TEMA OIL AND GAS COMPANY, Plaintiff, v. ETC FIELD SERVICES, LLC FKA REGENCY FIELD SERVICES, LLC, Defendant.
Cause No. 24-BC08B-0001
The Business Court of Texas Eighth Division
November 6, 2024
2024 Tex. Bus. 3
SYLLABUS1
After construing H.B. 19—the legislation implementing Chapter 25A—the Court concludes that removal is not permitted for cases filed before September 1, 2024. The Court also concludes that sanctions are not warranted.
TEMA OIL AND GAS COMPANY, Plaintiff, v. ETC FIELD SERVICES, LLC FKA REGENCY FIELD SERVICES, LLC, Defendant.
Cause No. 24-BC08B-0001
The Business Court of Texas Eighth Division
November 6, 2024
2024 Tex. Bus. 3
OPINION AND ORDER
¶ 1 Before the Court is Plaintiff Tema Oil and Gas Company‘s (“Tema“) Motion to Remand (“Remand Motion“) filed on October 8, 2024. Tema‘s Remand Motion and Defendant ETC Field Services, LLC, f/k/a Regency Field Services, LLC‘s (“ETC“) Brief on Jurisdiction and Response in Opposition to
I. BACKGROUND
¶ 2 The parties are business entities operating in the oil-and-gas industry. Their predecessors in interest executed a gas purchase contract encompassing the working interest in gas produced from two tracts in Loving County, Texas. The contract, according to Tema, obligates ETC to provide facilities to receive Tema‘s gas and to purchase it.
A. Tema commences litigation in the District Court
¶ 3 After ETC allegedly failed to meet its contractual obligation for numerous months over several years, Tema sued ETC in the District Court on March 17, 2017, for breach of contract and negligence. Thereafter, Tema and ETC became embroiled in a plethora of trial and appellate court activity
B. The legislature passes H.B. 19 to create the Business Court
¶ 4 While this case was pending in the District Court, legislation establishing the Business Court was enacted in 2023 when H.B. 19 was signed into law. See Act of May 25, 2023, 88th Leg., R.S., ch. 380, §§ 1-9, 2023 Tex. Sess. Law Serv. 919, 919-929. Section 1 of H.B. 19 codifies
C. Section 25A.006 permits removal and authorizes sanctions
¶ 5 Chapter 25A permits the removal of a case to the Business Court pursuant to Section 25A.006. See
D. Rule 355 permits removal and authorizes a party to seek remand
¶ 6 To implement Chapter 25A, the Supreme Court of Texas adopted new and amended rules of civil procedure applicable to the Business Court in June 2024. See Supreme Court of Tex., Final Approval of Rules for the Business Court, Misc. Docket No. 24-9037 (Jun. 28, 2024). The operative date for these new rules, like Chapter 25A, is September 1, 2024. See id. (“...this Order incorporates the revisions and contains the final version of the new and amended rules, effective September 1, 2024.“).
¶ 7 The rule governing removal is
E. ETC seeks removal and Tema seeks remand and sanctions
¶ 8 ETC filed its Removal Notice on September 11, 2024. ETC contends, inter alia, removal is proper because the Business Court was granted authority over this case on September 1, 2024. Tema responded to ETC‘s Removal Notice by filing its Remand Motion on October 8, 2024. Tema argues, inter alia, removal is improper because only those cases filed on or after September 1, 2024, can be removed to the Business Court. Consequently, Tema seeks remand. Tema also seeks sanctions against ETC. Sanctions are warranted, according to Tema, because ETC seeks removal for frivolous purposes.
¶ 9 The Court also ordered, and the parties submitted, briefing on the effect, if any, of Section 8 on the Court‘s jurisdiction and authority to hear this
II. DISCUSSION
¶ 10 The issues before the Court are the propriety of removal and sanctions.
A. Removal is not permitted
¶ 11 As mentioned previously, neither Section 25A.006 nor Rule 355 contains an express provision permitting or prohibiting the removal of a case commenced before September 1, 2024. In its briefing, ETC argues removal is permitted because it timely and properly removed the case, the Court has subject-matter jurisdiction of a case involving a publicly traded company and arising under trade regulation law, and Section 8 of H.B. 19 does not bar removal of the case. Section 8 does not bar removal of the case, according to ETC, because its plain language does not explicitly prohibit removal of cases filed before September 1, 2024, or expressly state it applies “only” to cases commenced thereafter. ETC maintains the absence of such limiting language indicates the legislature did not intend to exclude cases begun before September 1, 2024. In other words, ETC contends the legislature intended
1. The plain and common text of H.B. 19 must be construed to ascertain if the legislature intended Chapter 25A to permit removal of cases filed before September 1, 2024
¶ 12 To determine whether Section 8 permits the retroactive application of Chapter 25A, the Court must construe Section 8 in the context and framework of H.B. 19.
