85R53 CAE-F     By: Villalba H.B. No. 2594       A BILL TO BE ENTITLED   AN ACT   relating to the creation of the chancery court and the court of   chancery appeals to hear certain cases; authorizing fees.          BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:          SECTION 1.  Subtitle A, Title 2, Government Code, is amended   by adding Chapter 24A to read as follows:   CHAPTER 24A. CHANCERY COURT   SUBCHAPTER A. GENERAL PROVISIONS          Sec. 24A.001.  DEFINITIONS.  In this chapter:                (1)  "Controlling person" means a person who directly   or indirectly controls a governing person, officer, or   organization.                (2)  "Governing documents" means the instruments,   documents, or agreements adopted under an organization's governing   law to govern the organization's formation and internal affairs.   The term includes:                      (A)  a certificate of formation, articles of   incorporation, and articles of organization;                      (B)  bylaws;                      (C)  a partnership agreement;                      (D)  a company agreement or operating agreement;                      (E)  a shareholder agreement;                      (F)  a voting agreement or voting trust agreement;   and                      (G)  an agreement among owners restricting the   transfer of ownership interests.                (3)  "Governing law" means the law governing the   formation and internal affairs of an organization.                (4)  "Governing person" means a person who is entitled,   alone or as part of a group, to manage and direct an organization's   affairs under the organization's governing documents and governing   law. The term includes:                      (A)  a member of the board of directors of a   corporation or other organization;                      (B)  a general partner of a general or limited   partnership;                      (C)  a manager of a limited liability company that   is managed by its managers;                      (D)  a member of a limited liability company that   is managed by its members;                      (E)  a trust manager of a real estate investment   trust; and                      (F)  a trustee of a business trust.                (5)  "Governmental entity" means:                      (A)  the state; or                      (B)  a political subdivision of the state,   including a municipality, a county, or any kind of district.                (6)  "Internal affairs" means:                      (A)  the rights, powers, and duties of an   organization's governing persons, officers, owners, and members;   and                      (B)  matters relating to the organization's   membership or ownership interests.                (7)  "Managerial official" means a governing person or   officer.                (8)  "Officer" means a person elected, appointed, or   designated as an officer of an organization by the organization's   governing persons or by the organization's governing documents.                (9)  "Organization" means a foreign or domestic entity   or association that is for profit or nonprofit. The term includes:                      (A)  a corporation;                      (B)  a limited partnership;                      (C)  a general partnership;                      (D)  a limited liability partnership;                      (E)  a limited liability company;                      (F)  a business trust;                      (G)  a real estate investment trust;                      (H)  a joint venture;                      (I)  a joint stock company;                      (J)  a cooperative;                      (K)  a bank;                      (L)  a credit union;                      (M)  a savings and loan association;                      (N)  an insurance company; and                      (O)  a series of a limited liability company or of   another entity.                (10)  "Owner" means an owner of an organization. The   term includes:                      (A)  a shareholder or stockholder of a corporation   or other organization;                      (B)  a general or limited partner of a partnership   or an assignee of a partnership interest in a partnership;                      (C)  a member of, or an assignee of a membership   interest in, a limited liability company; and                      (D)  a member of a nonprofit organization.                (11)  "Ownership interest" means an owner's interest in   an organization, including an owner's economic, voting, and   management rights.                (12)  "Qualified transaction" means a qualified   transaction as that term is defined in Section 271.001, Business &   Commerce Code.          Sec. 24A.002.  ADVISORY COUNCIL.  (a)  The governor shall   appoint a Chancery Court Nominations Advisory Council consisting of   seven members.  A member of the council serves at the pleasure of   the governor.          (b)  Members of the council must meet the requirements of   Section 24A.054 for judges of the chancery court and be experienced   in the areas of law in the jurisdiction of the chancery court.          (c)  Not more than four members of the council may be   associated with the same political party as the governor.          (d)  To fill a position of a chancery court judge on the   creation of the chancery court, the position of a court of chancery   appeals justice on the creation of the court of chancery appeals, or   on the occurrence of any subsequent vacancy on the chancery court or   court of chancery appeals, including a vacancy created by the   expiration of a judge's or justice's term of office, the council   shall provide the governor with a list of at least five candidates   for each vacancy. Each candidate must be well qualified to serve as   a judge or justice of the chancery court or the court of chancery   appeals.          (e)  The governor may request that the council enlarge the   list for any vacancy with up to five additional qualified   candidates.          (f)  The governor must appoint a judge or justice to fill a   vacancy from the list of candidates submitted by the council.   SUBCHAPTER B. CHANCERY COURT          Sec. 24A.051.  JURISDICTION. (a) The chancery court has   civil jurisdiction concurrent with district courts in:                (1)  a derivative action on behalf of an organization;                (2)  an action arising out of or relating to a qualified   transaction in which the amount in controversy exceeds $10 million,   excluding interest, statutory damages, exemplary damages,   penalties, attorney's fees, and costs;                (3)  an action regarding the governance or internal   affairs of an organization;                (4)  an action in which a claim under a state or federal   securities or trade regulation law is asserted against:                      (A)  an organization;                      (B)  a governing person of an organization for an   act or omission by the organization or by the person in the person's   capacity as a governing person;                      (C)  a person directly or indirectly controlling   an organization for an act or omission by the organization; or                      (D)  a person directly or indirectly controlling a   governing person for an act or omission by the governing person;                (5)  an action by an organization, or an owner or a   member of an organization, if the action:                      (A)  is brought against an owner, managerial   official, or controlling person of the organization; and                      (B)  alleges an act or omission by the person in   the person's capacity as an owner, managerial official, or   controlling person of the organization;                (6)  an action alleging that an owner, managerial   official, or controlling person breached a duty, by reason of the   person's status as an owner, managerial official, or controlling   person, including the duty of care, loyalty, or good faith;                (7)  an action seeking to hold an owner of an   organization, a member of an organization, or a governing person   liable for an obligation of the organization, other than on account   of a written contract signed by the person to be held liable in a   capacity other than as an owner, member, or governing person;                (8)  an action in which the amount in controversy   exceeds $10 million excluding interest, statutory damages,   exemplary damages, penalties, attorney's fees, and costs that:                      (A)  arise against, between, or among   organizations, governing authorities, governing persons, members,   or owners, relating to a contract transaction for business,   commercial, investment, agricultural, or similar purposes; or                      (B)  involve violations of the Finance Code or   Business & Commerce Code;                (9)  an action brought under Chapter 37, Civil Practice   and Remedies Code, involving:                      (A)  the Business Organizations Code;                      (B)  an organization's governing documents; or                      (C)  a dispute based on claims that fall within   the provisions of this subsection; and                (10)  an action arising out of the Business   Organizations Code.          (b)  The chancery court has statewide jurisdiction of an   action described in Subsection (a) and all matters arising out of or   related to an action described in Subsection (a).          (c)  The chancery court may grant any relief available in a   district court.          (d)  Notwithstanding Subsections (a) and (b), the chancery   court:                (1)  does not have jurisdiction of a civil   action  brought by or against a governmental entity, unless the   governmental entity invokes or consents to the jurisdiction of the   chancery court; and                (2)  must sever any claim in which a party seeks   recovery of monetary damages for personal injury or death or any   claim arising under Chapter 17, Business & Commerce Code, the   Estates Code, the Family Code, or Title 9, Property Code, unless all   parties and the chancery court judge agree that the claim may   proceed in the chancery court.          Sec. 24A.052.  INITIAL FILING; REMOVAL AND REMAND; TRANSFER.   (a) An action in the jurisdiction of the chancery court may be filed   in the chancery court. If the chancery court does not have subject   matter jurisdiction of the action, or part of the action, the court   shall dismiss without prejudice to refiling the whole or part of the   action.  A claim that is dismissed under this subsection may be   refiled in a court with jurisdiction by the party who filed the   claim in the chancery court not later than the 30th day after the   date the claim was dismissed by the chancery court, notwithstanding   the expiration of a period of limitation provided by statute.          (b)  A party to an action filed in a district court or county   court at law that is in the subject matter jurisdiction of the   chancery court may remove the action to the chancery court by filing   a notice of removal with the chancery court and the court in which   the action was originally filed. If the chancery court does not   have jurisdiction of the action or part of the action, the chancery   court shall remand the action, or the part in which the chancery   court does not have jurisdiction, to the court from which the action   was removed.          (c)  Removal of a case to the chancery court is not subject to   the statutes or rules governing the due order of pleading.          (d)  Removal of a case does not waive a defect in venue or   constitute an appearance to determine personal jurisdiction.          (e)  Any claim in which the chancery court does not have   jurisdiction under Section 24A.051(d) must be transferred to a   district court in a county in which the claim could have been   originally filed. If the claim could have been filed in more than   one county, the party bringing the claim may elect the county to   which the claim is transferred.          (f)  A cause of action filed in the chancery court shall be   assigned to the docket of a judge on a rotating basis.          (g)  The supreme court shall promulgate rules of civil   procedure providing for the timely and efficient removal and remand   of cases to and from the chancery court.          Sec. 24A.053.  POWERS AND DUTIES.  (a) The chancery court may   issue any writ necessary for the enforcement of the court's   jurisdiction, including a:                (1)  writ of injunction;                (2)  writ of mandamus;                (3)  writ of sequestration;                (4)  writ of attachment;                (5)  writ of garnishment; and                (6)  writ of supersedeas.          (b)  The chancery court may answer a question regarding a   matter in the court's jurisdiction that is certified to the   chancery court by another court.          Sec. 24A.054.  QUALIFICATIONS OF JUDGE.  A judge of the   chancery court must:                (1)  be at least 35 years of age;                (2)  be a United States citizen;                (3)  be a resident of this state for at least two years   before appointment; and                (4)  be a licensed attorney in this state and have 10 or   more years of experience in:                      (A)  practicing complex civil business   litigation;                      (B)  practicing complex business transaction law;                      (C)  teaching courses in complex civil business   litigation or complex business transaction law at an accredited law   school in this state;                      (D)  serving as a judge of a court in this state   with civil jurisdiction; or                      (E)  any combination of experience described by   Paragraphs (A)-(D).          Sec. 24A.055.  COMPOSITION OF COURT.  (a)  The chancery court   is composed of seven judges appointed by the governor with the   advice and consent of the senate.          (b)  A chancery court judge may be reappointed.          (c)  The governor may not appoint:                (1)  more than three judges who reside in the same   county; or                (2)  more than a majority of judges associated with the   same political party.          Sec. 24A.056.  TERMS OF OFFICE. The judges of the chancery   court shall serve staggered six-year terms of office.          Sec. 24A.057.  VACANCY.  If a vacancy occurs on the chancery   court, the governor, with the advice and consent of the senate,   shall appoint, in the same manner as the original appointment,   another person to serve for the remainder of the unexpired term.          Sec. 24A.058.  JUDICIAL AUTHORITY. A chancery court judge   has all powers, duties, immunities, and privileges of a district   judge.          Sec. 24A.059.  JUDGE'S SALARY.  (a)  A chancery court judge   shall be paid a total annual salary from the state that is the sum   of:                (1)  the salary paid to a district judge by the state   under Section 659.012; and                (2)  the maximum amount of county contributions and   supplements allowed by law to be paid to a district judge under   Section 659.012.          (b)  The salary shall be paid in equal monthly installments.          Sec. 24A.060.  REMOVAL; DISQUALIFICATION AND RECUSAL. (a)     A chancery court judge may be removed from office in the same manner   and for the same reasons as a district judge.          (b)  A chancery court judge is disqualified or shall recuse   himself or herself in a particular case for the same reasons as a   district judge. Disqualification or recusal of a chancery court   judge shall be governed by the same procedure as disqualification   or recusal of a district judge.          Sec. 24A.061.  PRIVATE PRACTICE OF LAW.  A chancery court   judge shall diligently discharge the duties of the office on a   full-time basis and may not engage in the private practice of law.          Sec. 24A.062.  VISITING JUDGE. (a)  A retired or former   judge or justice may be assigned as a visiting judge of the chancery   court by the chief justice of the supreme court. A visiting judge   of the chancery court is subject to objection, disqualification, or   recusal in the same manner as a retired or former judge or justice   is subject to objection, disqualification, or recusal if appointed   as a visiting district judge.          (b)  A visiting judge must meet the qualifications of a   chancery court judge as provided by Section 24A.054.          (c)  Before accepting an assignment as a visiting judge of   the chancery court, a retired or former judge or justice shall take   the constitutional oath of office required of appointed officers of   this state and file the oath with the supreme court.          Sec. 24A.063.  JURY PRACTICE AND PROCEDURE. (a)  A party in   an action pending in the chancery court has the right to a trial by   jury when required by the constitution.          (b)  A jury trial shall be held in a county in which venue   would be found under Section 15.002, Civil Practice and Remedies   Code.          (c)  Subject to Subsection (b), a jury trial in a case   removed to the chancery court shall be held in the county in which   the action was originally filed.          (d)  Subject to Subsection (b), a jury trial in a case filed   initially in the chancery court shall be held in any county in which   it could have been filed under Section 15.002, Civil Practice and   Remedies Code, as chosen by the plaintiff.          (e)  The parties and the chancery court judge may agree to   hold the jury trial in any other county.          (f)  The drawing of jury panels, selection of jurors, and   other jury-related practice and procedure in the chancery court   shall be the same as for the district court in the county in which   the trial is held.          (g)  Practice, procedure, rules of evidence, issuance of   process and writs, and all other matters pertaining to the conduct   of trials, hearings, and other business in the chancery court are   governed by the laws and rules prescribed for district courts.          (h)  The chancery court may adopt rules of practice, which   must be approved by the supreme court.          Sec. 24A.064.  COURT LOCATION; STAFFING. (a)  The chancery   court shall have a clerk, whose office shall be located in Travis   County in facilities provided by the state.  The clerk shall:                (1)  receive all filings in the chancery court; and                (2)  fulfill the legal and administrative functions of   a district clerk and an appellate court clerk.          (b)  The judges of the chancery court shall maintain chambers   in the county seat of their county of residence in facilities   provided by the state.          (c)  Subject to Section 24A.063, the chancery court, or any   judge of the chancery court, may hold court at any location in the   state, as the court determines is necessary or convenient for a   particular civil action.          (d)  The chancery court shall use the most advanced   technology feasible when necessary and appropriate to facilitate   expeditious proceedings in matters brought before the court. As   determined by the chancery court, counsel and parties may appear   before the chancery court by means of Internet-based or other   technological devices rather than in person.          (e)  In a county in which the chancery court sits, the   sheriff shall in person or by deputy attend the chancery court as   required by the court. The sheriff or deputy is entitled to be   reimbursed by the state for the cost of attending court.          (f)  Subject to any limitations provided by the General   Appropriations Act, the chancery court may appoint personnel   necessary for the operation of the court, including:                (1)  the clerk of the court;                (2)  staff attorneys for the court;                (3)  staff attorneys for each chancery court judge;                (4)  court coordinators; and                (5)  administrative assistants.          (g)  The court officials shall perform the duties and   responsibilities of their offices and are entitled to the   compensation, fees, and allowances prescribed by law for the   offices.          Sec. 24A.065.  FEES.  The chancery court shall provide rates   for fees associated with filings and actions in the chancery court.   The fees shall be set at a sufficient amount to cover the costs of   administering the provisions of this chapter, taking into account   fee waivers in the interest of justice.          Sec. 24A.066.  SEAL.  