C Ten 31 LLC v. Tarbox

2025 Tex. Bus. 1

The Business Court of Texas,
Third Division

C TEN 31 LLC, directly and deriva- §
tively on behalf of SUMMERMOON §
HOLDINGS LLC, §
§
Plaintiff,
§
v. § Cause No. 24-BC03A-0004
JOHN TARBOX, JORDAN §
VIMONT, CU DESIGNATED §
MANAGER 1 LLC, and CU §
DESIGNATED MANAGER 2 LLC, §
§
Defendants. §
═══════════════════════════════════════
SYLLABUS
═══════════════════════════════════════

On a motion to remand, the Court decides issues of statutory construction and
procedure relating to the scope of the Business Court’s jurisdiction under Section
25A.004(e) of the Government Code and the burden-shifting framework for chal-
lenges to amount-in-controversy pleadings in the removal context.
First, the Court holds that Section 25A.004(e), which grants the Court juris-
diction over actions that seek “injunctive relief or a declaratory judgment” and in-
volve “a dispute based on a claim within the court’s jurisdiction under Subsection
(b), (c), or (d),” incorporates the amount-in-controversy limit (or exception) of the
underlying Subsections—i.e., Subsection (b)’s $5 million limit, Subsection (d)’s
$10 million limit, or Subsection (c)’s exemption from any amount-in-controversy
limit. Here, the removing party invokes Subsection (b) as underlying the Court’s

1
jurisdiction over this action for injunctive and declaratory relief. As a result, the
Court has jurisdiction only if the value of the rights at issue exceeds $5 million.
Second, the Court holds that when, as here, the notice of removal pleads that
the value of the rights at stake are within the Court’s jurisdiction and the petition
does not plead otherwise, the party moving for remand bears the initial burden of
showing that the amount pleaded is fraudulent or that a different amount is readily
established, such as by statute. The Court adopts the same burden-shifting frame-
work applied to jurisdictional challenges raised through pleas to the jurisdiction and
motions for traditional summary judgment, such that the movant bears the initial
burden on the pretrial motion but the party asserting jurisdiction bears the ultimate
burden of proof at trial.
The Court also denies a request for attorney’s fees and holds that the movant
has not met its burden of proving that a venue clause in the Company Agreement
applies to this action or that it binds Defendants, who are not signatories. 1

1
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.

2
2025 Tex. Bus. 1

The Business Court of Texas,
Third Division

C TEN 31 LLC, directly and deriva- §
tively on behalf of SUMMERMOON §
HOLDINGS LLC, §
§
Plaintiff,
§
v. § Cause No. 24-BC03A-0004
JOHN TARBOX, JORDAN §
VIMONT, CU DESIGNATED §
MANAGER 1 LLC, and CU §
DESIGNATED MANAGER 2 LLC, §
§
Defendants. §
═══════════════════════════════════════
OPINION AND ORDER
═══════════════════════════════════════

¶1 Before the Court is Plaintiff’s motion to remand. The Court holds that

(1) jurisdiction under Section 25A.004(e) is limited by the amount-in-controversy

requirement (or exception) in the underlying statute, and (2) when a notice of re-

moval pleads that the amount in controversy is within the Court’s jurisdictional

limits and the petition below is silent on that issue, the party moving for remand

1
bears the initial burden of showing that the amount pleaded is fraudulent or that a

different amount is readily established.

¶2 Having considered the briefing, the oral arguments, the evidence, and

the governing law, the Court ORDERS that:

• the request for remand based on lack of jurisdiction is CARRIED pending an
evidentiary hearing after discovery and supplemental briefing; 1

• the request for remand based on the choice-of-venue clause is DENIED;

• the request for attorney’s fees is DENIED;

• the request to supplement the record is GRANTED.

Procedural Background

¶3 This dispute arises out of the governance of Summer Moon Holdings,

LLC (Summer Moon), which owns, operates, and franchises coffee shops. Summer

Moon is governed by a Board of Managers (the Board), made up of three managers—

one manager designated by minority owner CTen 31 LLC (CTen) and two managers

designated by majority owner Coffee Unplugged, LLC (CU). On September 16,

2024, CTen’s designated manager purported to remove CU’s two designated man-

agers, John Tarbox and Jordan Vimont, from the Board based on putative conflicts

of interest. Two days later, CTen 2 sued Tarbox and Vimont in the 261st District

1
See Jurisdictional Analysis, Part B(4), infra.
2
CTen brings this suit both directly and derivatively on behalf of Summer Moon.

2
Court of Travis County, Texas, seeking a declaratory judgment that the removal was

effective. Tarbox and Vimont removed the suit to this Court over CTen’s objection.

¶4 In this Court, CTen filed a second amended petition alleging that

Vimont and Tarbox resigned from the Board but that CU’s designated replacement

managers—CU Designated Manager 1 LLC and CU Designated Manager 2 LLC (the

CU Managers)—are “Trojan Horse shell entities” and a “backdoor attempt to put

Tarbox and Vimont back on the Board.” CTen’s second amended petition adds the

CU Managers as defendants, requests injunctive relief, and seeks additional declar-

atory relief regarding the CU Managers and a series of alleged breaches of duties by

all Defendants.

¶5 CTen subsequently moved to remand this action to the District Court,

which Defendants opposed. CTen asks the Court to remand for lack of jurisdiction

or based on a venue-selection clause. CTen also seeks an award of attorney’s fees

and an opportunity to supplement the record. Defendants oppose the requested re-

lief. The Court held a hearing on the motion to remand on December 11, 2024.

