Overview
Two recent decisions clarify the Texas Business Court’s jurisdiction, giving further guidance on what matters can and cannot be resolved by the court. In OWL AssetCo 1, LLC v. EOG Resources, Inc. 2025 Tex. Bus. 30 (11th Div. 2025), the Business Court held that it lacked jurisdiction because the amount in controversy did not meet the current $10 million threshold. The court refused to hold the case pending HB 40’s1 lower $5 million threshold, which becomes effective September 1, 2025, emphasizing that courts without jurisdiction must remand. In contrast, in Lone Star NGL Product Services LLC v. EagleClaw Midstream Ventures LLC, No. 15-25-00003-CV (Tex. App.—15th Dist., 2025), the Fifteenth Court of Appeals allowed a case that was pending before September 1, 2024, (when the Business Court came into existence) and subsequently removed by agreement to remain in the Business Court until HB 40 takes effect. The court reasoned that the effective-date language in the original statute that created the Business Court is not jurisdictional when parties agree to removal.
I. OWL AssetCo 1, LLC v. EOG Resources, Inc.
The Eleventh Division of the Texas Business Court held that it lacked jurisdiction over a dispute involving approximately $8.2 million in remediation costs and a counterclaim for $929,000. The court concluded that the amount in controversy did not exceed the $10 million threshold under Texas Government Code § 25A.004(d)(1). Even if OWL’s claim and EOG’s ripe counterclaim were aggregated, the total ($9.14 million) fell short. The court declined to decide whether aggregation of claims and counterclaims is permissible, while rejecting EOG’s argument that an earlier Business Court decision, C Ten 31 LLC ex rel. SummerMoon Holdings LLC v. Tarbox, 708 S.W.3d 223, 230 (Tex. Bus. Ct. 2025), held that counterclaims are aggregated with the plaintiff’s claims to establish the amount in controversy. Accordingly, despite the CTen court’s emphasis on the word, “action” in the statute, there is still an open question whether counterclaims are aggregated for the jurisdictional limit. The court also held that unripe or contingent claims (such as EOG’s potential $6.45 million future claim) cannot be counted toward the jurisdictional minimum.
The court made clear that HB 40’s reduction of the jurisdictional threshold to $5 million (effective September 1, 2025) does not apply retroactively. The court rejected EOG’s request to stay the case until HB 40 takes effect, holding that a court without jurisdiction cannot act other than to remand.
Finally, the court reinforced that declaratory judgment jurisdiction under Texas Government Code § 25A.004(e) requires an underlying claim within the court’s jurisdictional limits.
II. Lone Star NGL Product Services LLC v. EagleClaw Midstream Ventures LLC
This case involved a longstanding commercial dispute filed well before September 1, 2024, which the parties later agreed to remove to the Business Court under Texas Government Code § 25A.004(d)(2). Initially, the Business Court remanded the case, holding that Section 8 of House Bill 19 (the inaugural Business Court bill) barred removal because the statute applied only to actions “commenced on or after September 1, 2024.” All divisions of the Business Courts to consider the issue uniformly held that this was a jurisdictional requirement.
While the appeal was pending, HB 40 added Texas Government Code § 25A.021, which expressly allows agreed removal of pre-September 1, 2024 cases if the cases otherwise meet the jurisdictional requirements and the Business Court grants permission. The appellate court concluded that, given the change in law, Section 8’s effective date is not a jurisdictional limitation in this context and remanded the case for the Business Court to decide whether to accept it once HB 40 takes effect on September 1, 2025.
III. Reconciling the Two Decisions
At first glance, the appellate court’s decision to keep the Lone Star case in the Business Court until September 1, 2025, might seem inconsistent with the Eleventh Division decision’s holding that the court could not retain a case pending HB 40’s effective date. However, the difference lies in the legal reasoning:
- In OWL, the Business Court determined it lacked jurisdiction under existing law and therefore had no power to do anything but remand.
- In Lone Star, the appellate court expressly held that Section 8 of House Bill 19 was not jurisdictional in the context of agreed removal, allowing the case to remain in abeyance pending HB 40’s effective date.
IV. Key Takeaways
- Parties can agree to remove matters to the Business Court, even those that were filed before September 1, 2024, if the case otherwise meets the jurisdictional requirements.
- Until September 1, 2025, the $10 million threshold governs cases filed or removed without agreement. HB 40’s $5 million threshold applies only prospectively. Additionally, it is likely that the $5 million threshold will apply even to agreed-removal cases filed before September 1, 2024, since HB 40 provides that a case commenced before September 1, 2024 “that is within the business court” may be transferred by agreement and with permission. Tex. Gov’t Code § 25A.021(a).
- The question of whether counterclaims can be aggregated with a plaintiff’s claims to meet the jurisdictional minimum remains unresolved. Parties should be aware of the risk that cases requiring the aggregation of claims and counterclaims to satisfy the amount-in-controversy requirement could be remanded if the Business Court ultimately decides that aggregation is insufficient.
- Future or contingent damages cannot be used to establish jurisdiction.
- For cases near the threshold, waiting until HB 40 takes effect after September 1, 2025 may be worthwhile to secure Business Court jurisdiction. However, note that statutes of limitations, removal deadlines, and procedural requirements still apply.
1 HB 40 is a bill recently passed by the Texas Legislature to expand Business Court jurisdiction, effective September 1, 2025.
