Texas Business Court Update

• Constitutionality of TBC Statute Challenged
  • Litigant claims the TBC’s jurisdiction is invalid.
• TBC Breaks in the Gavel
  • Marathon Oil defeats claims by Mercuria Energy in the Court’s first full-length bench trial.
• TBC Speaks Plainly—Decisions Focus on Readability
  • Court opinions have been reasonably concise and written in a manner that will be relatively easy for non-lawyers to understand.
• Appendix A: Deal Or No Deal: Contract Disputes Take Center Stage
  • Court opinions are once again dominated by contract rulings.

The Texas Business Court is facing its first constitutional challenge. In Unico Commodities, LLC v. Castleton Commodities International, LLC, removed to the TBC in September, the plaintiff argues in a preliminary motion that the TBC’s structure violates both the Texas and U.S. Constitutions because it exercises jurisdiction over the entire state and its judges are appointed by the governor for two-year terms.[1] Plaintiff’s state-law arguments center on Article V of the Texas Constitution: because TBC judges exercise the full powers of district judges, Unico contends that the legislature may neither create a single statewide district nor fill these seats through two-year gubernatorial appointments.[2]

Plaintiff’s federal claims mirror these concerns.[3] It argues that under the Fourteenth Amendment, the Court’s authorizing statute creates an arbitrary “dual-track” system in which similarly situated civil litigants may appear before either elected or appointed judges based solely on “statutory routing.”[4] Plaintiff contends that this violates the equal protection principles articulated in Bush v. Gore.[5] Plaintiff also asserts a Due-Process Clause violation on the theory that the TBC is not a lawfully constituted tribunal under Texas law and that short, renewable terms by appointment undermine judicial independence.[6]

Partially on this basis (arguing that, because the removal was invalid, it “never occurred”), Plaintiff has moved to remand the case to the state district court from which it was removed.[7] Judge Dorfman is expected to issue an initial ruling, and any appeal would likely go to the newly created Fifteenth Circuit Court of Appeals—whose own constitutionality was recently upheld over many of the same arguments.[8]

On November 11, 2025, the Texas Business Court issued its first post-trial ruling in Marathon Oil Co. v. Mercuria Energy America, LLC.[9] The case arose from Mercuria’s challenge to Marathon’s force majeure declaration after Marathon failed to meet its natural gas delivery obligations during Winter Storm Uri.[10] The bench trial was presided over by Judge Melissa Andrews, who is assigned to the Third Division in Austin but sat by designation in the Eleventh Division in Houston.

Judge Andrews ruled for Marathon, finding that the extreme weather and resulting operational disruptions constituted force majeure under the contract, and that Marathon made reasonable efforts to mitigate and resume performance.[11] Exercising her discretion under Texas Civil Practice and Remedies Code § 38.001, the Judge declined to award attorneys’ fees, finding that doing so “would not be equitable and just . . . under the procedural and factual circumstances of the case.”[12]

This decision follows preliminary briefing and three earlier opinions in which Judge Andrews resolved discrete issues on which she had requested supplemental briefing. In the first such opinion, the Court held that Marathon’s “pipeline delivery” clause became part of the parties’ integrated agreement, finding that Mercuria’s failure to mark the provision or otherwise communicate objection rendered its silence acquiescence under the contract’s confirmation process, and that no material inconsistency existed between the parties’ confirmations.[13] In the second, the Court declined to determine whether the agreement’s liquidated-damages clause was an unenforceable penalty, concluding that factual disputes concerning the relevant spot-market price and Mercuria’s actual market-value damages precluded summary judgment—even while rejecting Marathon’s position that historical acquisition costs could negate actual loss.[14] Third, the Court held that the contract’s force majeure provision relieved Marathon of any obligation to procure substitute performance, ruling that the express waiver of a duty to seek “alternative gas supplies” encompassed both spot-market purchases and buyback transactions.[15] Collectively, these rulings clarified the contract’s operative terms, narrowed the damages issue for trial, and confirmed the scope of Marathon’s obligations during the force majeure period.

The Court’s early opinions reflect a developing style defined by conciseness and clarity. Most decisions have been notably brief—averaging just under 19 pages, with only two opinions exceeding 40—and they consistently adopt a straightforward, tightly focused mode of analysis. The Court favors ordinary, accessible language, a choice that appears intentional: Nearly half of its opinions expressly invoke “plain language” as an interpretive anchor, including virtually every case involving contract or statutory construction. Whether this becomes the Court’s hallmark remains to be seen, but its initial output suggests it is committed to saying precisely what it means. For now, its opinions stand out for their readability in an industry known for superfluidity.

