By Ethan Lennon
On June 20, 2025, Texas House Bill 40 was signed by Governor Greg Abbott. This Bill, which becomes effective on September 1, 2025, makes various amendments to Chapter 25A of the Texas Government Code, the statute which establishes and governs the new Texas Business Court, as well as to certain related provisions of the Texas Civil Practice and Remedies Code.
The amendments to the Business Court statute and the Civil Practice and Remedies Code made by H.B. 40 include, among other things, significantly expanding the jurisdiction of the Business Court, addressing the issue of removing cases filed prior to the Business Court’s inception, improving efficiency in the resolution of disputes heard by the Business Court, and clarifying the establishment of the Business Court as a permanent fixture in the Texas court system.
Jurisdiction
The current text of the Business Court statute provides that the Business Court has civil jurisdiction concurrent with Texas district courts in actions arising out of a “qualified transaction” in which the amount in controversy exceeds $10 million. The amendments made by H.B. 40 expand this area of the Business Court’s jurisdiction in two significant ways. First, the amount in controversy threshold will be lowered to $5 million, allowing access to the Business Courts for lower-valued disputes that previously would have been barred from litigating in the Business Court. Second, the definition of “qualified transaction,” which currently limits such transactions to single transactions, is now being broadened to include a “series of related transactions”. Therefore, not only do potential litigants have a significantly reduced “amount in controversy” threshold to meet, but they are no longer limited to proving this amount through a single transaction. The amount in controversy can be met by combining the disputed amounts under multiple related transactions.
H.B. 40 will also now give the Business Court concurrent jurisdiction with district courts over a wide range of intellectual property disputes, an area that the Business Court was not explicitly authorized to oversee under the existing statute. These disputes may include, among other things, disputes involving computer software, data and data security, pharmaceuticals, biotechnology products, and trade secrets, thereby allowing the Business Court to potentially hear certain disputes that might not otherwise arise out of a “qualified transaction”.
Additionally, the Business Court will now be empowered to support alternative dispute resolution avenues by having concurrent jurisdiction over actions to enforce arbitration agreements, appoint arbitrators, review arbitral awards, or any other action authorized by an arbitration agreement that otherwise falls under the Business Court’s jurisdiction.
Notably, however, H.B. 40 will restrict the Business Court’s jurisdiction in one conspicuous area, consumer transactions. Currently, the Business Court is restricted from hearing disputes involving consumer transactions unless the dispute falls under the Court’s supplemental jurisdiction. The amendments made by H.B. 40 will change the text of the Business Court statute to restrict the Court from hearing any dispute related to a consumer transaction, regardless of whether the claim falls under the Court’s supplemental jurisdiction. This change highlights the Legislature’s intent that the Business Court be utilized for disputes between businesses, not disputes between businesses and their consumers.
Similarly, H.B. 40 will limit the circumstances under which parties can contractually agree to litigate disputes in the Business Court. Currently, the Business Court statute permits parties to virtually any contract to include language in the contract specifying that the Business Court has jurisdiction over any disputes arising out of that contract. With the amendments made by H.B. 40, parties will now only be allowed to include such language in “business, commercial, or investment” contracts, thereby further ensuring that the Business Court only hears disputes involving the subject matter for which the Business Court was originally intended.
Removal of Cases Filed Prior to September 1, 2024
One issue that has frequently arisen and been argued since the inception of the Business Court, is whether or not cases commenced prior to September 1, 2024 (the date that the Business Court became effective) could be removed to the Business Court. H.B. 40 directly addresses this issue by adding language to the Business Court statute which states that cases commenced prior to September 1, 2024, may be transferred to the Business Court on the agreement of all the parties and the consent of the Business Court.
Moreover, the Business Court’s consent to removal in these cases shall be predicated on rules adopted by the Texas Supreme Court. In establishing rules pertaining to whether the Business Court should permit removal of a case filed prior to September 1, 2024, the Texas Supreme Court has been asked to “prioritize complex civil actions of longer duration . . . without impairing the business court’s efficiency and effectiveness in resolving actions commenced on or after September 1, 2024.” Therefore, the pre-September 1, 2024, cases that will be approved for removal will likely be those most complex cases pending in the district courts where the Business Court and the parties agree that transferring the case to the Business Court will more efficiently and effectively resolve the dispute.
