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A BILL TO BE ENTITLED
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AN ACT
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relating to the creation of the business court and the Court of |
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Business Appeals to hear certain cases; authorizing fees. |
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BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS: |
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SECTION 1. Subtitle A, Title 2, Government Code, is amended |
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by adding Chapter 24A to read as follows: |
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CHAPTER 24A. BUSINESS COURT |
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SUBCHAPTER A. GENERAL PROVISIONS |
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Sec. 24A.001. DEFINITIONS. In this chapter: |
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(1) "Controlling person" means a person who directly |
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or indirectly controls a governing person, officer, or |
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organization. |
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(2) "Governing documents" means the instruments, |
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documents, or agreements adopted under an organization's governing |
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law to govern the organization's formation and internal affairs. |
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The term includes: |
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(A) a certificate of formation, articles of |
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incorporation, and articles of organization; |
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(B) bylaws; |
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(C) a partnership agreement; |
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(D) a company agreement or operating agreement; |
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(E) a shareholder agreement; |
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(F) a voting agreement or voting trust agreement; |
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and |
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(G) an agreement among owners restricting the |
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transfer of ownership interests. |
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(3) "Governing law" means the law governing the |
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formation and internal affairs of an organization. |
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(4) "Governing person" means a person who is entitled, |
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alone or as part of a group, to manage and direct an organization's |
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affairs under the organization's governing documents and governing |
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law. The term includes: |
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(A) a member of the board of directors of a |
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corporation or other organization; |
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(B) a general partner of a general or limited |
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partnership; |
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(C) a manager of a limited liability company that |
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is managed by its managers; |
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(D) a member of a limited liability company that |
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is managed by its members; |
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(E) a trust manager of a real estate investment |
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trust; and |
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(F) a trustee of a business trust. |
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(5) "Governmental entity" means: |
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(A) the state; or |
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(B) a political subdivision of the state, |
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including a municipality, a county, or any kind of district. |
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(6) "Internal affairs" means: |
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(A) the rights, powers, and duties of an |
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organization's governing persons, officers, owners, and members; |
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and |
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(B) matters relating to the organization's |
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membership or ownership interests. |
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(7) "Managerial official" means a governing person or |
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officer. |
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(8) "Officer" means a person elected, appointed, or |
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designated as an officer of an organization by the organization's |
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governing persons or by the organization's governing documents. |
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(9) "Organization" means a foreign or domestic entity |
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or association that is for profit or nonprofit. The term includes: |
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(A) a corporation; |
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(B) a limited partnership; |
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(C) a general partnership; |
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(D) a limited liability partnership; |
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(E) a limited liability company; |
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(F) a business trust; |
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(G) a real estate investment trust; |
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(H) a joint venture; |
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(I) a joint stock company; |
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(J) a cooperative; |
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(K) a bank; |
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(L) a credit union; |
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(M) a savings and loan association; |
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(N) an insurance company; and |
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(O) a series of a limited liability company or of |
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another entity. |
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(10) "Owner" means an owner of an organization. The |
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term includes: |
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(A) a shareholder or stockholder of a corporation |
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or other organization; |
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(B) a general or limited partner of a partnership |
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or an assignee of a partnership interest in a partnership; |
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(C) a member of, or an assignee of a membership |
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interest in, a limited liability company; and |
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(D) a member of a nonprofit organization. |
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(11) "Ownership interest" means an owner's interest in |
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an organization, including an owner's economic, voting, and |
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management rights. |
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(12) "Qualified transaction" means a qualified |
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transaction as that term is defined in Section 271.001, Business & |
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Commerce Code. |
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Sec. 24A.002. ADVISORY COUNCIL. (a) The governor shall |
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appoint a Business Court Nominations Advisory Council consisting of |
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seven members. A member of the council serves at the pleasure of |
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the governor. |
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(b) Members of the council must meet the requirements of |
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Section 24A.054 for judges of the business court and be experienced |
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in the areas of law in the jurisdiction of the business court. |
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(c) Not more than four members of the council may be |
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associated with the same political party as the governor. |
