to a trial by | ||
jury when required by the constitution. | ||
(b) A jury trial shall be held in a county in which venue | ||
would be found under Section 15.002, Civil Practice and Remedies | ||
Code. | ||
(c) Subject to Subsection (b), a jury trial in a case | ||
removed to the business court shall be held in the county in which | ||
the action was originally filed. | ||
(d) Subject to Subsection (b), a jury trial in a case filed | ||
initially in the business court shall be held in any county in which | ||
it could have been filed under Section 15.002, Civil Practice and | ||
Remedies Code, as chosen by the plaintiff. | ||
(e) The parties and the business court judge may agree to | ||
hold the jury trial in any other county. A party may not be required | ||
to agree to hold the jury trial in a different county. | ||
(f) The drawing of jury panels, selection of jurors, and | ||
other jury-related practice and procedure in the business court | ||
shall be the same as for the district court in the county in which | ||
the trial is held. | ||
(g) Practice, procedure, rules of evidence, issuance of | ||
process and writs, and all other matters pertaining to the conduct | ||
of trials, hearings, and other business in the business court are | ||
governed by the laws and rules prescribed for district courts. | ||
(h) The business court may adopt rules of practice, which | ||
must be approved by the supreme court. | ||
Sec. 24A.064. COURT LOCATION; STAFFING. (a) The business | ||
court shall have a clerk, whose office shall be located in Travis | ||
County in facilities provided by the state. The clerk shall: | ||
(1) receive all filings in the business court; and | ||
(2) fulfill the legal and administrative functions of | ||
a district clerk and an appellate court clerk. | ||
(b) The judges of the business court shall maintain chambers | ||
in the county seat of their county of residence in facilities | ||
provided by the state. | ||
(c) Subject to Section 24A.063, the business court, or any | ||
judge of the business court, may hold court at any location in the | ||
state, as the court determines is necessary or convenient for a | ||
particular civil action. | ||
(d) The business court shall use the most advanced | ||
technology feasible when necessary and appropriate to facilitate | ||
expeditious proceedings in matters brought before the court. As | ||
determined by the business court, counsel and parties may appear | ||
before the business court by means of Internet-based or other | ||
technological devices rather than in person. | ||
(e) In a county in which the business court sits, the | ||
sheriff shall in person or by deputy attend the business court as | ||
required by the court. The sheriff or deputy is entitled to be | ||
reimbursed by the state for the cost of attending court. | ||
(f) Subject to any limitations provided by the General | ||
Appropriations Act, the business court may appoint personnel | ||
necessary for the operation of the court, including: | ||
(1) the clerk of the court; | ||
(2) staff attorneys for the court; | ||
(3) staff attorneys for each business court judge; | ||
(4) court coordinators; and | ||
(5) administrative assistants. | ||
(g) The court officials shall perform the duties and | ||
responsibilities of their offices and are entitled to the | ||
compensation, fees, and allowances prescribed by law for the | ||
offices. | ||
Sec. 24A.065. FEES. The business court shall provide rates | ||
for fees associated with filings and actions in the business court. | ||
The fees shall be set at a sufficient amount to cover the costs of | ||
administering the provisions of this chapter, taking into account | ||
fee waivers in the interest of justice. | ||
Sec. 24A.066. SEAL. The seal of the business court is the | ||
same as that provided by law for a district court except that the | ||
seal must contain the name "The Business Court of Texas." | ||
SUBCHAPTER C. COURT OF BUSINESS APPEALS | ||
Sec. 24A.101. APPEAL; COURT OF BUSINESS APPEALS. (a) An | ||
appeal from an order or judgment of the business court is available | ||
in the same manner as an appeal from an order or judgment of a | ||
district court. The procedure governing an appeal from an order or | ||
judgment of a business court is the same as an appeal from an order | ||
or judgment of a district court. | ||
(b) The governor shall appoint seven active justices from | ||
the courts of appeals to serve as the intermediate appellate court, | ||
called the court of business appeals. | ||
