Texas is known as a business-friendly state. With every biennial session, the Texas Legislature passes laws affecting our courts and commercial disputes. This post discusses changes from the most recent regular session that are already in play or will be taking effect soon.
Business Courts
After much discussion over the last several sessions, specialized business courts will soon become reality. Effective September 1, 2024, HB 19 created a court system with jurisdiction to hear specific types of disputes, including those involving public companies, certain claims over $5 million, and certain business transactions over $10 million. The Governor will appoint the judges for two-year terms, subject to reappointment, and appeals will go to the new Fifteenth Court of Appeals. At first, business courts will roll out in larger urban counties, with funding for the rest of the state to follow.
Creating a new court system out of whole cloth is no small task, and the transition will bring much uncertainty. While we wait for September 1 to arrive and to learn who the Governor will appoint to these benches, the Supreme Court of Texas has approved preliminary procedural rules governing business-court proceedings, which clarify that the Texas Rules of Civil Procedure apply in business courts. The rules are open for public comment until May 1, 2024 and will be finalized before the business courts begin operations.
Fifteenth Court of Appeals
SB 1045 created the new Fifteenth Court of Appeals effective September 1, 2024. When fully operational, the Fifteenth Court will have five justices and will be based in Austin, where the Texas Supreme Court and Third Court of Appeals also sit. The Fifteenth Court will have statewide, exclusive jurisdiction over (1) appeals from business courts; (2) appeals against the State, its agencies, or officials; and (3) challenges to the constitutionality and validity of a statute. The justices will be appointed by the Governor but must stand for statewide election to keep their seats.
Creating a new appellate court with statewide jurisdiction brings some unique challenges, most notably that the Fifteenth Court will have no binding precedent of its own. Also of interest, the Fifteenth Court will begin with an existing docket of appeals falling within its jurisdiction filed since September 1, 2023 and automatically transferred from the other fourteen intermediate appellate courts. As with business courts, the Texas Supreme Court has released preliminary amendments to the Texas Rules of Appellate Procedure related to the Fifteenth Court, which are also open for public comment until May 1, 2024.
Permissive Appeals
Permissive appeals allow parties to seek review of an otherwise-unappealable order involving a controlling question of law that may materially advance the ultimate termination of the litigation. SB 1063 codified a new requirement for permissive appeals that had been the subject of debate in the Texas Supreme Court: How much (or little) an appellate court should say when denying a permissive appeal. The statute settles the matter as implemented in amended Texas Rule of Appellate Procedure 28.3, which states that a court of appeals denying a petition for permissive appeal “must explain in its decision the specific reasons for its finding that an appeal is not warranted.” It also gives the Supreme Court de novo review over the decision to deny and permits the Court to override a denial and direct the intermediate court of appeals to reach the merits. The amended rule governs all permissive appeals filed after September 1, 2023.
Supersedeas Bonds
Supersedeas bonds permit a judgment debtor to stay enforcement of a judgment while seeking appellate review. HB 4381 streamlined the supersedeas process under Texas Rule of Appellate Procedure 24 in three important ways. First, amended Rule 24—which took effect January 1, 2024—no longer requires the clerk’s approval before a supersedeas bond will take effect. This should make it easier and quicker to get a judgment superseded and stop any ongoing collection efforts. Second, the amended rule provides concrete standards for courts to use in evaluating the propriety of alternative security used to support a supersedeas bond. Third, it allows a party who prevails at the intermediate court of appeals to seek redetermination of the supersedeas amount while the appeal remains pending.
Time will tell whether business courts and the Fifteenth Court of Appeals will enhance the Texas court system as intended. Pursuing cases within those courts’ jurisdictions will help shape the courts’ procedures and precedent. Meanwhile, the changes to permissive appeals and supersedeas bonds make seeking appellate review before or after a final judgment easier.
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