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(d) To fill a position of a business court judge on the |
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creation of the business court, the position of a court of business |
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appeals justice on the creation of the court of business appeals, or |
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on the occurrence of any subsequent vacancy on the business court or |
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court of business appeals, including a vacancy created by the |
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expiration of a judge's or justice's term of office, the council |
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shall provide the governor with a list of at least five candidates |
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for each vacancy. Each candidate must be well qualified to serve as |
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a judge or justice of the business court or the court of business |
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appeals. |
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(e) The governor may request that the council enlarge the |
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list for any vacancy by adding not to exceed five additional |
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qualified candidates. |
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(f) The governor must appoint a judge or justice to fill a |
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vacancy from the list of candidates submitted by the council. |
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SUBCHAPTER B. BUSINESS COURT |
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Sec. 24A.051. JURISDICTION. (a) The business court has |
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civil jurisdiction concurrent with district courts in: |
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(1) a derivative action on behalf of an organization; |
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(2) an action arising out of or relating to a qualified |
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transaction in which the amount in controversy exceeds $10 million, |
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excluding interest, statutory damages, exemplary damages, |
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penalties, attorney's fees, and costs; |
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(3) an action regarding the governance or internal |
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affairs of an organization; |
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(4) an action in which a claim under a state or federal |
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securities or trade regulation law is asserted against: |
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(A) an organization; |
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(B) a governing person of an organization for an |
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act or omission by the organization or by the person in the person's |
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capacity as a governing person; |
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(C) a person directly or indirectly controlling |
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an organization for an act or omission by the organization; or |
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(D) a person directly or indirectly controlling a |
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governing person for an act or omission by the governing person; |
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(5) an action by an organization, or an owner or a |
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member of an organization, if the action: |
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(A) is brought against an owner, managerial |
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official, or controlling person of the organization; and |
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(B) alleges an act or omission by the person in |
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the person's capacity as an owner, managerial official, or |
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controlling person of the organization; |
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(6) an action alleging that an owner, managerial |
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official, or controlling person breached a duty, by reason of the |
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person's status as an owner, managerial official, or controlling |
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person, including the duty of care, loyalty, or good faith; |
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(7) an action seeking to hold an owner of an |
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organization, a member of an organization, or a governing person |
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liable for an obligation of the organization, other than on account |
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of a written contract signed by the person to be held liable in a |
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capacity other than as an owner, member, or governing person; |
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(8) an action in which the amount in controversy |
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exceeds $10 million excluding interest, statutory damages, |
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exemplary damages, penalties, attorney's fees, and costs that: |
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(A) arise against, between, or among |
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organizations, governing authorities, governing persons, members, |
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or owners, relating to a contract transaction for business, |
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commercial, investment, agricultural, or similar purposes; or |
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(B) involve violations of the Finance Code or |
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Business & Commerce Code; |
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(9) an action brought under Chapter 37, Civil Practice |
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and Remedies Code, involving: |
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(A) the Business Organizations Code; |
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(B) an organization's governing documents; or |
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(C) a dispute based on claims that fall within |
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the provisions of this subsection; and |
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(10) an action arising out of the Business |
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Organizations Code. |
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(b) The business court has statewide jurisdiction of an |
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action described in Subsection (a) and all matters arising out of or |
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related to an action described in Subsection (a). |
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(c) The business court may grant any relief available in a |
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district court. |
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(d) Notwithstanding Subsections (a) and (b), the business |
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court: |
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(1) does not have jurisdiction of a civil |
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action brought by or against a governmental entity, unless the |
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governmental entity invokes or consents to the jurisdiction of the |
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business court; and |
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(2) must sever any claim in which a party seeks |
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recovery of monetary damages for personal injury or death or any |
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claim arising under Chapter 17, Business & Commerce Code, the |
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Estates Code, the Family Code, or Title 9, Property Code, unless all |
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parties and the business court judge agree that the claim may |
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proceed in the business court. |
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(e) If a claim is severed as provided by Subsection (d)(2), |
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the business court has discretion to stay or abate its own |
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proceedings pending resolution of the severed claim. |
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Sec. 24A.052. INITIAL FILING; REMOVAL AND REMAND; TRANSFER. |
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(a) An action in the jurisdiction of the business court may be |
