Texas Construction Law Blog

On June 1, 2025, the Texas legislature passed HB 40, and Governor Greg Abbott signed it on June 21, 2025. The new law helps further define the jurisdiction of Texas’s Business Courts, originally established in 2023. This is an analysis of key changes in the bill, which will take effect on September 1, 2025. With expanded jurisdiction, we expect more construction litigation matters will find their way into the Business Courts, building a body of case law that could have a substantial impact on the industry.

The most significant impact will be the several ways the legislature expanded the Courts’ jurisdiction:

• Reducing the amount-in-controversy threshold from $10 million to $5 million. This provision also allows aggregation of the amount of all joined parties’ claims to be rolled together to meet the $5 million floor.
• Reducing the threshold value of “qualified transactions” from $10 million to $5 million. Qualified transactions also now include a series of related transactions. This conforms the Courts’ supplemental jurisdiction with the similar federal provision, which allows the Courts to hear any claim “so related to the action” that it forms “part of the same case or controversy.” The parties must agree to the Courts’ exercise of that supplemental jurisdiction.
• Expanding jurisdiction to more intellectual property matters, including trade secret disputes.
• Allowing a party to establish venue in the Courts by using their governing documents.
• Adding investment contracts to the types of actions within the Courts’ purview. Previously, the Courts could hear cases arising out of a contract or commercial transaction.
• If a dispute would fall under the Business Courts’ jurisdiction, allowing suits to enforce arbitration agreements or challenge arbitration awards in the Business Court, as well as appoint an arbitrator if authorized by an arbitration agreement. This creates concurrent jurisdiction with District Courts in this sphere.

These jurisdictional changes bring increased clarity for the Business Courts’ scope and seek to streamline disputes heard by the Court. And, of course, the lowered dollar thresholds will encourage more matters to be brought before the Business Courts.

One section of the bill, however, foreclosed jurisdiction: any cases involving consumer transactions where a consumer in Texas is a party. This applies to claims arising out of a violation of state or federal law.

HB 40 also contained several administrative provisions to clean up aspects of the Courts’ functions. Importantly, the bill moves Montgomery County to the Eleventh Business Court Division (Houston) from the Second Business Court Division, which is not yet operating. The prior sunset provisions for six divisions are vacated, removing the deadline for the legislature to provide funding for them.

To further maximize efficiency in the Business Courts, the legislature authorized the Supreme Court of Texas establish procedures governing (1) jurisdictional determinations based on pleadings or summary proceedings; (2) the establishment of time limits during which issues or claims must be asserted; and (3) interlocutory appeals.

Porter Hedges will monitor the status of HB 40 and provide additional updates as warranted.