CRS Mechanical, Inc. v. Norfolk Cold Storage, LLC, 2025 Tex. Bus. 46 (8th Div., Nov. 14, 2025)

After Norfolk purchased a cold-storage facility in Nebraska, CRS claimed that it had agreed with Norfolk to share ownership of the facility, but that Norfolk had excluded CRS from all ownership and operations.[16] CRS sued, and Norfolk counterclaimed seeking three declaratory judgments and asserting entitlement to attorneys’ fees related to those claims.[17] CRS moved for summary judgment on the fee claim, arguing that a declaratory-judgment counterclaim is improper when it merely duplicates defenses to the plaintiffs’ claims.[18]

The Court agreed and granted CRS’s motion.[19] It explained that a declaratory-judgment counterclaim is permissible only when it has broader implications than the issues already before the Court.[20] Here, the three declarations Norfolk sought simply restated matters already subsumed within CRS’s claims—specifically, whether a contract existed and whether CRS’s asserted liens on the property were valid.[21] The Court also held that it lacked subject-matter jurisdiction over two of the requested declarations because the disputed property is located in Nebraska, and Texas courts cannot directly adjudicate title to real property outside of the state.[22]

City Choice Group v. TMC Grand Blvd Land Co., 2025 Tex. Bus. 45 (11th Div., Nov. 8, 2025)

This case arises out of a real estate dispute regarding the termination of a purchase agreement for a property in Houston’s medical center area.[23] During the contract’s review period—during which City Choice could unilaterally terminate for any reason—City Choice attempted to renegotiate certain terms with TMC.[24] TMC refused to negotiate, did not return the signed contract to City Choice, and treated City Choice’s conduct as termination.[25] City Choice sued for specific performance, and TMC filed a third-party claim against the title company in possession of $100,000 that City Choice had agreed to forfeit upon unilateral termination.[26] TMC sought summary judgment on both the termination issue and its entitlement to the forfeited payment.[27]

The Court granted summary judgment for TMC on the termination issue, holding that City Choice’s statement that “[i]f you cannot sign and return to me, then this email serves as our notice to terminate the Agreement” clearly and unambiguously ended the contract.[28] The Court rejected City Choice’s argument that this was an ineffective attempt to exercise an option, primarily because the agreement was not an option contract.[29] However, the Court denied TMC’s request for immediate reimbursement of the forfeited funds, finding that TMC had not complied with the statutory procedures for writs of attachment.[30] The Court concluded that immediate payment could not be ordered until those requirements were satisfied.[31]

Lensabl, Inc. v. RBH SPE ONE, LLC, 2025 Tex. Bus. 44 (8th Div., Nov. 5, 2025)

Lensabl sued several defendants, including Robert Byrnes, members of the Byrnes family (“Byrnes Defendants”), and Byrnes’s holding company (“RBH SPE”), after RBH SPE contracted to purchase a 49% interest in Lensabl but failed to perform.[32] Lensabl asserted claims for fraud, breach of contract, and a veil-piercing theory of liability.[33] The Byrnes Defendants, who were not signatories to the Transaction Agreement, moved to dismiss under Texas Rule of Civil Procedure 91a, arguing that the petition failed to state a claim.[34]

The Court first addressed the governing law.[35] The Transaction Agreement contained a choice-of-law clause specifying that the Agreement was governed by Delaware law.[36] The Court observed that Texas generally enforces such clauses when the chosen state bears a reasonable relationship to the transaction and the clause does not contravene any Texas public policy.[37] However, the Court interpreted the clause narrowly, holding that it applied only to the interpretation and enforcement of the Agreement itself—thus governing only the breach-of-contract claims based on that document.[38] Because the Byrnes Defendants were not signatories, the clause did not extend to claims against them.[39] The Court therefore applied Texas’s “most significant relationship” test to determine the governing law for the remaining tort claims, and concluded that Texas law controlled given that negotiations occurred in Texas, the purchasing entity was based in Texas, and the individual defendants largely resided in Texas.[40] Delaware’s sole connection, Lensabl’s incorporation, was insufficient to outweigh those factors.[41]

The Court dismissed two of Lensabl’s three claims against the Byrnes Defendants.[42] It first dismissed the veil-piercing theory, finding the petition’s “Delaware-style veil-piercing theory” inadequate under Texas’s stringent standard, and noted that it is “not entirely settled whether Texas even permits veil piercing for LLCs.”[43] The Court also dismissed the breach-of-contract claim against Robert Byrnes individually because he was not a party to or signatory of the Agreement.[44] However, the Court denied dismissal of the common-law fraud claim, holding that the allegations satisfied Texas’s liberal pleading standard.[45]

Cadence McShane Construction Co. v. Ryan BB-Blockhouse Creek, LLC, 2025 Tex. Bus. 43 (3d Div., Nov. 3, 2025)

Cadence McShane Construction (“CMC”), the general contractor for a 347-unit apartment complex, sued the complex’s landowner, Ryan BB-Blockhouse Creek (“Ryan”), for breach of contract.[46] Ryan counterclaimed, alleging that CMC failed to fulfill its general contractor duties and was responsible for numerous construction defects.[47] In response, CMC filed third-party claims against several subcontractors.[48] Ryan moved to dismiss those claims by filing a plea to the jurisdiction, arguing that the TBC lacked subject-matter jurisdiction over these third-party claims.[49] Specifically, Ryan contended that the subcontractor claims did not constitute actions “aris[ing] from or relat[ing] to a qualified transaction” under Texas Government Code Section 25A.004(d) but were instead independent claims below the $5 million jurisdictional threshold for the TBC.[50] In the alternative, Ryan argued that the claims were premature or hypothetical and not ripe for adjudication.[51]

