New legislation will create new specialized business court for Bexar County

Starting late next year, major legal disputes between businesses in Bexar County and surrounding areas will go before a new court created by the Texas Legislature and presided over by an appointee of Gov. Greg Abbott.

The new 4th Business Court Division comes as a result of House Bill 19, which creates specialized courts to adjudicate complex, high-dollar business lawsuits. The courts will handle litigation subject to various criteria, including how much money is in dispute and the type of action, as well as cases brought by shareholders and executives.

“Think Elon Musk versus Twitter,” said Lucy Nashed Cafrelli, communications director at Texans for Lawsuit Reform, which pushed for the creation of the new courts. “If that were filed in Texas, it would move through this court.”

Many states have specialized business courts, including Delaware’s Court of Chancery, where Twitter’s lawsuit against Musk was filed.

But in Texas, where judges are elected on a partisan basis, the new law is being met with some skepticism from the state district judges who have long handled business disputes in civil court, among other types of cases. The business court judges would be appointed by Abbott and confirmed by the Texas Senate for two-year terms.

HB 19 says the new business courts will serve one of the state’s 11 administrative judicial regions, but only courts in the five regions containing major metro areas are set to be created as of Sept. 1, 2024.

Republican priority

Like many of the state’s major metro areas, Bexar County saw its courts usher in a wave of Democratic judges after the 2018 election, and expanded those numbers last November. In 2019 the state’s Republican leaders created a task force to “study and review the method by which statutory county court judges” are selected for office.

“We are primarily, especially in Bexar County, women of color,” State District Judge Monique Diaz said of the newer judges. “What’s interesting to me is that all of a sudden, there is a need for a specialized court to be handled by judges that are appointed, when that’s something that our civil district court judges have been handling for a very long time with no concern.”

Among the all-Republican sponsors of HB 19 were three San Antonio lawmakers, Reps. John Lujan, Steve Allison and Mark Dorazio. Two San Antonio Democrats, Reps. Liz Campos and Josey Garcia, voted for the measure.

The 4th Business Court Division will serve 22 counties, including Bexar County, spanning from Eagle Pass to Port Aransas.

It’s up to the individual judges to decide where in the region they want the court to be based, Bexar County Government Affairs Director Melissa Shannon said at a Commissioners Court meeting Tuesday.

“What I suggest is, if it’s a Bexar County judge appointed by the governor, that judge is going to want a courtroom in the Bexar County Courthouse,” Bexar County Judge Peter Sakai said. “I don’t think he’s going to go down to Laredo.”

How it works

Starting Sept. 1, 2024, cases can be filed directly in the business court, but Diaz said it’s not yet clear how other cases will be selected to go to the court.

Appeals to the business court’s rulings will go to another new court created by the Legislature, the 15th state appeals court. That court was designed primarily to hear cases against the state and will comprise five statewide-elected justices.

Among attorneys who work on complicated business issues, HB 19 is being cheered as a welcome change.

“If you have a lawyer that practiced family law for five years, and then they decide to run for judge … and the first case in front of them is a shareholder derivative suit, you can see how that may be a bit of an issue,” said Councilman Marc Whyte (D10), a business attorney who started his career in commercial litigation.

Aside from the technical expertise of the judges, Whyte said the new courts should also help business by providing a quicker ruling on time-sensitive issues.

“Their dockets should be much more limited … much lighter than the judges down at the courthouse right now,” he said. “When you’re dealing with a business divorce, for instance, or other kinds of issues that affect the day-to-day operation of the business, it gets really tough when these cases drag on for a while.”

Diaz contends business cases account for a small share of her colleagues’ caseloads.

“What we really need are courts of general jurisdiction,” Diaz said. “We’ve had extreme population growth since the last civil district court was added in Bexar County” in 2010.

As for the political optics, proponents of HB 19 say the cases going before the new courts aren’t likely to be David-versus-Goliath disputes between businesses and employees. The law also stipulates that business-related lawsuits against a governmental entity cannot be filed within the new business courts unless the governmental entity agrees to it.

“I can see how people may have concerns that maybe the governor would just appoint certain types of folks to be the judges here,” Whyte said. “But the people that are going to be on either side of these matters, they’re all business people.”