Implications of Jurisdictional Commencement Rulings on Family Law Practice

In Re Westdale Asset Management, Ltd., 25-0159, June 27, 2025.

On appeal from Dallas County Court at Law No. 3

Synopsis

The Texas Supreme Court denied mandamus relief, reaffirming that civil actions “commenced” before September 1, 2024, cannot be transferred to the Business Court under House Bill 19. Pre‑existing cases remain in their original trial courts until they can be transferred by an agreed motion and Business Court permission under HB 40’s procedures, effective September 1, 2025.

Relevance to Family Law

Although commercial in form, the decision materially affects family law practitioners because divorce, custody, and marital‑property disputes may implicate business entities, breach‑of‑contract claims, partnership disputes, and other business‑centered causes of action that could have been routed to the Business Court. For matrimonial litigation in which business valuation, corporate governance, or complex contractual claims are core to property division or enforcement issues, this ruling limits unilateral forum shifts for cases filed before 9/1/24 and imposes strategic constraints until HB 40’s agreed‑motion transfer procedure becomes available on 9/1/25.

Case Summary

Fact Summary

Relators (Westdale entities and individuals) sought mandamus relief after attempting to remove a breach‑of‑contract action that had been pending in Dallas County Court at Law No. 3 since 2021 to the newly created Texas Business Court. The Business Court and the Fifteenth Court of Appeals had already interpreted Section 8 of House Bill 19 to apply only to civil actions “commenced on or after September 1, 2024,” thereby foreclosing transfer of actions that were filed prior to that effective date. Relators argued that their removal to the Business Court on September 30, 2024, amounted to “commencing” the action in the Business Court; the Supreme Court examined that contention against the text of the Rules of Civil Procedure and intervening statutory amendment in HB 40.

Issues Decided

The key issues decided were (1) whether a civil action commenced in a trial court before September 1, 2024, may be transferred or removed to the Business Court created by HB 19 absent an agreed motion and specific transfer rules; and (2) whether the act of removing the case after the Business Court’s creation constitutes “commencing” the action for purposes of Section 8 of HB 19.

Rules Applied

The court relied on statutory text in House Bill 19 (Act of May 25, 2023, ch. 380, § 5, with Section 8 limiting application to actions “commenced on or after September 1, 2024”) and on established procedure under the Texas Rules of Civil Procedure, principally Rule 22’s definition of commencement as filing a petition in the clerk’s office. The opinion also referenced subsequent legislative amendment by House Bill 40 (Act of June 1, 2025, H.B. 40, § 56, to be codified at TEX. GOV’T CODE § 25A.021(a)) which expressly allows transfer of pre‑9/1/24 actions only by agreed motion and Business Court permission under Supreme Court‑adopted rules. The Business Court’s and the Fifteenth Court of Appeals’ prior decisions interpreting Section 8 (e.g., In re ETC Field Servs., LLC; XTO Energy, Inc. v. Houston Pipe Line Co.; Energy Transfer LP v. Culberson Midstream LLC) inform the consistent statutory construction.

Application

The Court framed the dispute as a question of statutory construction and procedural formality. It contrasted the relators’ functional argument — that removal post‑creation effectively “commenced” the action in the Business Court — with the unambiguous procedural meaning of “commenced” under Rule 22, which anchors commencement to the original filing that gave rise to the cause. The Court emphasized the plain text of HB 19’s Section 8, and observed that the Legislature subsequently addressed any gap by enacting HB 40 to permit transfer of pre‑existing actions but only through an agreed motion and with Business Court permission and rules to be adopted by the Supreme Court. Given the consistent interpretations by the Business Court and the Fifteenth Court of Appeals, and the forthcoming statutory mechanism in HB 40, the Court declined to upset the existing jurisprudence by granting mandamus.

Holding

The Supreme Court denied the petition for writ of mandamus. It held that civil actions commenced before September 1, 2024, are not subject to transfer to the Business Court under HB 19 and that removal or other unilateral attempts to effectuate such a transfer are inconsistent with the statutory language and the Rules of Civil Procedure. The Court further recognized that HB 40, effective September 1, 2025, will authorize transfer of pre‑existing actions only by agreed motion of a party and with permission of the Business Court under rules to be promulgated by the Supreme Court; until that mechanism takes effect, the existing interpretation of Section 8 stands.

Practical Application

For family law practitioners, the ruling mandates immediate reassessment of forum strategy when business‑related claims arise in divorce, custody, or property enforcement matters that originated before September 1, 2024. If a marital estate dispute involves business entities or contractual claims that might be more efficiently handled in the Business Court, unilateral transfer is presently unavailable; instead, counsel must preserve remedies in the original trial court, consider procedural devices (e.g., severance, claims‑by‑counterclaim, or interlocutory requests where appropriate), and, if advantageous, negotiate an agreed transfer once HB 40’s agreed‑motion procedure and Supreme Court rules are in place after September 1, 2025. Practitioners should also audit pleadings for claims that could trigger Business Court jurisdiction going forward, preserve necessary jurisdictional facts, and advise clients on the timing trade‑offs between litigating in the current court versus consenting to a future transfer.

Checklists

Assess forum and timing

• Identify whether any causes of action in the family docket implicate business entities, partnership disputes, shareholder claims, complex contract remedies, or other Business Court subject matter.
• Confirm original filing dates for each contested cause of action to determine whether the action was “commenced” before 9/1/24.
• If claims were commenced before 9/1/24, mark HB 40’s effective date (9/1/25) in the case calendar for potential agreed‑motion transfer.

Preserve and plead strategically

• Plead and preserve all business‑related claims and jurisdictional facts in the original petition or responsive pleading.
• Include specific allegations as to the nature of business entanglements, corporate identities, and governance issues to aid any future transfer motion or to support application of specialized tribunals.
• Avoid procedural maneuvers that could waive arguments necessary to obtain a later agreed transfer.

Negotiating an agreed transfer (post‑9/1/25)

• Early in settlement discussions, evaluate client exposure to consenting to transfer; obtain client authorization to agree if transfer would materially benefit resolution or management of complex issues.
• Draft agreed‑motion terms that include timelines, preservation of appellate and discovery rights, and stipulations regarding scope of transferred claims.
• Prepare supporting materials for Business Court permission: concise statement of why specialized adjudication will materially benefit efficient resolution and preserve judicial economy.

Handling opposition to transfer

• If the opposing party resists a transfer after 9/1/25, be prepared with factual and legal arguments demonstrating the benefits of consolidation in Business Court, including expert‑driven efficiency analyses and proposed case management plans.
• If transfer is unavailable (pre‑9/1/25), consider severance or bifurcation to isolate business claims for separate adjudication where appropriate.

Client counseling and risk management

• Explain to clients the current prohibition on unilateral transfer of pre‑9/1/24 cases and the future agreed‑motion pathway under HB 40.
• Discuss cost/benefit analysis of consenting to transfer versus litigating in the original forum, including timing, discovery burdens, and potential differences in judicial expertise.

Citation

In re Westdale Asset Management, Ltd., No. 25-0159, opinion filed June 27, 2025 (Tex.).

Full Opinion

Full opinion — Texas Supreme Court, Justice Sullivan (concurring in denial), June 27, 2025