The seal of the chancery court is the   same as that provided by law for a district court except that the   seal must contain the name "The Chancery Court of Texas."   SUBCHAPTER C. COURT OF CHANCERY APPEALS          Sec. 24A.101.  APPEAL; COURT OF CHANCERY APPEALS. (a)  An   appeal from an order or judgment of the chancery court is available   in the same manner as an appeal from an order or judgment of a   district court.  The procedure governing an appeal from an order or   judgment of a chancery court is the same as an appeal from an order   or judgment of a district court.          (b)  The governor shall appoint seven active justices from   the courts of appeals to serve as the intermediate appellate court,   called the court of chancery appeals.          (c)  The appointment of a justice to the court of chancery   appeals shall be made by the governor from the list of qualified   appellate justices as provided by Section 24A.002.          (d)  A justice of the court of chancery appeals must meet the   qualifications of a judge of the chancery court as provided by   Section 24A.054.          Sec. 24A.102.  CHIEF JUSTICE.  The governor shall designate   one of the seven justices appointed under Section 24A.101 as the   chief justice of the court of chancery appeals.          Sec. 24A.103.  COMPOSITION OF COURT.  Not more than three   justices appointed to the court of chancery appeals may be from the   same court of appeals.          Sec. 24A.104.  TERM OF OFFICE.  A justice appointed under   Section 24A.101 shall serve on the court of chancery appeals for a   six-year term of office.  A justice may be reappointed by the   governor.  A justice who retires or resigns from or is not reelected   to the court of appeals must cease service on the court of chancery   appeals on the date the justice is no longer serving on the court of   appeals.          Sec. 24A.105.  PANEL.  The justices appointed to the court of   chancery appeals shall sit in randomly selected panels of three to   hear and determine appeals from the chancery court.          Sec. 24A.106.  LOCATION.  The justices hearing appeals from   the chancery court may sit in any convenient place to hear the   appeal.          Sec. 24A.107.  JUDGMENT.  The court of chancery appeals   shall render judgments and hand down opinions in the same manner as   any other court of appeals under Chapter 22.          Sec. 24A.108.  REVIEW.  (a)  A party may seek an en banc   review of a decision of a panel of the court of chancery appeals.          (b)  A party to an order or judgment of the chancery court or   the court of chancery appeals may file a petition for review in the   supreme court in the same manner and circumstances as a party to an   order or judgment of a district court or court of appeals.          Sec. 24A.109.  CLERK.  The clerk of the chancery court shall   serve as the clerk of the court of chancery appeals.          Sec. 24A.110.  COMPENSATION.  A justice of the court of   chancery appeals shall receive compensation equal to that of the   chief justice of a court of appeals, including the maximum amount of   local contributions.  The compensation is in lieu of, not in   addition to, a justice's compensation for service on the court of   appeals.          Sec. 24A.111.  SEAL.  The seal of the court of chancery   appeals is the same as that provided by law for a court of appeals   except that the seal must contain the name "The Court of Chancery   Appeals of Texas."          SECTION 2.  (a)  As soon as practicable after the effective   date of this Act, the governor shall appoint judges to the chancery   court, as required by Sections 24A.002(f) and 24A.055, Government   Code, as added by this Act, as follows:                (1)  the governor shall appoint two judges to a term   expiring December 31, 2018;                (2)  the governor shall appoint two judges to a term   expiring December 31, 2020; and                (3)  the governor shall appoint three judges to a term   expiring December 31, 2022.          (b)  As soon as practicable after the effective date of this   Act, the governor shall appoint justices to the court of chancery   appeals, as required by Section 24A.101, Government Code, as added   by this Act.          SECTION 3.  The changes in law made by this Act apply to   civil actions commenced on or after January 1, 2018.          SECTION 4.  (a)  The Supreme Court of Texas has exclusive and   original jurisdiction over a challenge to the constitutionality of   this Act or any part of this Act and may issue injunctive or   declaratory relief in connection with the challenge.          (b)  If the appointment of judges by the governor to the   chancery court under Section 24A.055, Government Code, as added by   this Act, is held by the Supreme Court of Texas as unconstitutional,   the chancery court shall be staffed by sitting or retired judges who   are appointed by the supreme court.          (c)  If the appointment of a justice by the governor to the   court of chancery 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 chancery appeals shall be staffed by   sitting or retired justices who are appointed by the supreme court.          SECTION 5.  This Act takes effect September 1, 2017.