Defining decisions: A year in review of Texas Business Court foundational cases

In its inaugural year, the Texas Business Court concentrated on delineating the contours of its jurisdiction, with particular emphasis on the timing of case filings and the statutory prerequisites for removal under Chapter 25A of the Texas Government Code. With more than half of the Texas Business Court’s opinions—25 out of 41—published in the Southwestern Reporter, the court is rapidly establishing a body of precedent that provides authoritative guidance for complex commercial litigants in Texas. This article briefly summarizes the key opinions issued by the Business Court in its first year of operation.

“Effective Date” provision no longer a barrier for sophisticated parties who jointly elect to proceed in Texas Business Court

The Business Court consistently held that it lacks subject-matter jurisdiction over cases commencing prior to its effective date of September 1, 2024, regardless of party consent,¹ express waiver attempts,² or the timing of joinder of additional parties or filing of cross claims and counterclaims.³

For example, in Lone Star NGL Product Services LLC v. EagleClaw Midstream Ventures LLC, a multi-million-dollar natural gas contract dispute, the parties jointly sought to remove the case from district court, but the court concluded that subject-matter jurisdiction cannot be waived and remanded the case despite a post-September 1 agreement purporting to confer subject matter jurisdiction.⁴ This construction was echoed in multiple decisions⁵ until the Fifteenth Court of Appeals reversed the Business Court’s ruling, holding that Section 8 of House Bill 19 does not constitute a prohibition on the Business Court’s subject matter jurisdiction.⁶

Texas Business Court adopts an expansive view of Texas Government Code § 25A.004(b)(2)

In Reed v. Rook TX, LP, the Business Court adopted an expansive reading of Texas Government Code § 25A.004(b)(2), holding that it may have “internal affair” or “governance” subject matter jurisdiction even in the absence of a corporate relationship between the parties.⁷

Under Texas Government Code § 25A.004(b)(2), the Business Court has civil jurisdiction over actions involving governance, governing documents or internal affairs of an organization, if the amount in controversy exceeds US$5 million, excluding interest, statutory damages, exemplary damages, penalties, attorney’s fees and court costs. In Reed, the plaintiff alleged that Rook TX, LP and its affiliates orchestrated a scheme to rig the Lotto Texas jackpot, fraudulently leveraging Rook’s corporate formation to obscure the identities of the scheme’s beneficiaries.⁸ As Rook TX, LP and Rook GP, LLC, the entity accused of misrepresenting the formation of Rook TX, moved to remove the case, Reed contended that his claims did not “predominantly” concern internal affairs and thus fell outside the scope of § 25A.004(b)(2), which he interpreted as limited to disputes involving shareholder or managerial rights.⁹ The Business Court rejected the argument that the statute requires such issues to be the predominant focus of the case.

The court reasoned while the allegations are more akin to the plot of “Lucky Number”¹⁰—complete with claims of rigged jackpots—the dispute was squarely within the Business Court’s jurisdictional wheelhouse.¹¹ The case turned on classic business governance issues: the management and direction of Rook’s affairs, the validity and use of its governing documents and the duties of its governing persons.¹² The court concluded that the alleged misuse of Rook’s formation directly implicated the statutory criteria—making this high-stakes lottery dispute a textbook Business Court case.¹³

The Texas Business Court continues to refine its interpretation of the amount-in-controversy requirement, offering further guidance on what constitutes a “qualified transaction” under Chapter 25A

Another recurring theme is the interpretation of the amount-in-controversy requirement under Tex. Gov’t Code § 25A.004. In C Ten 31 LLC v. Tarbox, a dispute involving governance rights between minority and majority owners, the court clarified that the party asserting jurisdiction bears the ultimate burden of proving that the value of the rights at issue exceeds US$5 million under Tex. Gov’t Code § 25A.004(b).¹⁴

This framework applied in other cases such as ET Gathering & Processing v. Tellurian Production, where the defendant challenged jurisdiction, arguing the claimed amount in controversy—exceeding US$10 million—was a sham designed to invoke Business Court authority.¹⁵ The court determined the argument lacked merit, finding no evidence of fraud and holding that the plaintiff’s well-pleaded allegations, particularly those tied to lost revenue and capital expenditures, were sufficient to satisfy the jurisdictional threshold under Tex. Gov’t Code § 25A.004(d).¹⁶ But the Business Court does not simply accept a party’s asserted amount in controversy at face value. In Black Mountain SWD v. NGL Water Sols. Permian, where defendant asserted jurisdiction based on the purported lifetime value of disputed royalties exceeding US$10 million, the court found that the amount in controversy, limited to past damages pled and supported by uncontroverted evidence, did not exceed US$4.5 million and rejected defendant’s speculative future damages as insufficient to meet the US$10 million threshold.¹⁷ Accordingly, the court remanded the case for lack of jurisdiction under Tex. Gov’t Code § 25A.004(d)(1).¹⁸

