TEMA Oil and Gas Company v. ETC Field Services

2024 Tex. Bus. 3
Texas Business Court·Decided November 6, 2024·No. 24-BC08B-0001·Published·Cited by 10 cases

Opinion

2024 Tex. Bus. 3

The Business Court of Texas Eighth Division

TEMA OIL AND GAS COMPANY, § §

Plaintiff, § §

v. § § Cause No. 24-BC08B-0001 §

§

ETC FIELD SERVICES, LLC FKA §

REGENCY FIELD SERVICES, LLC, §

Defendant. §

═══════════════════════════════════════════════ 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.

1NOTE: The syllabus was created by court staff and is provided for the convenience of the reader. It is not part of the Court’s opinion, does not constitute the Court’s official description or statement, and should not be relied upon as legal authority.

2024 Tex. Bus. 3

The Business Court of Texas Eighth Division

TEMA OIL AND GAS COMPANY, § §

Plaintiff, § §

v. § § Cause No. 24-BC08B-0001 §

§

ETC FIELD SERVICES, LLC FKA §

REGENCY FIELD SERVICES, LLC, §

Defendant. §

═══════════════════════════════════════════════ 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

Tema’s Motion to Remand raise two issues: (1) whether ETC is entitled to remove to the Business Court of Texas (“Business Court”) the case commenced in the 236th Judicial District Court of Tarrant County (“District Court”); and (2) whether Tema is entitled to sanctions. After considering the parties’ arguments and the relevant law, the Court concludes that neither removal nor sanctions is appropriate. Accordingly, the Court grants in part and denies in part Tema’s Remand Motion.

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

spanning more than seven years before ETC filed a Notice of Removal to Business Court (“Removal Notice”) on September 11, 2024. 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 Chapter 25A of the Texas Government Code to establish the Business Court. Id. § 1 (codified at TEX. GOV’T CODE ANN. § 25A.001 et. seq). Although uncodified Section 9 of H.B. 19 notes that the effective date for H.B. 19 is September 1, 2023, two other uncodified sections of H.B. 19—Sections 5 and 8—clarify that the operative date for Chapter 25A is September 1, 2024. See Act of May 25, 2023, 88th Leg., R.S., ch. 380, §§ 5, 8-9, 2023 Tex. Sess. Law Serv. 919, 929. Section 5 identifies the Business Court’s creation date as September 1, 2024, and Section 8 declares that H.B. 19’s changes in law apply to cases begun on or after September 1, 2024. Id. §§ 5, 8. 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 TEX. GOV’T CODE ANN. § 25A.006(d)-(j).

Section 25A.006 establishes that removal is effectuated by filing notice and is permitted so long as the Business Court has jurisdiction; otherwise, remand is required. Id. § 25A.006(d)-(g). Section 25A.006 also establishes that sanctions are available for a frivolous notice of removal. Id. § 25A.006(h). Nothing in Chapter 25A, including Section 25A.006, speaks to the removal of a case commenced before September 1, 2024. Indeed, Chapter 25A does not include the commencement-date restriction articulated in Section 8 of H.B. 19. 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 Texas Rule of Civil Procedure 355. See TEX. R. CIV. P. 355. Like Section 25A.006, Rule 355 requires the moving party to give notice and to establish the Business Court’s jurisdiction (albeit

the rule uses the term “authority”). TEX. R. CIV. P. 355(a)-(c). And like Section 25A.006, Rule 355 also requires remand if removal was improper, though, unlike Section 25A.006, Rule 355 authorizes a party to file a motion to remand. TEX. R. CIV. P. 355(f). Nothing in these new rules, including Rule 355, speaks to the removal of a case commenced before September 1, 2024. In fact, like Chapter 25A, these rules do not include the commencement-date restriction articulated in Section 8 of H.B. 19. 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

case. Although provided the opportunity, neither party requested a hearing on its respective pleadings.

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

Chapter 25A to apply retroactively to permit removal of cases filed before September 1, 2024. ETC’s argument is unpersuasive.

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

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TEMA Oil and Gas Company v. ETC Field Services, 2024 Tex. Bus. 3 (Tex. Super. Ct. 2024).

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