¶ 13 Construing a statute is a question of law. Cadena Comercial USA Corp. v. Tex. Alcoholic Beverage Comm‘n, 518 S.W.3d 318, 325 (Tex. 2017). The objective in construing a statute is to ascertain and effectuate legislative intent. Id. The legislative intent of a statute is ordinarily expressed in the plain and common meaning of its text “unless a different meaning is supplied, is apparent from the context, or the plain meaning of the words leads to absurd or nonsensical results.” Id. (citation omitted). In construing the plain and common meaning of statutory text, the words and phrases are considered in the context and framework of the entire statute and construed as a whole. Id. at 325-26 (citations omitted). The words and phrases are also construed according to the rules of grammar and usage. Id. at 325 (quotation marks and citations omitted). The presumption is that the legislature chose the statutory
2. Section 8, when construed in harmony with the other provisions of H.B. 19, expresses the legislative intent that cases filed before September 1, 2024, cannot be removed to the Business Court
¶ 14 Section 8 is unambiguous and clear on its face, and ETC does not contend otherwise. In plain and common terms, Section 8, when construed in harmony with the other provisions of H.B. 19, expresses the legislative intent that cases filed before September 1, 2024, cannot be removed to the Business Court.
Section 8—H.B. 19‘s applicability clause—states in its entirety:
The changes in law made by this Act apply to civil actions commenced on or after September 1, 2024.
¶ 17 This construction of Section 8 is not absurd or nonsensical. No other provision in H.B. 19 indicates the contrary, i.e., that suits filed before September 1, 2024, can be removed. Section 1 and Section 5—the portion of H.B. 19 identifying September 1, 2024, as the Business Court‘s creation date—are both silent on the matter. Neither section addresses the retroactive or prospective application of Chapter 25A or includes the commencement-
¶ 18 The Business Court was granted jurisdiction over cases begun on or after September 1, 2024. ETC does not dispute that Chapter 25A and its provisions, including removal, did not come into force until September 1, 2024, and that the case began in the District Court on March 17, 2017. Because the case did not begin in the District Court on or after September 1, 2024, Section 25A.006‘s removal provision does not apply. Consequently, ETC cannot remove the case to the Business Court pursuant to Section 25A.006. See
(a) The absence of the word “only” or other limiting clarifying phrases from Section 8 does not mean that cases filed before September 1, 2024, can be removed
¶ 19 That the legislature included Section 8 in H.B. 19 to identify the date when Chapter 25A and its provisions, including removal, would become operative for case processing purposes strongly suggests, if not outright proves, the legislature did not intend for Chapter 25A to apply retroactively. Notwithstanding this reasoning, ETC asserts the omission of the word “only” or other limiting clarifying phrases from Section 8 was purposeful and indicative of the legislature‘s intent not to prohibit the removal of cases filed before September 1, 2024. Relying on the presumption identified in Cadena Comercial USA Corp. (and numerous other cases) that the purposeful omission of words indicates legislative intent, ETC cites various legislative acts that assertedly prove the legislature always resorts to distinctive language, even in
¶ 20 The legislative acts cited by ETC are amendments containing express language in their applicability clauses delineating the non-retroactive application of the amended law. For example, in the 2021 legislative act cited by ETC that amended the law to expand the recovery of attorney‘s fees, the legislature delineated the non-retroactive application of the amended law by stating, in the applicability clause, that whereas the amended law applied “only” to a case begun on or after the effective date, the existing law continued to apply to a case begun before then. See Act of May 28, 2021, 87th Leg., R.S. ch. 665, §§ 1, 2, 2011 Tex. Gen. Laws 1391, 1391. Likewise, in the 1989 legislative act cited by ETC that amended the law to limit the scope of consumer protection measures, the legislature delineated the non-retroactive application of the amended law by stating, in the applicability clause, that whereas the amended law applied “to all” cases begun on or after the effective date, the existing law continued to apply to a case begun before then. See Act of May 29, 1989, 71st Leg., R.S., ch. 380, §§ 1-6, 1989 Tex. Gen. Laws 1490, 1490-93.
