USA – TEXAS Trends and Developments Contributed by: Daniella Main, Alix Allison, Richard Guiltinan and Catherine G. Pritchard, Vartabedian Hester & Haynes LLP
as development costs mounted and his possibility of making a return shrank. The opinion addressed both removal mechanics and the court’s original jurisdiction under § 25A.004 (b). Judge Whitehill held that removal by a single defendant suffices; other defendants need not file separate consents. More importantly, the court explained that the amount-in-controversy threshold applies to the case as a whole, including counter- claims, rather than claim by claim. The facts – a USD58 million planned urban devel- opment financed by a USD48 million construction loan and layered ownership entities – mirror how many modern real estate projects are structured. In Chaudhry , the Business Court signalled that complex development disputes will likely qualify for Business Court treatment even when pleaded through multiple entities and overlapping claims. Takeaways from these early decisions The first wave of cases confirms that the Business Court is reading Chapter 25A pragmatically. Similarly, transactional lawyers should take the time to craft their dealings to fit into the Business Court’s jurisdic- tion. They can do this in a few different ways. • First, include an opt-in clause: Section 25A.004 (d) allows parties to contract into the Business Court for transactions exceeding USD5 million. Forum selection provisions in purchase agreements, lim- ited liability company (LLC) operating agreements and loan documents should expressly designate the Business Court as the agreed forum. • Second, consider the documents: Parties should ensure that the value of a transaction is traceable and quantifiable. The clearer the paper trail, the easier it is to demonstrate a “qualified transaction”. • Third, preserve the record for opinions: Under Texas Rule of Civil Procedure 360, the parties can request written opinions on dispositive rulings, and the Court is required to write an opinion if it is on an issue important to the jurisprudence of the state. Texas’s Business Court is arriving at a moment when commercial real estate disputes are poised to multi- ply. Shrinking valuations and tighter credit conditions will drive litigation between borrowers, sponsors and
lenders. The DFW metroplex – with its concentration of development loans and private equity sponsors – will generate much of that docket. The Business Court’s specialised judges, written opinion require- ment and focus on complex transactions position it to become a preferred venue for these disputes. The Impact of the Business Court on Oil and Gas Litigation in Texas Historically, many oil and gas cases in Texas have been handled in district courts in rural counties, where judges manage diverse dockets and may lack spe- cialisation in high-stakes commercial disputes. Often, these judges carry heavy caseloads across dockets in multiple counties. With the institution of the Busi- ness Court for certain high-value disputes, many oil and gas companies have taken advantage of the new forum. The institution of the Business Court offers an avenue for increased efficiency for large-scale dis- putes; whereas such a dispute may have taken sev- eral years to reach resolution in busy district court, the process will likely be shortened significantly through the Business Court. Of the early opinions published by the Business Court, a significant portion arise out of an energy-related dispute. The majority of early energy-related opinions come from the Eleventh Division in Houston, Eighth Division in Fort Worth and First Division in Dallas, reflecting the concentration of the oil and gas indus- try across these cities. While only five divisions of the Business Court are operational, several of the ten sit- ting judges have oil and gas experience. Therefore, liti- gants may opt to adjudicate energy-related claims in the Business Court because the judges have a deeper background or expertise in the technical nature of oil and gas disputes. Companies may also be attracted to filing claims in the Business Court based on the promise of efficiency to resolve claims that slow busi- ness operations in the oil and gas field. Early jurisdictional guidance In Slant Operating , the Business Court held that Plain- tiff Slant Operating, LLC (“Slant”) pleaded sufficient facts to establish jurisdiction under both the amount in controversy and qualified transaction requirements ( Slant Operating, LLC v Octane Energy Operating, LLC , 717 S.W.3d 409 (Tex. Bus. Ct. 2025)). Slant and
1236 CHAMBERS.COM
Powered by FlippingBook