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filed in the business court. If the business court does not have |
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subject matter jurisdiction of the action, or part of the action, |
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the court shall dismiss without prejudice to refiling the whole or |
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part of the action. A claim that is dismissed under this subsection |
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may be refiled in a court with jurisdiction by the party who filed |
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the claim in the business court not later than the 30th day after |
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the date the claim was dismissed by the business court, |
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notwithstanding the expiration of a period of limitation provided |
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by statute. |
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(b) A party to an action filed in a district court or county |
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court at law that is in the subject matter jurisdiction of the |
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business court may remove the action to the business court by filing |
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a notice of removal with the business court and the court in which |
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the action was originally filed. If the business court does not |
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have jurisdiction of the action or part of the action, the business |
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court shall remand the action, or the part in which the business |
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court does not have jurisdiction, to the court from which the action |
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was removed. A party may appeal an interlocutory order of the |
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business court that grants or refuses a remand under this |
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subsection to the court of business appeals. |
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(c) Removal of a case to the business court is not subject to |
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the statutes or rules governing the due order of pleading. |
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(d) Removal of a case does not waive a defect in venue or |
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constitute an appearance to determine personal jurisdiction. |
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(e) Any claim in which the business court does not have |
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jurisdiction under Section 24A.051(d) must be transferred to a |
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district court in a county in which the claim could have been |
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originally filed. If the claim could have been filed in more than |
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one county, the party bringing the claim may elect the county to |
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which the claim is transferred. |
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(f) A cause of action filed in the business court shall be |
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assigned to the docket of a judge on a rotating basis. |
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(g) The supreme court shall promulgate rules of civil |
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procedure providing for the timely and efficient removal and remand |
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of cases to and from the business court. |
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Sec. 24A.053. POWERS AND DUTIES. (a) The business court may |
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issue any writ necessary for the enforcement of the court's |
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jurisdiction, including a: |
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(1) writ of injunction; |
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(2) writ of mandamus; |
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(3) writ of sequestration; |
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(4) writ of attachment; |
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(5) writ of garnishment; and |
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(6) writ of supersedeas. |
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(b) The business court may answer a question regarding a |
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matter in the court's jurisdiction that is certified to the |
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business court by another court. |
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Sec. 24A.054. QUALIFICATIONS OF JUDGE. A judge of the |
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business court must: |
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(1) be at least 35 years of age; |
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(2) be a United States citizen; |
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(3) be a resident of this state for at least two years |
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before appointment; and |
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(4) be a licensed attorney in this state and have 10 or |
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more years of experience in: |
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(A) practicing complex civil business |
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litigation; |
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(B) practicing complex business transaction law; |
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(C) teaching courses in complex civil business |
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litigation or complex business transaction law at an accredited law |
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school in this state; |
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(D) serving as a judge of a court in this state |
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with civil jurisdiction; or |
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(E) any combination of experience described by |
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Paragraphs (A)-(D). |
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Sec. 24A.055. COMPOSITION OF COURT. (a) The business court |
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is composed of seven judges appointed by the governor with the |
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advice and consent of the senate. |
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(b) A business court judge may be reappointed. |
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(c) The governor may not appoint: |
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(1) more than three judges who reside in the same |
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county; or |
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(2) more than a majority of judges associated with the |
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same political party. |
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Sec. 24A.056. TERMS OF OFFICE. The judges of the business |
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court shall serve staggered six-year terms of office. |
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Sec. 24A.057. VACANCY. If a vacancy occurs on the business |
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court, the governor, with the advice and consent of the senate, |
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shall appoint, in the same manner as the original appointment, |
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another person to serve for the remainder of the unexpired term. |
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Sec. 24A.058. JUDICIAL AUTHORITY. A business court judge |
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has all powers, duties, immunities, and privileges of a district |
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judge. |
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Sec. 24A.059. JUDGE'S SALARY. (a) A business court judge |
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shall be paid a total annual salary from the state that is the sum |
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of: |
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(1) the salary paid to a district judge by the state |
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under Section 659.012; and |
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(2) the maximum amount of county contributions and |
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supplements allowed by law to be paid to a district judge under |
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Section 659.012. |
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(b) The salary shall be paid in equal monthly installments. |
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Sec. 24A.060. REMOVAL; DISQUALIFICATION AND RECUSAL. (a) |