¶6 After the hearing on the motion to remand, CTen filed an application

for a TRO and temporary injunction, as well as a third amended petition. The third

amended petition added claims relating to the removal and replacement of Summer

Moon’s chief financial officer (CFO), which is also the subject of the application for

temporary relief. The Court held a TRO hearing on December 27, 2024.

3
Jurisdictional Analysis

¶7 Section 25A.006(d) of the Government Code and Rule 355 of the Texas

Rules of Civil Procedure dictate that if this Court lacks jurisdiction over a removed

action, the Court must remand the action to the court from which it was removed. 3

The parties dispute whether this Court has jurisdiction over this removed action.

Their dispute raises two key jurisdictional issues: (1) whether the $5 million

amount-in-controversy requirement in Section 25A.004(b) of the Government Code

limits the Court’s jurisdiction under Section 25A.004(e); and (2) if so, how a dis-

pute over the amount in controversy is resolved in the removal context. The Court

holds that it has jurisdiction only if the amount in controversy exceeds $5 million,

and the movant bears the initial burden on the amount in controversy, under the

same framework that governs pleas to the jurisdiction.

A. This Court has jurisdiction over this action only if the amount in controversy
exceeds $5 million.

¶8 The parties’ jurisdictional dispute requires the Court to interpret Sec-

tion 25A.004 of the Government Code. 4 Texas courts determine the meaning of

statutes from the statutory text, giving undefined words their ordinary,

3
TEX. GOV’T CODE § 25A.006(d); TEX. R. CIV. P. 355(f)(1).
4
Statutory construction is a question of law for the Court. E.g., Malouf v. State ex rels. Ellis, 694
S.W.3d 712, 718 (Tex. 2024); In re Mem'l Hermann Hosp. Sys., 464 S.W.3d 686, 700 (Tex. 2015).

4
contemporaneous meaning, as understood from reading the statute as a whole and

in context. 5 As used here, “context” generally refers to “the surrounding words and

structure of the operative text,” not extrinsic and subjective considerations. 6 The

Court thus examines the language and structure of the provisions at issue in light of

the statutory framework, striving for a “fair meaning” rather than “hyper-technical

readings of isolated words or phrases.” 7 Absent ambiguity, the inquiry begins and

ends with the text: “the alpha and the omega of the interpretive process.” 8

¶9 Whether a court has subject-matter jurisdiction is generally a question

of law for the court to decide, but controverting evidence of jurisdictional facts can

create a fact question for the fact finder to decide. 9

5
Malouf, 694 S.W.3d at 718; Pub. Util. Comm’n of Tex. v. Luminant Energy Co. LLC, 691 S.W.3d
448, 460 (Tex. 2024); City of Austin v. Quinlan, 669 S.W.3d 813, 821 (Tex. 2023); LTTS Charter
Sch., Inc. v. C2 Constr., Inc., 342 S.W.3d 73, 75 (Tex. 2011).
6
U.S. Polyco, Inc. v. Tex. Cent. Bus. Lines Corp., 681 S.W.3d 383, 390 n.3 (Tex. 2023) (per curiam).
The Texas Supreme Court’s approach is consistent with the “whole text” canon, which “calls on
the judicial interpreter to consider the entire text, in view of its structure and of the physical and
logical relation of its many parts.” Luminant Energy, 691 S.W.3d at 461–62 (quoting ANTONIN
SCALIA & BRYAN A. GARNER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 167 (2012)).
7
In re Dallas Cnty., 697 S.W.3d 142, 158 (Tex. 2024) (quoting ANTONIN SCALIA & BRYAN A. GAR-
NER, READING LAW: THE INTERPRETATION OF LEGAL TEXTS 356 and In re Off. of Att’y Gen. of Tex.,
456 S.W.3d 153, 155 (Tex. 2015)).
8
BankDirect Capital Fin., LLC v. Plasma Fab, LLC, 519 S.W.3d 76, 86 (Tex. 2017); see also City of
Denton v. Grim, 694 S.W.3d 210, 214 (Tex. 2024); Brown v. City of Houston, 660 S.W.3d 749, 752
(Tex. 2023); Alex Sheshunoff Mgmt. Servs., L.P. v. Johnson, 209 S.W.3d 644, 652 (Tex. 2006).
9
Tex. Dep’t of Parks & Wildlife v. Miranda, 133 S.W.3d 217, 226 (Tex. 2004).

5
1. This Court’s jurisdiction is governed by Section 25A.004.

¶ 10 Section 25A.004 grants this Court “civil jurisdiction concurrent with

district courts” in certain categories of actions, subject to specific exclusions. 10 The

layout of Section 25A.004 is generally:

• Subsection (a): the Court’s powers generally

• Subsection (b): jurisdiction over certain business-affairs actions when the
amount in controversy exceeds $5 million

• Subsection (c): jurisdiction over Subsection (b) disputes, regardless of the
amount in controversy, when a party is a publicly traded company

• Subsection (d): jurisdiction over actions arising out of certain commercial
transactions 11 and violations of the Finance or Business & Commerce
Code, when the amount in controversy exceeds $10 million

• Subsection (e): jurisdiction over certain injunctive and declaratory actions

• Subsection (f): supplemental jurisdiction

• Subsection (g): exclusions from the Court’s non-supplemental jurisdiction

• Subsection (h): absolute exclusions from the Court’s jurisdiction 12

¶ 11 Defendants rely on Subsections (b) and (e). Subsection (b) grants the

Court jurisdiction in listed actions “in which the amount in controversy exceeds $5

10
TEX. GOV’T CODE § 25A.004.
11
Specifically, “qualified transactions,” involving at least $10 million in consideration or value, id.
§§ 25A.001(14), 25A.004(d)(1), and when the parties have agreed—either in the contract or after
the fact—to jurisdiction in the Business Court, id. § 25A.004(d)(2), subject to certain exclusions.
12
See id. § 25A.004(b)–(h).

