New Ruling Limits Jurisdiction of Texas Business Courts

On October 30, the Dallas Business Court issued a long-awaited ruling of first impression, holding that Texas’ newly formed business courts have no jurisdiction over cases already in existence prior to September 1, 2024.

Background

The ruling was issued as part of litigation between two energy companies. The litigation originated in the 193rd District of Dallas County in 2022 but was removed to the Dallas Business Court, the 1st Division of The Business Court of Texas, on September 30, 2024, shortly after the business courts began accepting cases under the statute.  

The Ruling

The Dallas Business Court ruled on strict statutory interpretation grounds, finding that the plain language limited the business courts’ jurisdiction to cases initiated after September 1. The statutory provisions at issue were Section 8, stating that the changes in law "apply to civil actions commenced on or after September 1, 2024," and Section 9, stating that “[t]his Act takes effect September 1, 2023.”  

The court read Section 9 to apply to the creation and establishment of the courts, rather than their jurisdiction. But the court held that Section 8, on the other hand, directly addresses jurisdictional issues for the business courts. Again relying on the plain language of the statute, the court held that Section 8 limited the business courts’ jurisdiction to cases filed on or after September 1, 2024, despite the fact that Section 8 does not include the phrase “only to” or other indicia of exclusivity, as argued by the removing party.

Takeaway

Not surprisingly, the ruling is being appealed, but as for now the Dallas Business Court has drawn a clear line in the sand: if a case was filed before September 1, 2024, the Texas Business Courts have no jurisdiction to hear it.