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A business court judge may be removed from office in the same manner |
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and for the same reasons as a district judge. |
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(b) A business court judge is disqualified or shall recuse |
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himself or herself in a particular case for the same reasons as a |
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district judge. Disqualification or recusal of a business court |
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judge shall be governed by the same procedure as disqualification |
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or recusal of a district judge. |
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Sec. 24A.061. PRIVATE PRACTICE OF LAW. A business court |
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judge shall diligently discharge the duties of the office on a |
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full-time basis and may not engage in the private practice of law. |
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Sec. 24A.062. VISITING JUDGE. (a) A retired or former |
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judge or justice may be assigned as a visiting judge of the business |
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court by the chief justice of the supreme court. A visiting judge |
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of the business court is subject to objection, disqualification, or |
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recusal in the same manner as a retired or former judge or justice |
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is subject to objection, disqualification, or recusal if appointed |
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as a visiting district judge. |
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(b) A visiting judge must meet the qualifications of a |
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business court judge as provided by Section 24A.054. |
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(c) Before accepting an assignment as a visiting judge of |
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the business court, a retired or former judge or justice shall take |
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the constitutional oath of office required of appointed officers of |
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this state and file the oath with the supreme court. |
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Sec. 24A.063. JURY PRACTICE AND PROCEDURE. (a) A party in |
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an action pending in the business court has the right to a trial by |
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jury when required by the constitution. |
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(b) A jury trial shall be held in a county in which venue |
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would be found under Section 15.002, Civil Practice and Remedies |
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Code. |
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(c) Subject to Subsection (b), a jury trial in a case |
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removed to the business court shall be held in the county in which |
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the action was originally filed. |
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(d) Subject to Subsection (b), a jury trial in a case filed |
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initially in the business court shall be held in any county in which |
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it could have been filed under Section 15.002, Civil Practice and |
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Remedies Code, as chosen by the plaintiff. |
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(e) The parties and the business court judge may agree to |
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hold the jury trial in any other county. A party may not be required |
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to agree to hold the jury trial in a different county. |
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(f) The drawing of jury panels, selection of jurors, and |
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other jury-related practice and procedure in the business court |
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shall be the same as for the district court in the county in which |
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the trial is held. |
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(g) Practice, procedure, rules of evidence, issuance of |
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process and writs, and all other matters pertaining to the conduct |
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of trials, hearings, and other business in the business court are |
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governed by the laws and rules prescribed for district courts. |
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(h) The business court may adopt rules of practice, which |
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must be approved by the supreme court. |
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Sec. 24A.064. COURT LOCATION; STAFFING. (a) The business |
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court shall have a clerk, whose office shall be located in Travis |
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County in facilities provided by the state. The clerk shall: |
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(1) receive all filings in the business court; and |
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(2) fulfill the legal and administrative functions of |
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a district clerk and an appellate court clerk. |
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(b) The judges of the business court shall maintain chambers |
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in the county seat of their county of residence in facilities |
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provided by the state. |
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(c) Subject to Section 24A.063, the business court, or any |
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judge of the business court, may hold court at any location in the |
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state, as the court determines is necessary or convenient for a |
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particular civil action. |
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(d) The business court shall use the most advanced |
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technology feasible when necessary and appropriate to facilitate |
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expeditious proceedings in matters brought before the court. As |
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determined by the business court, counsel and parties may appear |
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before the business court by means of Internet-based or other |
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technological devices rather than in person. |
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(e) In a county in which the business court sits, the |
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sheriff shall in person or by deputy attend the business court as |
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required by the court. The sheriff or deputy is entitled to be |
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reimbursed by the state for the cost of attending court. |
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(f) Subject to any limitations provided by the General |
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Appropriations Act, the business court may appoint personnel |
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necessary for the operation of the court, including: |
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(1) the clerk of the court; |
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(2) staff attorneys for the court; |
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(3) staff attorneys for each business court judge; |
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(4) court coordinators; and |
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(5) administrative assistants. |
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(g) The court officials shall perform the duties and |
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responsibilities of their offices and are entitled to the |
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compensation, fees, and allowances prescribed by law for the |
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offices. |
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Sec. 24A.065. FEES. The business court shall provide rates |
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for fees associated with filings and actions in the business court. |
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The fees shall be set at a sufficient amount to cover the costs of |