In the evolving jurisprudence surrounding amount in controversy, the Business Court also issued several opinions on the “qualified transaction” subject matter jurisdiction requirement set out in Tex. Gov’t Code § 25A.004(d)(1).¹⁹ In Atlas IDF v. NexPoint Real Estate Partners, a suit seeking to recover approximately US$7.3 million in principal and US$6.4 million in interest owed under two promissory notes, the Business Court clarified that a case “arises out of” a qualified transaction only if the transaction meets the statutory threshold at the time the transaction occurred—not when the petition is filed.²⁰ The Court further distinguished statutory interest excluded under the statute from “contracted-for interest,” which was central to the plaintiff’s claims.²¹

In G-Force & Associates v. Bloecher, the Business Court found that no “qualified transaction” existed, because the underlying transaction had never been consummated. Without an actual agreement obligating a party to pay or receive at least US$10 million, the Business Court therefore lacked jurisdiction.²²

Conclusion

The Texas Business Court’s first year was defined by a rigorous, textualist approach to jurisdiction, with the Business Court’s judges establishing foundational doctrines on statutory interpretation, amount-in-controversy thresholds and the scope of “qualified transactions” under Chapter 25A.

1 Jorrie v. AL Glob. Servs., 705 S.W.3d 787, 791 (Tex. Bus. Ct. 2024) (concluded the legislation creating the Business Court of Texas did not grant the court jurisdiction over cases filed before September 1, 2024, despite all parties consenting to the removal, requiring remand); Winans v. Berry, 705 S.W.3d 236, 239 (Tex. Bus. Ct. 2024) (holding that the Business Court lacked jurisdiction over a case filed in 2022 and disagreeing with plaintiff’s hypothetical litigation strategy of amending her petition to add new claims or parties).

2 Lone Star NGL Prod. Servs., LLC v. EagleClaw Midstream Ventures, LLC, 705 S.W.3d 243, 253-54 (Tex. Bus. Ct. 2024), overruled by Lone Star NGL Prod. Servs., LLC v. EagleClaw Midstream Ventures, LLC, No. 15-25-00003-CV, 2025 WL 2318307, at *2 – 3 (Tex. App.—Dallas July 31, 2025) (holding that § 8 of H.B. 19 operates as a jurisdictional provision and cannot be waived); Bestway Oilfield, Inc. v. Cox, No. 24-BC11A-0016, 2025 WL 251338, at *5 (Tex. Bus. Ct. Jan. 17, 2025) (finding that parties to a civil action commenced before September 1, 2024 cannot waive the application of Section 8 in order to establish subject-matter jurisdiction in the Business Court under Section 25A.004).

3 Sebastian v. Durant, 707 S.W.3d 124 (Tex. Bus. Ct. 2025) (finding that new action was not created by husband’s joining of LLCs and property companies to divorce action); Osmose Utilities Services, Inc. v. Navarro Cnty. Elec. Coop., 707 S.W.3d 117, 123 (Tex. Bus. Ct. 2025) (finding that removal of only part of the underlying case was improper).

4 705 S.W.3d 243 (Tex. Bus. Ct. 2025).

5 See supra notes 1 – 3.

6 Lone Star NGL Prod. Servs., LLC, WL 2318307, at *2 – 3.

7 Reed v. Rook TX, LP, No. 25-BC03A-0007, 2025 WL 1713358 at *5 (Tex. Bus. Ct. June 18, 2025).

8 Id. at *1 – 2.

9 Id. at *6.

10 Lucky Number (Lionsgate Films 2005).

11 Id.

12 Id.

13 After this ruling, the plaintiff amended the live petition to drop these allegations, leading the case to be remanded to district court.

14 708 S.W.3d 223, 229 (Tex. Bus. Ct. 2025).

15 709 S.W.3d 1, 3 – 4 (Tex. Bus. Ct. 2025).

16 Id. at 4 – 5.

17 No. 25-BC08A-0004, 2025 WL 1826122 at *6 – 7 (Tex. Bus. Ct. June 30, 2025).

18 Id. at *8.

19 Under Section 25A.001(14) of the Texas Government Code, a “qualified transaction” is defined as a transaction—excluding those involving loans or advances by banks, credit unions, or savings and loan institutions—in which a party either (A) pays or receives, or is obligated to pay or entitled to receive, consideration with an aggregate value of at least US$10 million, or (B) lends, advances, borrows, receives, is obligated to lend or advance, or is entitled to borrow or receive money or credit with an aggregate value of at least US$10 million. Tex. Gov’t Code Ann. § 25A.001(14) (West 2024).

20 715 S.W.3d 390, 396 – 98 (Tex. Bus. Ct. 2025).

21 Id. at 398.

22 715 S.W.3d 778, 785 – 787 (Tex. Bus. Ct. 2025).