LONE STAR NGL PRODUCT SERVICES LLC v. EAGLECLAW MIDSTREAM VENTURES LLC CR LLC (2025)

OPINION AND ORDER

This is a joint permissive appeal challenging the Business Court's order remanding a civil action that was commenced before September 1, 2024, to the Harris County district court. The issue in this case is whether a civil action that was commenced before September 1, 2024, may be removed when the parties agree and the case otherwise meets the Business Court's jurisdictional requirements. While this appeal was pending, the Legislature passed House Bill 40, which allows parties to agree to remove cases within the Business Court's jurisdiction, even in cases commenced before September 1, 2024. Act of June 1, 2025, 89th Leg., R.S., H.B. 40, § 56, sec. 25A.021 (to be codified at Tex. Gov't Code § 25A.021).

In light of this change in law, we conclude that Section 8 of the act that created the Business Court in 2023 (House Bill 19), which provides the act's “changes in law” apply to civil actions “commenced on or after September 1, 2024,” is not a jurisdictional limitation when the parties agree to remove a civil action that commenced before September 1, 2024, and the case otherwise meets the Business Court's jurisdictional requirements. Act of May 25, 2023, 88th Leg. R.S., ch. 380, § 8, 2023 Tex. Gen. Laws 918, 928. We abate this appeal and remand the case to the Business Court with instructions to determine whether to grant permission to proceed in the Business Court pursuant to Section 25A.021 of the Texas Government Code when it becomes effective. See Tex. R. App. P. 43.6.

BACKGROUND

The underlying case involves a complex commercial dispute relating to the sale of natural gas liquids (NGLs) under two gas purchasing agreements. Lone Star NGL Product Services LLC filed suit against EagleClaw Midstream Ventures LLC and and CR Permian Processing, LLC, on May 20, 2021, in Harris County district court for breach of contract, fraud, and other torts. Lone Star alleges hundreds of millions of dollars in damages. For the last few years, the parties have engaged in a considerable amount of discovery. This includes written discovery, review and production of documents, several depositions, and third-party ancillary discovery proceedings. The parties have also litigated a number of discovery disputes.

While this suit was pending in the district court, the Texas Legislature created the Business Court in 2023 through House Bill 19. Act of May 25, 2023, 88th Leg. R.S., ch. 380, § 1, 2023 Tex. Gen. Laws 918, 919. Section 1 of House Bill 19 added a new chapter to the Texas Government Code, Chapter 25A. Id. § 1; Tex. Gov't Code §§ 25A.001–.020. Section 25A.004 sets out the jurisdiction and powers of the Business Court. Relevant here, the Business Court's jurisdiction includes the following:

(d) the [B]usiness [C]ourt has civil jurisdiction concurrent with district courts in the following actions in which the amount in controversy exceeds $10 million ․:

(1) an action arising out of a qualified transaction 1;

(2) an action that arises out of a contract or commercial transaction in which the parties to the contract or transaction agreed in the contract or a subsequent agreement that the [B]usiness [C]ourt has jurisdiction of the action ․

Tex. Gov't Code § 25A.004(d)(1)–(2).² Section 8 of House Bill 19 provides that “changes in law made by this Act apply to civil actions commenced on or after September 1, 2024.” Act of May 25, 2023, 88th Leg. R.S., ch. 380, § 8. Section 9 provides that this “Act takes effect September 1, 2023.” Id. § 9.

On September 13, 2024—after the Business Court opened—the parties entered into an agreement consenting to the jurisdiction of the Business Court. The agreement provided that the parties intended the agreement to be a “subsequent agreement” under Section 25A.004(d)(2). The agreement also waived any challenge to the jurisdiction of the Business Court. The parties agreed to remove the case to the Business Court or to nonsuit its claims and refile in the Business Court in the event the Business Court remands the case.

After executing the agreement, the parties filed a joint notice of removal to the Business Court. The Business Court ordered the parties to submit briefing on the propriety of removal and jurisdiction. After a hearing, the Business Court remanded the case back to the Harris County district court. The Business Court's order reasoned that Section 8 “unambiguously operates as a jurisdictional provision when applied to Texas Government Code Section 25A.004 (entitled ‘Jurisdiction and Powers’).” Lone Star NGL Prod. Servs., LLC v. EagleClaw Midstream Ventures, LLC, 2024 Tex. Bus. 8, ¶ 23, 705 S.W.3d 243, 254 (11th Div. 2024); see also Bestway Oilfield, Inc. v. Cox, 2025 Tex. Bus. 2, ¶¶ 15–17, 2025 WL 251338 (11th Div. Jan. 17, 2025); Jorrie v. Charles, 2024 Tex. Bus. 4, ¶ 15, 705 S.W.3d 787, 791 (4th Div. 2024). Therefore, it concluded the parties to a civil action commenced before September 1, 2024, could not waive Section 8's effective-date provision to establish subject-matter jurisdiction in the Business Court. Lone Star NGL Prod. Servs., LLC, 705 S.W.3d at 254.

