Legislation Calls for Appointed Judges to Decide Business Cases

H.B. 1603 has been introduced into the Texas Legislature by Rep. Jason Villalba (R-Dallas), proposing a state-wide chancery court system for complex business disputes or business transactions.  Delaware already has a similar system in place to handle specific types of business issues such as corporate governance, management and other types of corporate matters.   Rep. Villalba has proposed this bill to handle what he calls an “overburdened and overtaxed” district court system.

Here are three key points you need to know:

1. Appointed Judges:

The Chancery Court would be made up of appointed judges, rather than elected ones.  Under the legislation, the Governor would appoint the judges to serve staggered terms over six years.  The judges would have jurisdiction to hear lawsuits statewide.

2. Chancery Court of Appeals:

The current legislation also calls for the creation of a Court of Chancery Appeals.  The appellate judges would also be appointed by the Governor, but would be selected from the existing intermediate appellate courts.  Judges would sit in panels of three and would be able to convene anywhere within the state that would be the most suitable to hear a case. 

3. Considerable Opposition to Overcome:

While there appears to be support for this bill, according to the Texas Lawyer, “Commercial litigators from both sides of the bar [have spoken] passionately with lawmakers to kill [the] bill.”  Many feel that the cost to create these courts would be too great, the justices would be overly taxed with cases that could eventually end up back in the existing courts, and that the bill is similar to a previous court reorganization that failed. 

While it remains to be seen whether this legislation will pass, it certainly has the potential to disrupt the current legal system in Texas for resolving business disputes.  We will be closely tracking this bill as it makes its way through the 2015 Texas Legislature.