Texas Business Court asserts jurisdiction over contractor claims

A recent ruling from the Third Division of the Texas Business Court (the Business Court) recognized that claims arising under various subcontracts on a construction project may be aggregated to establish the threshold requirements of jurisdiction.

In Cadence McShane Construction Company, LLC v. Ryan BB-Blockhouse Creek, LLC, No. 25-BC03B-0002, the Business Court held that it had jurisdiction over a general contractor’s third-party claims against its numerous subcontractors because the claims met the definition of “an action arising out of a qualified transaction” under Section 25A.004(d)(1) of the Government Code. Due to the various agreements entered into between the general contractor and the various subcontractors, the Business Court held that it need not independently assess the amount-in-controversy of each individual claim. Instead, the Business Court evaluated the agreements and claims on a collective basis. This interpretation of Section 25A.004(d)(1) may allow far more construction disputes to be litigated in the Business Court.

The Cadence McShane Construction Company dispute arose from the construction of a 347-unit apartment complex in Leander, Texas. In February of 2025, the general contractor of the project, Cadence McShane Construction Company LLC’s (CMC), brought suit in the Business Court against the property owner, Ryan BB-Block House Creek, LLC (Ryan). CMC alleged that Ryan improperly terminated and failed to pay amounts due under the parties’ contract (Prime Contract). CMC pleaded jurisdiction under Section 25A.004(b), because that contract was a “qualified transaction” and the amount in controversy exceeded the necessary statutory threshold.¹

In turn, Ryan counterclaimed for CMC’s alleged mismanagement of the project and numerous construction defects. Ryan asserted that “CMC and its subcontractors failed to properly install and construct, among other things, the roofs, window system, stucco and balconies.”

CMC then filed third-party claims against 18 subcontractors that performed work on the project. CMC’s claims were based on its uniform subcontract that it entered into with each of the subcontractors. While each subcontract referenced the Prime Contract, only one subcontract had stated consideration that exceeded US$5 million.

Ryan filed a plea to the jurisdiction challenging the Business Court’s original jurisdiction over the third-party claims, arguing that CMC “cannot aggregate” claims against multiple defendant subcontractors with “separate, independent and distinct claims.” The Business Court rejected Ryan’s argument.

The Business Court reasoned that all claims in the lawsuit, including the third-party claims, concern “one construction project carried out through a network of related contracts.” As such, the claims “ar[ose] out of a qualified transaction” as stated in Section 25A.004(d)(1), making it unnecessary to independently assess the amount-in-controversy of the third-party claims individually.

The Business Court’s ruling in CMC is a significant interpretation of Section 25A.004(d)(1).² Under this framework, parties to a construction dispute may bring claims before the Business Court which do not individually meet the threshold requirements for jurisdiction by considering such claims in the aggregate. This may open the doors of Business Court to large-scale construction defect disputes being filed in or removed to the Texas Business Court.