The Business Court also granted the parties’ request for a permissive appeal, and this Court subsequently accepted the parties’ joint petition for permissive appeal.

DISCUSSION

Shortly after the parties appealed, this Court issued In re ETC Field Services, LLC, holding civil actions commenced before September 1, 2024, in a local trial court cannot be removed to the Business Court. 707 S.W.3d 924, 926–28 (Tex.App. 2025). In that case, we explained that “[w]hile the effective date of the Act was September 1, 2023, the business court itself was not actually created until September 1, 2024. So the Act provided that ‘[t]he changes in law made by this Act apply to civil actions commenced on or after September 1, 2024.’ ” Id. at 926 (citing Act of May 25, 2023, 88th Leg. R.S., ch. 380, §§ 8–9). Therefore, we concluded a civil action cannot properly be removed to the Business Court after that date because “removal does not ‘commence’ a new action in the business court after the Act's effective date, but simply transfers a pre-existing one.” Id.

The parties in this case argue they had the ability to waive the effective date in Section 8 of House Bill 19 and consent to the jurisdiction of the Business Court through their September 13, 2024, agreement. Subject-matter jurisdiction, however, cannot be waived. See Texas Ass'n of Bus. v. Texas Air Control Bd., 852 S.W.2d 440, 445 (Tex. 1993) (subject matter jurisdiction cannot be waived by parties); In re Crawford & Co., 458 S.W.3d 920, 928 n.7 (Tex. 2015) (waiver and estoppel doctrines could not create subject-matter jurisdiction where it does not otherwise exist); Oncor Elec. Delivery Co. NTU v. Wilbarger CAD, 691 S.W.3d 890, 907 (Tex. 2024) (“Of course, subject-matter jurisdiction cannot be conferred by waiver or estoppel.”).

Thus, the question presented is whether Section 8's effective date is a jurisdictional limitation. The Business Court concluded it was and therefore parties to a civil action commenced before September 1, 2024, could not agree to remove the action to the Business Court. Lone Star NGL Prod. Servs. LLC, 705 S.W.3d at 254. That was the posture of this case when the parties filed their briefs and when this case was submitted on oral argument.

While this appeal was pending, however, the Legislature made several amendments to Chapter 25A of the Government Code through House Bill 40, including the addition of Section 25A.021. Act of June 1, 2025, 89th Leg., R.S., H.B. 40, § 56, sec. 25A.021 (to be codified at Tex. Gov't Code § 25A.021).³ This new section provides that “[n]otwithstanding Section 8 [of House Bill 19]” civil actions that were “commenced before September 1, 2024” and that are “within the jurisdiction of the [B]usiness [C]ourt” may be transferred there “on an agreed motion of a party and permission of the [B]usiness [C]ourt.” Id. (to be codified at Tex. Gov't Code § 25A.021(a)).⁴

In light of this amendment, we conclude Section 8 of House Bill 19 is not a jurisdictional limitation on the Business Court when parties to a civil action that commenced before September 1, 2024, agree to removal and the civil action otherwise meets the Business Court's jurisdictional requirements. Here, the underlying lawsuit meets the jurisdictional requirements of the Business Court. See Tex. Gov't Code § 25.004(d)(1)–(2). Accordingly, we remand the case to the Business Court with instructions for the Business Court to determine whether to grant permission to accept the case under the new Section 25A.021.

CONCLUSION

We abate this appeal and remand this case to the Business Court with instructions to determine whether to grant the parties permission to proceed in the Business Court pursuant to Section 25A.021 of the Government Code when it becomes effective on September 1, 2025. This appeal is abated, treated as closed, and removed from this Court's active docket. Within 20 days of the Business Court's determination of whether to grant permission, the parties are ordered to file a status report informing the Court of the status of the case and whether the appeal should be dismissed or reinstated.

It is so ordered. See Tex. R. App. P. 43.6.

FOOTNOTES

1.   Relevant here, a “qualified transaction” means “a transaction ․ under which a party: (A) pays or receives, or is obligated to pay or is entitled to receive, consideration with an aggregate value of at least $10 million.” Tex. Gov't Code § 25.001(14)(A). It is undisputed the agreements between Eagle Claw and Lone Star satisfy this definition.

2.   House Bill 40 reduced the amount in controversy requirement and the aggregate value amount of a qualified transaction to $5 million and made other amendments to this provision that are not relevant to this appeal. See Act of June 1, 2025, 89th Leg., R.S., H.B. 40, §§ 43, 45 (to be codified at Tex. Gov't Code §§ 25.001(14), 25A.004(d)).

3.   The Governor signed House Bill 40 into law on June 20, 2025.

4.   This amendment takes effect on September 1, 2025. Act of June 1, 2025, 89th Leg., R.S., H.B. 40, § 73.

Scott K. Field, Justice