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administering the provisions of this chapter, taking into account |
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fee waivers in the interest of justice. |
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Sec. 24A.066. SEAL. The seal of the business court is the |
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same as that provided by law for a district court except that the |
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seal must contain the name "The Business Court of Texas." |
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SUBCHAPTER C. COURT OF BUSINESS APPEALS |
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Sec. 24A.101. APPEAL; COURT OF BUSINESS APPEALS. (a) An |
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appeal from an order or judgment of the business court is available |
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in the same manner as an appeal from an order or judgment of a |
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district court. The procedure governing an appeal from an order or |
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judgment of a business court is the same as an appeal from an order |
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or judgment of a district court. |
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(b) The governor shall appoint seven active justices from |
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the courts of appeals to serve as the intermediate appellate court, |
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called the court of business appeals. |
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(c) The appointment of a justice to the court of business |
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appeals shall be made by the governor from the list of qualified |
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appellate justices as provided by Section 24A.002. |
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(d) A justice of the court of business appeals must meet the |
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qualifications of a judge of the business court as provided by |
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Section 24A.054. |
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Sec. 24A.102. CHIEF JUSTICE. The governor shall designate |
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one of the seven justices appointed under Section 24A.101 as the |
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chief justice of the court of business appeals. |
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Sec. 24A.103. COMPOSITION OF COURT. Not more than three |
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justices appointed to the court of business appeals may be from the |
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same court of appeals. |
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Sec. 24A.104. TERM OF OFFICE. A justice appointed under |
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Section 24A.101 shall serve on the court of business appeals for a |
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six-year term of office. A justice may be reappointed by the |
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governor. A justice who retires or resigns from or is not reelected |
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to the court of appeals must cease service on the court of business |
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appeals on the date the justice is no longer serving on the court of |
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appeals. |
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Sec. 24A.105. PANEL. The justices appointed to the court of |
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business appeals shall sit in randomly selected panels of three to |
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hear and determine appeals from the business court. |
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Sec. 24A.106. LOCATION. The justices hearing appeals from |
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the business court may sit in any convenient place to hear the |
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appeal. |
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Sec. 24A.107. JUDGMENT. The court of business appeals |
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shall render judgments and hand down opinions in the same manner as |
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any other court of appeals under Chapter 22. |
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Sec. 24A.108. REVIEW. (a) A party may seek an en banc |
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review of a decision of a panel of the court of business appeals. |
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(b) A party to an order or judgment of the business court or |
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the court of business appeals may file a petition for review in the |
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supreme court in the same manner and circumstances as a party to an |
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order or judgment of a district court or court of appeals. |
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Sec. 24A.109. CLERK. The clerk of the business court shall |
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serve as the clerk of the court of business appeals. |
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Sec. 24A.110. COMPENSATION. A justice of the court of |
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business appeals shall receive compensation equal to that of the |
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chief justice of a court of appeals, including the maximum amount of |
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local contributions. The compensation is in lieu of, not in |
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addition to, a justice's compensation for service on the court of |
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appeals. |
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Sec. 24A.111. SEAL. The seal of the court of business |
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appeals is the same as that provided by law for a court of appeals |
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except that the seal must contain the name "The Court of Business |
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Appeals of Texas." |
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SECTION 2. (a) As soon as practicable after the effective |
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date of this Act, the governor shall appoint judges to the business |
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court, as required by Sections 24A.002(f) and 24A.055, Government |
|
Code, as added by this Act, as follows: |
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(1) the governor shall appoint two judges to a term |
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expiring December 31, 2020; |
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(2) the governor shall appoint two judges to a term |
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expiring December 31, 2022; and |
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(3) the governor shall appoint three judges to a term |
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expiring December 31, 2024. |
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(b) As soon as practicable after the effective date of this |
|
Act, the governor shall appoint justices to the court of business |
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appeals, as required by Section 24A.101, Government Code, as added |
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by this Act. |
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SECTION 3. The changes in law made by this Act apply to |
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civil actions commenced on or after January 1, 2020. |
|
SECTION 4. (a) The Supreme Court of Texas has exclusive and |
|
original jurisdiction over a challenge to the constitutionality of |
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this Act or any part of this Act and may issue injunctive or |
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declaratory relief in connection with the challenge. |
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(b) If the appointment of judges by the governor to the |
|
business court under Section 24A.055, Government Code, as added by |
|
this Act, is held by the Supreme Court of Texas as unconstitutional, |
|
the business court shall be staffed by sitting or retired judges who |
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are appointed by the supreme court. |
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(c) If the appointment of a justice by the governor to the |
|
court of business appeals under Section 24A.101, Government Code, |
|
as added by this Act, is held by the Supreme Court of Texas as |
|
unconstitutional, the court of business appeals shall be staffed by |
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sitting or retired justices who are appointed by the supreme court. |
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SECTION 5. This Act takes effect September 1, 2019. |