6
million, excluding interest, statutory damages, exemplary damages, penalties, attor-

ney’s fees, and court costs.” 13 Generally, the listed actions are:

• derivative proceedings;

• actions regarding an organization’s governance, governing documents, or
internal affairs;

• actions against certain defendants in which a claim is asserted under state
or federal securities or trade regulation law;

• certain actions by an organization or its owner against the organization’s
owner, controlling person, or managerial official;

• certain actions alleging a breach of a duty owed to an organization or its
owner;

• actions seeking to pierce the corporate veil; and

• actions arising out of the Business Organizations Code. 14

Subsection (c) expands the reach of Subsection (b), granting the Court jurisdiction

over “an action described in Subsection (b) regardless of the amount in controversy

if a party to the action is a publicly traded company.” 15

¶ 12 Subsection (e) grants the Court jurisdiction over actions “seeking in-

junctive relief or a declaratory judgment under Chapter 37, Civil Practice and

13
Id. § 25A.004(b).
14
Id. § 25A.004(b)(1)–(7).
15
Id. § 25A.004(c).

7
Remedies Code, involving a dispute based on a claim within the court’s jurisdiction

under Subsection (b), (c), or (d).” 16

2. A claim is “within the court’s jurisdiction under Subsection (b)” only if
the amount in controversy in the action exceeds $5 million.

¶ 13 Defendants argue that this Court has jurisdiction under Subsection (e)

because this action seeks injunctive and declaratory relief and involves “a dispute

based on a claim within the court’s jurisdiction under Subsection (b).” 17 They assert

that the underlying claims here fall within four of the categories listed in Subsection

(b) 18 and that this satisfies Subsection (e), regardless of the amount in controversy.

CTen does not dispute that this is a declaratory and injunctive action or that it falls

within the categories of actions listed in Subsection (b). But CTen argues that the

$5 million amount-in-controversy requirement in Subsection (b) also applies under

Subsection (e). 19 For the reasons below, the Court agrees with CTen that it lacks

jurisdiction unless the amount in controversy exceeds $5 million.

16
Id. § 25A.004(e).
17
Id. § 25A.004(e).
18
Specifically, they assert that it is a derivative action, relates to Summer Moon’s governance and
governing documents, alleges board managers breached duties owed to CTen and Summer Moon,
and arose out of the Business Organizations Code. Id. § 25A.004(b)(1), (2), (5) & (7).
19
Id. § 25A.004(e).

8
a. Subsection (b)’s amount-in-controversy requirement applies here.

¶ 14 The first issue is whether the phrase “within the court’s jurisdiction

under Subsection (b)” incorporates Subsection (b)’s amount-in-controversy mini-

mum. The Court concludes that it does.

¶ 15 Because the term “within” is undefined, the Court gives the term its

ordinary meaning, as it would be understood by a reasonable reader in this context.

Courts often consult dictionary definitions from when the statute was enacted to

determine a term’s ordinary meaning. 20 Modern dictionaries define “within,” when

used as a preposition (as it is here), as indicating enclosure or containment; that

something is inside—not beyond—the limit, period, length, range, or compass of

something else; and most relevantly, that something is in the field, sphere, or scope

of something else, such as when something is “within the jurisdiction of the state”

or “within one’s power.” 21 Consistently, for example, the United States Supreme

Court held in United States v. Rodgers 22 that a matter is “within the jurisdiction” of

20
E.g., Morath v. Lampasas Indep. Sch. Dist., 686 S.W.3d 725, 735 (Tex. 2024); Interest of J.S.,
670 S.W.3d 591, 598 (Tex. 2023); MCI Telecomm. Co. v. AT&T Co., 512 U.S. 218, 227–28 (1994).
21
Within, MERRIAM-WEBSTER.COM DICTIONARY (2024), available at www.merriam-webster.com;
within, DICTIONARY.COM (2024), available at www.dictionary.com; within, CAMBRIDGE DICTION-
ARY (2024), available at www.dictionary.cambridge.org.
22
102 S. Ct. 2382, 2393 (1982); see also Rumsfeld v. Padilla, 542 U.S. 426, 428 (2004) (holding
statute limiting courts to granting habeas relief “within their respective jurisdictions” required that
issuing court have jurisdiction over custodian); Plyler v. Doe, 457 U.S. 202, 214 (1982) (holding
“within its jurisdiction,” as used in Fourteenth Amendment, meant those on whom State would
impose its laws).

