Recent ruling clarifies Texas Business Court’s amount-in-controversy requirements

A recent ruling from the Third Division of the Texas Business Court clarifies the court’s jurisdictional scope by detailing the legal framework required for determining whether the Texas Business Court’s amount-in-controversy requirement is satisfied in actions seeking declaratory or injunctive relief.

In C Ten 31 LLC v. John Tarbox et al., Cause No. 24-BC03A-0004, the court held that (1) its amount-in-controversy limits govern the court’s jurisdiction over actions seeking injunctive or declaratory relief; and (2) that the amount in controversy for declaratory and injunctive actions is measured by the value of the rights at issue, as opposed to simply the monetary demand sought as damages.

In the underlying case, C Ten 31 LLC (C Ten) sued both directly and derivatively on behalf of Summer Moon Holdings, LLC (Summer Moon) relating to alleged misconduct of Summer Moon’s board, comprised of one manager designated by minority owner C Ten and two managers designated by majority owner Coffee Unplugged, LLC. In September 2024, C Ten’s manager attempted to remove Coffee Unplugged’s managers from the board based on alleged conflicts of interest, and C Ten filed suit in the 261st District Court of Travis County seeking solely non-monetary relief regarding whether the manager’s removal was effective. Defendants then removed the lawsuit to Texas Business Court, arguing that the declaratory relief claim was within the court’s jurisdiction. C Ten moved to remand the action to District Court for lack of jurisdiction, an oral hearing was held on December 11, 2025, and the January 3, 2025 opinion followed.

In the opinion, the court determined that the amount in controversy limitations apply to declaratory relief and injunction actions, but that the amount in controversy calculation is broad, consisting of the entire value of the lawsuit and including the value of the underlying rights at issue.

First, the court determined that Section 25A.004(e) of the Texas Government Code authorizes the Texas Business Court to exercise jurisdiction over claims for “injunctive relief” and “declaratory judgment,” otherwise within the scope of the Texas Business Court’s jurisdiction under Section 25A.004(b)–(d). Therefore, the court held that an action for injunctive or declaratory relief must meet one of the court’s amount-in-controversy thresholds—in this case, US$5 million pursuant to Section 25A.004(b).

Second, the court determined that the “amount in controversy” of a given action is determined by looking at the entire action, not each claim individually. Thus, when analyzing whether the court has jurisdiction, all properly joined claims will be aggregated when determining whether the dispute meets the threshold requirements in Section 25A.004(b)–(d).

Although the court determined that the amount in controversy requirement applies to declaratory and injunctive actions, the court also defined “amount in controversy” broadly and did not limit its calculation to the monetary relief sought as damages. Instead, the court analyzed the value of the underlying rights at issue in the declaratory and injunctive causes of action. The court considered the value of various rights at issue that could satisfy the amount-in-controversy requirement—such as the value of the business itself, the potential value of future board actions and the reversal of past board actions—before determining that the defendants’ pleading, pled in good faith, that the rights at issue exceeded US$5 million constituted prima facie evidence sufficient to establish the court’s jurisdiction.

The court’s ruling in C Ten provides a framework to analyze how different actions may fall within the jurisdictional limits of the new Texas Business Court, including the broad interpretation of the amount-in-controversy requirement for equitable actions covered under 25A.004(e).

Practically speaking, the court also clarified how parties should resolve a disputed amount in controversy. The court concluded that the party seeking remand bears the initial burden of proof to challenge the opposing party’s assertion that the jurisdictional threshold has been met. If the moving party meets that burden, the burden then shifts to the party opposing remand to raise a fact issue, and if that fact issue exists, the party asserting jurisdiction bears the burden of proof at trial.