Improved Efficiency
H.B. 40 is also aimed at supporting the Business Court’s purpose of resolving business disputes in an efficient manner. For example, one of the amendments made to the Civil Practice and Remedies Code by the Bill includes an added provision that allows Business Court judges to grant writs of injunctive relief for claims presided over by other Business Court judges where the presiding judge cannot be reached by “ordinary and available means” and where the applicant has made “fair and reasonable efforts” to reach the presiding judge. This amendment ensures that wronged parties will not be prevented from obtaining timely equitable relief when circumstances beyond their control prevent the presiding judge from being able to review the writ.
In a similar vein, judges appointed to the Business Court may now begin working up to thirty days prior to the start of their term in order to “allow time for training, organization of staff and chambers, and study of business court precedent, procedure, and pending cases.”
Additionally, the amended text of the Business Court statute will now grant the Texas Supreme Court rule-making authority for determining the Business Court’s jurisdiction over any matter, not just those filed prior to September 1, 2024. In addition to the jurisdictional issues involved with removing cases filed prior to September 1, 2024, the Business Court has also been required to invest significant amounts of time into resolving various other jurisdictional disputes since its inception. The amendments made by House Bill 40 request that the Texas Supreme Court establish procedures for efficiently resolving these issues. When establishing rules for determining whether the Business Court has jurisdiction over a certain matter, the Legislature has requested that the Texas Supreme Court consider, among other things, “the business court’s purpose of efficiently addressing complex business litigation in a manner comparable to or more effective than the business and commercial courts operating in other states,” “the limited potential for the movement of an action between a district court and the business court as it relates to issues of fundamental fairness,” and “the need for guidance on evolving usage of the business court and the Fifteenth Court of Appeals over time by business litigants and their counsel as the courts develop a body of precedent and practice.”
Clarifying the Permanency of the Business Court
Certain other provisions of H.B. 40 indicate that, following a successful first year, the Business Court is here to stay and shall be a permanent fixture in the Texas court system. For example, the Bill removes the currently existing language from the Business Court statute pertaining to the expiration date for the six currently inoperative divisions of the Business Court. At the present time, only the First (Dallas), Third (Austin), Fourth (San Antonio), Eighth (Fort Worth), and Eleventh (Houston) divisions of the Business Court are operative and funded through legislative appropriations. The remaining six divisions have yet to be funded and the current text of the Business Court statute indicates that these divisions are to be abolished on September 1, 2026, unless authorized by the legislature. While the amendments made my House Bill 40 do not yet provide funding to these six divisions, they do remove the language stating that the divisions will be abolished in 2026. Therefore, it seems that the Legislature intends for each of these divisions to become fully operative and permanent establishments in the Texas court system, pending legislative appropriations. The Texas Legislature is expected to decide on funding these inoperative branches during the 2025 legislative session, meaning the divisions could become operative as soon as September 1, 2026.
Additionally, House Bill 40 amends various other sections of the Civil Practice and Remedies Code to include explicit references to “the business court” in sections that address administrative actions or procedures in the district and statutory courts, including the grounds under which a party can seek interlocutory appellate review, thereby further clarifying and establishing the concurrent jurisdiction of the Business Court and the Texas district courts.
Conclusion
In conclusion, the amendments made by H.B. 40 reflect the position that the Texas Business Court has been an undoubted success in its first year of operation, and the Legislature’s intention that the Court be permitted to hear a wider array of business disputes moving forward. The Business Court can expect to see a significantly increased caseload in the coming months following the September 1, 2025, enactment of the Bill, and the improved efficiency controls promulgated by the Bill position the Court to effectively handle these cases, hopefully leading to the activation of the remaining six divisions in 2026.
Ethan Lennon is an associate in the Business Transactions department of Cantey Hanger LLP. He is a graduate of SMU Dedman School of Law and Texas A&M University. He focuses his practice on business formation, mergers and acquisitions, trademark registration and licensing, and other business transactions. For more information call 817-877-2835 or visit www.canteyhanger.com.