9
a governmental entity when the entity has the power to exercise authority over the

matter, distinguishing authorized functions from peripheral matters. 23

¶ 16 The statute also uses the undefined term “under” as a preposition. In

addition to those less applicable in this context, 24 modern definitions of “under,”

when used as a the preposition, include when one thing is subject to the authority of

or authorized by another. 25 Consistently, in National Association of Manufacturers

v. Department of Defense, the United States Supreme Court held that “under section

1311,” as used in the Clean Water Act, meant “pursuant to” or “by reason of the

authority of” section 1311. 26 In Powell v. City of Baird, the Texas Supreme Court

similarly held that “a poll tax is levied under a State law, within the meaning of Sec-

tion 2 of Article VI of our State Constitution, if some State law directly authorizes

such levy.” 27 The Court explained, “As used in the above constitutional provision,

the word ‘under’ is certainly used as a preposition, indicating subjection, guidance,

or control. It is used in a sense of ‘by authority of.’” 28

23
466 U.S. 475, 479 (1984); see also, e.g., United States v. Gray, 642 F.3d 371, 378 (2d Cir. 2011).
24
For example, spatial definitions (such as below or beneath), quantitative definitions (such as less
than or lower than), or hierarchical definitions (such as subordinate to).
25
Under, MERRIAM-WEBSTER.COM DICTIONARY (2024), available at www.merriam-webster.com;
under, DICTIONARY.COM (2024), available at www.dictionary.com; under, CAMBRIDGE DICTION-
ARY (2024), available at www.dictionary.cambridge.org.
26
583 U.S. 109, 124 (2018).
27
133 Tex. 489, 496, 128 S.W.2d 786, 789 (1939) (emphasis added).
28
Id. at 497, 128 S.W.2d at 790.

10
¶ 17 Based on these ordinary meanings, understood in the context of Section

25A.004, the Court concludes that a claim is “within the court’s jurisdiction under

Subsection (b)” if it is in the scope of (within) the jurisdiction granted to this Court

by the authority of (under) Subsection (b). The scope of the jurisdiction authorized

by Subsection (b) is limited to “actions in which the amount in controversy exceeds

$5 million.” 29 Thus, the phrase “within the court’s jurisdiction under Subsection

(b)” incorporates Subsection (b)’s amount-in-controversy requirement.

¶ 18 This conclusion is buttressed by Subsection (e)’s inclusion of Subsec-

tion (c) in the list of subsections under which jurisdiction may originate. Subsection

(c) exempts certain Subsection (b) actions from the amount-in-controversy require-

ment. If Subsection (e) eliminated the amount-in-controversy requirement for all

Subsection (b) actions, there would be no reason for it to also list Subsection (c)—

deleting the reference to Subsection (c) would have no effect on the meaning or reach

of Subsection (e). Courts endeavor to avoid a statutory construction that would ren-

der a portion of the statute meaningless. 30

29
TEX. GOV’T CODE § 25A.004(b).
30
Image API, LLC v. Young, 691 S.W.3d 831, 842 (Tex. 2024) (“[W]e must read subsections (b)
and (d) together, ‘giving effect to each provision so that [neither] is rendered meaningless or mere
surplusage.’” (quoting TIC Energy & Chem., Inc. v. Martin, 498 S.W.3d 68, 74 (Tex. 2016)));
Ritchie v. Rupe, 443 S.W.3d 856, 867 (Tex. 2014) (“[O]ur text-based approach to statutory con-
struction requires us to study the language of the specific provision at issue, within the context of
the statute as a whole, endeavoring to give effect to every word, clause, and sentence.”).

11
¶ 19 The language of Subsection (c) itself buttresses this conclusion in two

ways. First, when a publicly traded company is a party to a Subsection (b) action,

Subsection (c) grants the Court jurisdiction over the action “regardless of the

amount in controversy.” 31 This shows that the Legislature knows how to exempt

actions in one subsection from another subsection’s amount-in-controversy mini-

mum in unmistakable terms. 32 If the Legislature intended both Subsection (c) and

Subsection (e) to be exempt from the amount-in-controversy minimums, there would

be no reason to do so clearly in Subsection (c) and then (purportedly) do the same

thing much more obliquely in Subsection (e).

¶ 20 Defendants imply that an exemption from the amount-in-controversy

requirement is implied from the fact that declaratory and injunctive claims do not

seek monetary damages. But the parties agree that amount-in-controversy mini-

mums can be applied to declaratory and injunctive actions; as discussed below, the

amount in controversy in such actions is measured by the value of the rights at issue.

31
TEX. GOV’T CODE § 25A.004(c).
32
See Bexar Appraisal Dist. v. Johnson, 691 S.W.3d 844, 855 (Tex. 2024) (“We draw a different
conclusion from Section 11.13(a): that the Legislature knows how to limit a particular exemption
on a one-per-family basis. The fact that it did so in Section 11.13(a) but not Section 11.131(b) means
that Section 11.131(b) bears no such limitation.”); Interest of J.S., 670 S.W.3d 591, 613 (Tex. 2023)
(“We presume the Legislature included each word in the statute for a purpose and that words not
included were purposefully omitted.” (quoting Lippincott v. Whisenhunt, 462 S.W.3d 507, 509
(Tex. 2015))); In re Xerox Corp., 555 S.W.3d 518, 529 (Tex. 2018) (“Once again, the juxtaposition
of word choice in these adjoining statutory provisions shows the Legislature knows how to say
“damages” when it means to authorize an award of damages, yet deliberately chose not to use that
term in describing the relief available under Section 36.052.”).