(b) The absence of the word “only” or other limiting clarifying phrases from Section 8 does not mean that the Court must accept pending cases on or after September 1, 2024
¶ 22 ETC also maintains the intentional absence of the word “only” or other limiting clarifying phrases from Section 8 transforms the meaning of Section 8 to that of a marquee flashing an open-for-business date of September 1, 2024. This is allegedly evident when Section 8 is juxtaposed to Sections 25A.006(d) and (f)(1). According to ETC, whereas Section 8 does not explicitly prohibit removal of a case filed before September 1, 2024, Sections 25A.006 (d) and (f)(1) explicitly permits removal of a case so long as it is removed within 30 days, as occurred here, no matter when it was commenced.
¶ 23 ETC‘s proposed construction is awkward and disregards, as set forth above, the plain and common meaning of Section 8 when construed in the context and framework of Chapter 25A‘s removal provisions. To accept ETC‘s proposed construction would lead to an absurd or nonsensical result: treating Section 8 as surplusage and rendering it meaningless. This the Court
(c) Although consideration of H.B. 19‘s legislative history is not required to ascertain legislative intent, the legislative history does not support the conclusion that removal of cases filed before September 1, 2024, is proper
¶ 24 Although ETC does not contend Section 8 is ambiguous, ETC nonetheless argues H.B. 19‘s legislative history supports the conclusion that the legislature intended Section 8 to permit removal of cases filed before September 1, 2024. That the legislature omitted the word “only” or other limiting clarifying phrases from Section 8 necessarily means, according to ETC, that the legislature intended to expand the Business Court‘s jurisdiction to consider pending cases burdening the dockets of other courts. ETC‘s argument is misguided.
B. Remand is required
¶ 26 If a case is not removable, Section 25A.006(d) requires the Business Court to remand the case to the court in which the case was originally filed.
C. Sanctions are not warranted
¶ 27 The Court, however, does not grant the portion of Tema‘s Remand Motion seeking sanctions pursuant to Section 10.001 of the Civil Practice and Remedies Code (“CPRC“).
1. Sanctions for a frivolous notice of removal can be imposed under Chapter 25A if supported by competent evidence
¶ 28 Section 25A.006 of the Government Code establishes that sanctions for a frivolous notice of removal are available under Section 10.001 of the CPRC.
2. Despite Tema‘s arguments to the contrary, sanctions under Section 10.001 of the CPRC are not warranted because there is no competent evidence proving ETC filed a frivolous Removal Notice
¶ 29 Tema insists sanctions are warranted because ETC filed its Removal Notice for frivolous purposes. Those frivolous purposes, according to Tema, are to increase litigation costs, to delay proceedings, and to waste judicial resources. Tema asserts the frivolous nature of ETC‘s Removal Notice is proved by the fallacious allegations and arguments raised by ETC in support of removal and jurisdiction. Decrying that ETC has purposefully avoided a merits-based review of a case commenced more than seven years ago, Tema contends ETC has mischaracterized Tema‘s breach-of-contract and negligence claims as arising under trade or securities regulations and has failed to explain how removal is proper given the obvious prohibition against removing a case filed before September 1, 2024.
¶ 30 But Tema has not established its entitlement to sanctions. Tema did not request or obtain an evidentiary hearing on its request for sanctions. See BCLR 5(e) (requiring parties to notify the Business Court of a request for a hearing in the motion or response).3 Nor has Tema proffered competent
¶ 31 Even though the Court has determined that ETC‘s Removal Notice was legally impermissible, ETC‘s argument that a pre-September 1, 2024 case could be removed was not per se groundless or frivolous. Absent additional evidence or some other legal basis, a sanctions award would be inappropriate. Accordingly, the Court declines to impose sanctions.
III. CONCLUSION
¶ 32 Consistent with this opinion, the Court GRANTS in part and DENIES in part Tema‘s Remand Motion and REMANDS the case to the 236th District Court of Tarrant County, Texas.
IT IS SO ORDERED.
JERRY D. BULLARD
Judge of the Texas Business Court,
Eighth Division
SIGNED ON: November 6, 2024