(c) The appointment of a justice to the court of business | ||
appeals shall be made by the governor from the list of qualified | ||
appellate justices as provided by Section 24A.002. | ||
(d) A justice of the court of business appeals must meet the | ||
qualifications of a judge of the business court as provided by | ||
Section 24A.054. | ||
Sec. 24A.102. CHIEF JUSTICE. The governor shall designate | ||
one of the seven justices appointed under Section 24A.101 as the | ||
chief justice of the court of business appeals. | ||
Sec. 24A.103. COMPOSITION OF COURT. Not more than three | ||
justices appointed to the court of business appeals may be from the | ||
same court of appeals. | ||
Sec. 24A.104. TERM OF OFFICE. A justice appointed under | ||
Section 24A.101 shall serve on the court of business appeals for a | ||
six-year term of office. A justice may be reappointed by the | ||
governor. A justice who retires or resigns from or is not reelected | ||
to the court of appeals must cease service on the court of business | ||
appeals on the date the justice is no longer serving on the court of | ||
appeals. | ||
Sec. 24A.105. PANEL. The justices appointed to the court of | ||
business appeals shall sit in randomly selected panels of three to | ||
hear and determine appeals from the business court. | ||
Sec. 24A.106. LOCATION. The justices hearing appeals from | ||
the business court may sit in any convenient place to hear the | ||
appeal. | ||
Sec. 24A.107. JUDGMENT. The court of business appeals | ||
shall render judgments and hand down opinions in the same manner as | ||
any other court of appeals under Chapter 22. | ||
Sec. 24A.108. REVIEW. (a) A party may seek an en banc | ||
review of a decision of a panel of the court of business appeals. | ||
(b) A party to an order or judgment of the business court or | ||
the court of business appeals may file a petition for review in the | ||
supreme court in the same manner and circumstances as a party to an | ||
order or judgment of a district court or court of appeals. | ||
Sec. 24A.109. CLERK. The clerk of the business court shall | ||
serve as the clerk of the court of business appeals. | ||
Sec. 24A.110. COMPENSATION. A justice of the court of | ||
business appeals shall receive compensation equal to that of the | ||
chief justice of a court of appeals, including the maximum amount of | ||
local contributions. The compensation is in lieu of, not in | ||
addition to, a justice's compensation for service on the court of | ||
appeals. | ||
Sec. 24A.111. SEAL. The seal of the court of business | ||
appeals is the same as that provided by law for a court of appeals | ||
except that the seal must contain the name "The Court of Business | ||
Appeals of Texas." | ||
SECTION 2. (a) As soon as practicable after the effective | ||
date of this Act, the governor shall appoint judges to the business | ||
court, as required by Sections 24A.002(f) and 24A.055, Government | ||
Code, as added by this Act, as follows: | ||
(1) the governor shall appoint two judges to a term | ||
expiring December 31, 2020; | ||
(2) the governor shall appoint two judges to a term | ||
expiring December 31, 2022; and | ||
(3) the governor shall appoint three judges to a term | ||
expiring December 31, 2024. | ||
(b) As soon as practicable after the effective date of this | ||
Act, the governor shall appoint justices to the court of business | ||
appeals, as required by Section 24A.101, Government Code, as added | ||
by this Act. | ||
SECTION 3. The changes in law made by this Act apply to | ||
civil actions commenced on or after January 1, 2020. | ||
SECTION 4. (a) The Supreme Court of Texas has exclusive and | ||
original jurisdiction over a challenge to the constitutionality of | ||
this Act or any part of this Act and may issue injunctive or | ||
declaratory relief in connection with the challenge. | ||
(b) If the appointment of judges by the governor to the | ||
business court under Section 24A.055, Government Code, as added by | ||
this Act, is held by the Supreme Court of Texas as unconstitutional, | ||
the business court shall be staffed by sitting or retired judges who | ||
are appointed by the supreme court. | ||
(c) If the appointment of a justice by the governor to the | ||
court of business appeals under Section 24A.101, Government Code, | ||
as added by this Act, is held by the Supreme Court of Texas as | ||
unconstitutional, the court of business appeals shall be staffed by | ||
sitting or retired justices who are appointed by the supreme court. | ||
SECTION 5. This Act takes effect September 1, 2019. |