Background of the Case
In one of the first written opinions to come out of the Texas Business Court in an oil and gas case, the Court’s Eighth Division clarified that a case may only be removed to the Business Court if it was filed on or after September 1, 2024. The case (Tema Oil & Gas Co. v. Etc Field Servs., LLC, 2024 TXBC LEXIS 3, *1 [Tex. Bus.—Fort Worth (8th Div.) Nov. 6, 2024, no pet.]) had been originally filed on March 17, 2017, in a district court in Tarrant County, Texas by Tema Oil and Gas Company (“Tema”) against ETC Field Services, LLC f/k/a Regency Filed Services, LLC (“ETC”) for breach of contract. TEMA claimed that ETC failed to meet its contractual obligation to provide facilities to receive Tema’s gas and to purchase it. Over the next seven years, Tema and ETC engaged in several trial and appellate court activity until ETC filed a notice of removal to the Business Court on September 11, 2024.
ETC’s Argument for Removal
Although H.B. 19, which establishes the Business Court, states that the statute only applies to civil actions commenced on or after September 1, 2024, ETC argued that the section authorizing removal did not explicitly prohibit removal of cases filed before September 1, 2024 or expressly state that it applies only to cases commenced after that date. Given absence of limiting language, ETC argued that the legislature did not intend to exclude cases begun before September 1, 2024.
Court’s Statutory Interpretation of H.B. 19
Section 1 to H.B. 19 codifies Chapter 25A of the Texas Government Code to establish the Business Court and, although not codified, Section 9 of H.B. 19 notes that the effective date for H.B. 19 is September 1, 2023, and Sections 5 and 8 clarify that the operative date for Chapter 25A is September 1, 2024. In rejecting ETC’s argument, the Business Court noted that Section 8 of H.B. 19—stating that “changes in law made by this Act apply to civil actions commenced on or after September 1, 2024”—is unambiguous and, when construed in harmony with the other provisions of H.B. 19, indicates that the legislature did not intend for cases filed after September 1, 2024 not to be removed to the Business Court.
Clarification on the Term "Commenced" and Changes in Law
The Court dissected the language in Section 8, noting that a “civil action” is a lawsuit and that a lawsuit “commences” when a petition is filed. The creation of Chapter 25A, the Court further explained, is one of the “changes in law” made by H.B. 19; thus, the entirety of Chapter 25A, including its removal provision, are changes in law too. Under Section 8, this means that removal under Chapter 25A is a change in law limited in application to cases that were filed after September 1, 2024.
Support from Other Sections of H.B. 19
Moreover, the Court noted that this was consistent with language elsewhere in H.B. 19, including Section 1 and Section 5, which were both silent on whether suits filed before September 1, 2024, can be removed. Instead, reference to the creation date of the Business Court (September 1, 2024) further supports that lawsuits filed before that date cannot be removed to the Business Court.
Rejection of Retroactive Interpretation
The Court also rejected ETC’s argument that the absence of limiting language like “only” in Section 8 of H.B. 19 allows for the retroactive removal of cases filed before September 1, 2024. The Court explained that Section 8’s purpose is to establish the effective date of the new law, not to authorize retroactivity, as Chapter 25A, being new law, applies prospectively to cases filed after its implementation. The Court also found ETC’s reliance on legislative acts with explicit non-retroactivity clauses unpersuasive, noting that those acts addressed different contexts where that language was necessary. In this case, the inclusion of retroactive language would have been redundant because no cases existed under Chapter 25A before September 1, 2024. Additionally, ETC’s interpretation of Section 8 as an “open-for-business” date for accepting pre-existing cases would render the provision meaningless and contradict its plain language and purpose.
Legislative History Supports Prospective-Only Application
Finally, reviewing the legislative history of H.B. 19, the Business Court further noted that all versions of H.B. 19 contained the same creation-date and commencement-date restrictions, indicating an intent to limit removal to cases filed on or after September 1, 2024.
Tema’s Request for Sanctions Denied
With regard to Tema’s request for sanctions on the basis that ETC’s removal was frivolous, the Court found that Tema had not established its entitlement to sanctions because it did not request or obtain an evidentiary hearing on the request and because it had not proffered competent evidence to overcome the presumption that ETCs’ removal was filed in good faith. Notably, the Court found that even thought ETC’s removal was “legally impermissible,” ETC’s argument was not “per se groundless or frivolous.”