12
¶ 21 Second, Subsection (c) refers to actions “described in Subsection

(b),” 33 whereas Subsection (e) refers to claims “within the court’s jurisdiction under

Subsection (b).” 34 The Court presumes that this difference in language conveys a

difference in meaning. 35 This difference is most consistent with the understanding

that the reference in Subsection (c) is to the types of actions listed in Subsection (b)

but not necessarily all of the jurisdictional prerequisites, whereas the reference in

Subsection (e) necessarily implicates Subsection (b)’s jurisdictional prerequisites.36

¶ 22 Defendants argue that applying an amount-in-controversy requirement

to Subsection (e) makes it redundant. The Court disagrees. Subsection (e) grants the

Court jurisdiction over actions seeking specific types of relief—“injunctive relief or

a declaratory judgment”—that otherwise might not be available for disputes based

on claims within the Court’s jurisdiction under Subsections (b), (c), or (d). 37

¶ 23 Conversely, if Subsection (e) actions were exempt from Subsections (b)

and (d)’s amount-in-controversy limits, those limits could be circumvented by

33
TEX. GOV’T CODE § 25A.004(c).
34
Id. § 25A.004(e).
35
See Malouf, 694 S.W.3d at 727 (“[W]e generally presume the Legislature uses the same word
consistently throughout a statute and uses different words to convey different meanings.”); Ineos
USA, LLC v. Elmgren, 505 S.W.3d 555, 564 (Tex. 2016) (“When the legislature uses certain lan-
guage in one part of the statute and different language in another, the Court assumes different
meanings were intended.” (quoting DeWitt v. Harris Cnty., 904 S.W.2d 650, 653 (Tex. 1995))).
36
Malouf, 694 S.W.3d at 720; Ritchie, 443 S.W.3d at 867.
37
TEX. GOV’T CODE § 25A.004(e).

13
reframing a claim as one for declaratory or injunctive relief. CTen argues that under

Defendants’ interpretation, the Court would lack jurisdiction over claims for

$10,000 in damages for breach of a company agreement or breach of an agreement

with a Business Court choice-of-venue provision, but the same claims would be

within the Court’s jurisdiction if artfully pleaded as a declaratory-judgment action.

The Court does not find this to be the kind of “absurd” result that would justify

deviation from the plain meaning of the statutory text. 38 But here, the plain language

and structure of the statute dictate an approach under which no such loophole exists.

¶ 24 Finally, Defendants assert that the State Bar of Texas agrees with

them, citing material from a State Bar CLE. To the extent the cited material may be

understood to mean that qualified declaratory and injunctive claims can be added to

actions that otherwise satisfy the Court’s amount-in-controversy requirements, the

Court agrees. But to the extent it may be understood to mean that declaratory or

injunctive claims operate to exempt the entire action from amount-in-controversy

limits, the statute says otherwise. “When decoding statutory language, we are

bound by the Legislature’s prescribed means (legislative handiwork), not its

38
See Rodriguez v. Safeco Ins. Co. of Ind., 684 S.W.3d 789, 795–96 (Tex. 2024) (observing that
statutes should be construed to avoid “genuinely absurd results,” but “the absurdity safety valve
is reserved for truly exceptional cases” where the result would be “unthinkable or unfathomable”
(quoting Combs v. Health Care Servs. Corp., 401 S.W.3d 623, 630 (Tex. 2013))).

14
presumed intent (judicial guesswork): ‘We must rely on the words of the statute,

rather than rewrite those words to achieve an unstated purpose.’” 39

b. The amount-in-controversy threshold applies to the action, not each
claim.

¶ 25 Having decided that Section 25A.004(b)’s $5 million amount-in-con-

troversy requirement applies here, the Court must next determine how it applies. As

detailed below, the Court concludes that the amount in controversy applies at the

“action” level, considering all claims properly joined before the Court, rather than

as a per-claim minimum.

¶ 26 Because Section 25A.004 uses the undefined terms “action” and

“claim,” the Court is mindful of the distinction between these two terms and the

differences in the way the statute uses them. When undefined, 40 the Texas Supreme

Court has construed the term “action” to refer to a lawsuit or judicial proceeding

generally and the term “claim” to refer to an individual theory of liability or cause

of action asserted within a lawsuit or judicial proceeding. 41 The Fifth Circuit has

39
BankDirect Capital Fin., LLC v. Plasma Fab, LLC, 519 S.W.3d 76, 86–87 (Tex. 2017) (quoting
Jaster v. Comet II Constr., Inc., 438 S.W.3d 556, 571 (Tex. 2014) (plurality)).
40
When these terms are defined by the statute, the Texas Supreme Court employes the definition
given. E.g., Montelongo v. Abrea, 622 S.W.3d 290, 300 (Tex. 2021) (“By defining ‘legal action’ to
include not just ‘lawsuits,’ ‘petitions,’ ‘pleadings,’ and ‘filings,’ but also ‘causes of action,’ ‘cross-
claims,’ and ‘counterclaims,’ the Act permits a party to seek dismissal within sixty days after ser-
vice of a cause of action or claim, even if it’s not ‘early’ in the litigation.”).
41
See Off. of the Attorney Gen. of Tex. v. C.W.H., 531 S.W.3d 178, 183 (Tex. 2017) (quoting Jaster
and Thomas for meaning of “action”); Jaster, 438 S.W.3d at 563–64 (“The common meaning of
the term ‘action’ refers to an entire lawsuit or cause or proceeding, not to discrete ‘claims’ or

