84R8572 CAE-F
	By: Villalba	H.B. No. 1603

	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.
	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;
	(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 $1 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, 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 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 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, 2016;
	(2)  the governor shall appoint two judges to a term
	expiring December 31, 2018; and
	(3)  the governor shall appoint three judges to a term
	expiring December 31, 2020.
	(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, 2016.
	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 22A.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, 2015.