The Court denied Ryan’s plea.[52] Interpreting the phrase “arise out of” broadly, the Court held that it functions as a “but-for” standard encompassing “every event that hindsight can logically identif[y] in the causative chain.”[53] Applying that standard, the Court found that CMC’s subcontractor agreements arose directly out of the prime contract between CMC and Ryan—a qualified transaction that Ryan did not dispute.[54] Because each subcontract expressly incorporated and was governed by the prime contract, the third-party claims likewise arose out of that qualified transaction and fell within the Court’s jurisdiction under Section 25A.004(d).[55] The Court also rejected Ryan’s ripeness argument, reasoning that the subcontractors’ alleged failures formed the very basis for CMC’s claims and thus rendered them ripe for adjudication.[56]

Fiberwave, Inc. v. AT&T Enterprises, LLC, 2025 Tex. Bus. 42 (1st Div., Oct. 29, 2025)

Fiberwave brought tort claims against AT&T after AT&T terminated an agreement.[57] AT&T moved for partial summary judgment based on two limited-liability clauses in the parties’ contract.[58] The first provision disclaimed liability for all damages “arising from” a termination, and the second disclaimed liability for “incidental, consequential, or any other indirect loss” arising out of the agreement.[59]

The Court rejected AT&T’s reliance on the first provision in full.[60] Although the Court acknowledged the breadth of the phrase “arising from,” it held that it could not be interpreted so expansively as to produce an unreasonable or illogical result.[61] The parties, the Court reasoned, could not have intended to eliminate all liability following termination.[62] Accordingly, it construed the clause narrowly and declined to read it as categorically barring Fiberwave’s claims for damages.[63]

The Court, however, partially accepted AT&T’s argument under the second provision limiting recovery of special damages.[64] It concluded that most of Fiberwave’s tort claims could proceed because they sought general, direct damages.[65] But Fiberwave’s business disparagement claim, by contrast, required proof of special damages and therefore fell squarely within the contractual limitation.[66] On that basis, the Court granted summary judgment to AT&T on the business disparagement claim but denied the motion as to the remaining claims.[67]

JT Capital LLC v. Blom Capital LLC, 2025 Tex. Bus. 41 (1st Div., Oct. 29, 2025)

After a California company sued two Texas companies in the Texas Business Court over a failed Texas property acquisition, the defendant companies filed counterclaims against both the California company and its director, a California resident.[68] The director made a special appearance, contesting the Court’s exercise of personal jurisdiction over him.[69] Among other arguments, the Texas companies claimed that the director’s negotiations with them concerning the Texas property, and his alleged tortious conduct during those negotiations, constituted sufficient minimum contacts to subject him to specific personal jurisdiction.[70] The director maintained that all of his actions were undertaken solely in his capacity as a corporate representative, not on his own behalf.[71]

The Court agreed with the director and dismissed the claims against him for lack of personal jurisdiction.[72] Distinguishing between actions performed in a corporate capacity and those reflecting an individual’s personal, purposeful contacts with the forum, the Court found no evidence that the director personally directed any conduct toward Texas.[73] His involvement, the opinion reasoned, stemmed entirely from his role as a corporate officer of a non-Texas entity, and there was no indication that he either personally engaged in tortious conduct targeting Texas residents or derived any personal benefit from activities within the state.[74]

Arnold v. Blue Ridge Landfill TX, 2025 Tex. Bus. 38 (11th Div., Oct. 7, 2025)

This case arises out of a dispute over royalty payments based on “gate revenues” from Defendant’s landfill operations.[75] Plaintiffs—various trustees and landowners—claimed entitlement to royalties under a contract granting them five percent of the landfill’s revenue from any “final disposal of solid waste in the sanitary landfill operated on the Property.”[76] The landfill had expanded its operations onto a second, adjacent property tract, but did not pay royalties for waste deposited there, claiming that the new tract was not the “Property” contemplated in the contract.[77] Plaintiffs sued for breach of contract and declaratory relief.[78] Defendants moved for summary judgment.[79]

The Court denied the motion.[80] Emphasizing the contract’s “plain, grammatical, and ordinary meaning,” it held that “gate revenues” encompassed all waste disposed of in the landfill’s continuous operations under its single waste-disposal permit, regardless of whether it the waste was placed in the original or adjacent tract.[81] Plaintiffs presented evidence that waste deposited on the second tract satisfied the contract’s terms, including evidence that all waste at the landfill—regardless of the tract where it is deposited—goes through weighing and pricing stations on the first tract.[82] That evidence precluded summary judgment.[83]