15
similarly distinguished between the terms “action” and “claim” when construing

federal removal statutes. 42 Consistently, the Texas Business Court has recognized

that “[a] civil action is a lawsuit.” 43

¶ 27 This is consistent with the ordinary meaning of those terms, as re-

flected in contemporaneous dictionaries: “action” relates to the lawsuit generally

while “claim” relates to individual rights and remedies asserted within the suit. 44 It

is also consistent with how those terms are used throughout Section 25A.004. For

example, Section 25A.004(b)(3) addresses jurisdiction over “an action in which a

claim under a state or federal securities or trade regulation law is asserted.” 45

¶ 28 This Court’s jurisdiction under subsection (b) can depend on different

aspects of the case, including:

• the nature of the action
(e.g., “a derivative action” 46);

• the nature of the claims asserted in the action

‘causes of action’ asserted within a suit, cause, or proceeding.”); In re Jorden, 249 S.W.3d 416,
421 (Tex. 2008) (distinguishing between lawsuits and causes of action in interpreting “health care
liability claim”); Thomas v. Oldham, 895 S.W.2d 352, 356 (Tex. 1995) (“The term ‘action’ is gen-
erally synonymous with ‘suit[.]’”); see also Montelongo, 622 S.W.3d at 301.
42
E.g., Dillon v. State of Miss. Military Dep’t, 23 F.3d 915, 918 (5th Cir. 1994); Nolan v. Boeing Co.,
919 F.2d 1058, 1064–66 (5th Cir. 1990); Arango v. Guzman Travel Advisors Corp., 621 F.2d 1371,
1376 (5th Cir. 1980).
43
Tema Oil and Gas Co. v. ETC Field Servs., LLC, 2024 Tex. Bus. 3 at ¶ 15.
44
See, e.g., Action, BLACK’S LAW DICTIONARY (12th ed. 2024); Claim, BLACK’S LAW DICTIONARY
(12th ed. 2024); see also Fresh Coat, Inc. v. Parexlahabra, Inc., 424 S.W.3d 237, 242 (Tex. App.—
Beaumont 2014, no pet.) (collecting additional definitions and authorities).
45
TEX. GOV’T CODE § 25A.004(b)(3).
46
Id. § 25A.004(b)(1); see also id. § 25A.004(b)(2), (b)(7).

16
(e.g., “a claim under a state or federal securities or trade regulation law” 47);

• the nature of the allegations made in the action
(e.g., “alleges an act or omission by” 48);

• the nature of the parties to the action
(e.g., “by an organization, or an owner of an organization . . . against an
owner, controlling person, or managerial official” 49); and
• the nature of the relief or remedy sought in the action
(e.g., “seeking to hold an owner or governing person of an organization lia-
ble for an obligation of the organization” 50).

¶ 29 Regardless of whether jurisdiction is pegged to specific claims or some

other aspect of the suit, Subsection (b)’s jurisdictional grant, and its minimum

amount in controversy, refer to the “action”: “the business court has civil jurisdic-

tion . . . in the following actions in which the amount in controversy exceeds $5

million . . . .” 51 In fact, all of Section 25A.004’s jurisdictional grants refer to the

“action,” 52 save one: Subsection (f)’s grant of supplemental jurisdiction refers to

claims instead. 53 This makes sense, as supplemental jurisdiction typically applies to

47
Id. § 25A.004(b)(3).
48
Id. § 25A.004(b)(4)(B); see also id. § 25A.004(b)(5).
49
Id. § 25A.004(b)(5)(A).
50
Id. § 25A.004(b)(6).
51
Id. § 25A.004(b).
52
Id. § 25A.004(c) (“The business court has civil jurisdiction … in an action … .”), (d) (“The busi-
ness court has civil jurisdiction … in the following actions in which the amount in controversy
exceeds $10 million … .”); (e) (“The business court has civil jurisdiction … in an action …. .”).
53
Id. § 25A.004(f) (“the business court has supplemental jurisdiction over any other claim … .”).
Subsection (f) grants jurisdiction “over any other claim related to a case or controversy within the
court ’s jurisdiction that forms part of the same case or controversy.” Id. The phrase “form part of
the same case or controversy” is also used in federal courts’ supplemental-jurisdiction statute. 28
U.S.C. § 1367(a); e.g., Exxon Mobil Corp. v. Allapattah Servs., Inc., 545 U.S. 546, 554 (2005).

17
only some claims within an action; the court generally must have some independent

jurisdiction to which the supplemental jurisdiction can attach. 54 Section 25A.004’s

jurisdictional carve-outs, on the other hand, are sometimes stated with reference to

the “action” and other times to specific “claims.” 55

¶ 30 Applying these common meanings as understood within the context of

the statute, the Court holds that jurisdiction under Subsection (b) applies to the

listed categories of “actions” when the amount in controversy in the action exceeds

$5 million. Because “action” refers to the suit generally, it is not necessary for each

individual claim to put more than $5 million in controversy to satisfy Subsection

(b). 56 Thus, this Court has jurisdiction over this action only if the claims in the suit,

collectively, put more than $5 million in controversy.

¶ 31 Importantly, the Court does not hold that the term “action” can never

refer to less than all claims in a suit regardless of whether the claims are properly

joined and within the Court’s jurisdiction. 57 Section 25A.004 excludes certain

54
See Exxon Mobil, 545 U.S. at 554.
55
TEX. GOV’T CODE § 25A.004(g), (h).
56
This conclusion is consistent with the analysis of the amount in controversy in district courts,
where the Government Code provides: “If two or more persons originally and properly join in one
suit, the suit for jurisdictional purposes is treated as if one party is suing for the aggregate amount
of all their claims added together, excluding interest and costs.” TEX. GOV’T CODE § 24.009. Dis-
trict courts thus are not required to test the amount-in-controversy minimum on a claim-by-claim
or even a party-by-party basis.
57
Cf. Williams v. Seidenbach, 958 F.3d 341, 345 (5th Cir. 2020); id. at 350–51 (Ho, J., concurring);
id. at 360–61 (Oldham, J., dissenting) (addressing term “action’ as used in federal Rule 41(a)).

18
“claims” from the Court’s jurisdiction and provides for supplemental jurisdiction

over certain “claims.” 58 The statute thus contemplates that the Court may have ju-

risdiction over an action but not every claim asserted in the action, 59 and claims over

which the Court lacks jurisdiction would have to be either dismissed from the action

or severed into a separate action for transfer or remand to another court. 60

B. CTen has the burden of showing that Defendants’ amount-in-controversy
pleadings are fraudulent or that a lesser amount is readily established.

¶ 32 The amount in controversy in an action is “the sum of money or the

value of the thing originally sued for.”61 The parties agree with this but disagree

over whether the rights at issue in this action have a value over $5 million and how

that should be decided. This dispute raises issues of first impression for the proce-

dures governing removal to the Business Court when the parties dispute the amount

in controversy. To decide these issues, the Court looks first to Texas authority and

then takes guidance from federal authority, mindful of any differences in the gov-

erning law. 62 For the reasons below, the Court holds that CTen bears the initial

58
TEX. GOV’T CODE § 25A.004(f), (g)(2)–(5), (h).
59
Id.
60
Id. § 25A.006(b)–(d).
61
Tune v. Tex. Dep't of Pub. Safety, 23 S.W.3d 358, 361 (Tex. 2000) (quoting Gulf, C. & S.F.Ry. Co.
v. Cunnigan, 95 Tex. 439, 441, 67 S.W. 888, 890 (1902)).
62
See, e.g., Diamond Offshore Servs. Ltd. v. Williams, 542 S.W.3d 539, 545 n.10 (Tex. 2018) (Texas
courts look to federal law when interpreting similar authority); Kinney v. Barnes, 443 S.W.3d 87,
92 (Tex. 2014) (“We look to federal cases for guidance, not as binding authority.”); Prairie View
A & M Univ. v. Chatha, 381 S.W.3d 500, 505–09 (Tex. 2012) (Texas courts look to federal law for
guidance when interpreting analogous statutory language but not dissimilar statutory language).

19
burden of proof in challenging Defendants’ allegation that the amount in contro-

versy exceeds $5 million; if CTen meets its burden, the burden shifts to Defendants

to raise a fact issue; if there is a fact issue, Defendants will bear the burden of proof

at trial.

1. Defendants pleaded that the amount in controversy exceeds $5 million;
CTen has not pleaded otherwise.

¶ 33 The first step in analyzing jurisdiction is typically a pleadings burden.

Whether filing in the Business Court or a district court, a plaintiff must plead facts

that affirmatively show the jurisdiction of the court in which the action is brought,

including that the relief sought is within the court’s amount-in-controversy limits, 63

and a party removing an action to this Court must “plead facts to establish . . . the

business court’s authority to hear the action.” 64 Federal courts likewise require

complaints and removal notices to allege facts establishing jurisdiction, including

any minimum amount in controversy. 65

¶ 34 Rule 355 uses the term “plead” with respect to the jurisdictional alle-

gations in a notice of removal. 66 Thus, while the term “pleading” often refers only

63
United Servs. Auto. Ass’n v. Brite, 215 S.W.3d 400, 402 (Tex. 2007); TEX. R. CIV. P. 47(b); TEX.
R. CIV. P. 354(a) (requiring petitions to “plead facts to establish the business court’s authority to
hear the action” and to comply with Part II of the Rules of Civil Procedure, including Rule 47).
64
TEX. R. CIV. P. 355(b)(2)(A).
65
McNutt v. Gen. Motors Acceptance Corp. of Ind., 298 U.S. 178, 182 (1936); 28 U.S.C. § 1446(a).
66
TEX. R. CIV. P. 355(b)(2)(A). Notices of removal are not subject to “due order of pleading” rules.
TEX. GOV’T CODE § 25A.006(i); TEX. R. CIV. P. 355(d).

20
to petitions and answers, the jurisdictional allegations in Defendants’ notice of re-

moval are part of the “pleadings” for these purposes. As the United States Supreme

Court has observed, it would be “anomalous” to treat the jurisdictional allegations

in a complaint differently than from those in a notice of removal. 67

¶ 35 CTen’s petitions, including the second and third amended petitions

filed in this Court, are silent with respect to whether the action meets the Court’s

amount-in-controversy minimum. 68 But Defendants plead in their notice of removal

that the value of the rights at issue exceeds $5 million. Construing the pleadings

liberally in favor of jurisdiction and “look[ing] to the pleader’s intent,” 69 the Court

holds that Defendants have invoked the jurisdiction of this Court, and at a minimum,

the amount-in-controversy allegations do not establish a lack of jurisdiction, such

that Defendants would be entitled to amend. 70 The Texas Supreme Court has stated

67
Dart Cherokee Basin Op. Co., LLC v. Owens, 574 U.S. 81, 88 (2014) (stating, in context of dispute
over jurisdictional amount-in-controversy limit, that it would be “anomalous to treat commencing
plaintiffs and removing defendants differently with regard to the amount in controversy”).
68
The petitions assert only that the relief sought is within the district courts’ jurisdictional limits.
69
Tex. Tech Univ. Sys. v. Martinez, 691 S.W.3d 415, 419 (Tex. 2024); see also Reata Const. Corp. v.
City of Dallas, 197 S.W.3d 371, 377 (Tex. 2006) (citing Tex. Dep’t of Transp. v. Ramirez, 74 S.W.3d
864, 867 (Tex. 2002), for rule that “pleadings should be liberally construed in favor of jurisdic-
tion”).
70
See Dohlen v. City of San Antonio, 643 S.W.3d 387, 397 (Tex. 2022) (“[S]o long as petitioners’
pleading does not affirmatively demonstrate the absence of jurisdiction, they should be given an
opportunity to amend.”); Peek v. Equip. Serv. Co. of San Antonio, 779 S.W.2d 802, 804 (Tex. 1989)
(“The failure of a plaintiff to state a jurisdictional amount in controversy in its petition, without
more, thus will not deprive the trial court of jurisdiction. Even if the jurisdictional amount is never
established by pleading, in fact, a plaintiff may recover if jurisdiction is proved at trial.” (citation
omitted)).

21
that, when an action is brought to protect a right or privilege, “[t]he subjective value

of a privilege, if asserted in good faith, establishes jurisdiction if that value meets

the requisite amount in controversy.” 71 Independent of their other allegations, De-

fendants have pleaded that the value of the rights at issue exceeds $5 million.

¶ 36 With respect to Defendants’ assertion that the rights at issue implicate

the entire value of Summer Moon, the Court views this as unlikely. While the rights

at issue appear to go to the heart of Summer Moon’s business, at least some part of

Summer Moon’s value is likely attributable to assets or goodwill not dependent on

the rights at stake. 72 But unlikely is not impossible, and even if the entire value of

Summer Moon is not at stake here, that does not mean that the value at stake falls

below $5 million. Defendants assert that Summer Moon’s value “far exceeds $5

million,” and CTen admits it has no factual basis for disputing the value of Summer

Moon or the value of the rights at issue—an inquiry CTen says would be complex

and involve expert analysis. 73 CTen relies solely on its contention that Defendants

bear the burden of proof.

71
Tune, 23 S.W.3d at 362.
72
See generally McNutt, 298 U.S. at 181.
73
CTen stated at the oral hearing that it had elected not to investigate the value of Summer Moon,
relying instead on the contention that Defendants bore sole responsibility for proving it up.

22
¶ 37 Additionally, it is evident on the face of the pleadings that this suit puts

more at issue than just rights of control. In its live pleadings, 74 CTen seeks declara-

tions that all Defendants breached their fiduciary duties in a myriad of ways that

could subject Defendants to potential liability, upend past Board actions (including

approval of three new franchise locations), and mandate future Board actions. 75

CTen also seeks to enjoin future actions by the CU Managers, including prohibiting

future franchise agreements without CTen’s prior written approval, and to compel

the Board to take other actions, including the disbursement of unquantified funds.76

The amount in controversy may be impacted by the scope of these rights that CTen

seeks to have determined and enforced in this action, the impact that relief would

74
At oral argument, both parties agreed that the Court should consider CTen’s Second Amended
Petition (its then-live pleading) in deciding this dispute and need not look at a “snapshot” at the
time of removal. After oral argument, CTen filed a Third Amended Petition in which it requested
additional declaratory and injunctive relief related to its removal of Summer Moon’s chief financial
officer during the pendency of this suit.
75
For example, CTen alleges that Defendants breached their fiduciary duties by failing to distribute
unspecified amounts to members as allegedly required by Section 10 of the Company Agreement;
earmarking $200,000 for a reserve fund for indemnification related to this lawsuit; approving the
sale of franchise rights for three new franchise locations in Wake Forest/Raleigh, N.C., Nichols
Hills, Okla., and Edmond, Okla.; authorizing upward salary adjustments and bonuses; failing to
update financial disclosure documents; and failing to hire the entity chosen by CTen to serve as
Summer Moon’s new CFO and approve CTen’s proposed terms for that employment, which include
a salary of up to $240,000 per year for an indefinite number of years.
76
For example, CTen seeks to enjoin approval of “any transaction described by Section 11.7,” in-
cluding entering into franchise agreements or incurring certain expenses, without CTen’s written
consent, and compel the Board to disperse the $200,000 reserve funds and the “mandatory
monthly distributions required by the Company Agreement.”

23
necessarily have on the rights of CU and Summer Moon’s Board, and the duties and

liability exposure CTen seeks to impose on Defendants.

2. A notice of removal need not attach evidence of the amount in controversy.

¶ 38 CTen complains that Defendants did not file any evidence to support

the assertion in their notice of removal that the value of the rights at issue exceeds

$5 million. The Court holds that there is no duty to file jurisdictional evidence with

a notice of removal to this Court.

¶ 39 Although Texas has no precedent on this, the United States Supreme

Court addressed it in Dart Cherokee Basin Operating Co., LLC v. Owens. 77 Resolving

a circuit split on the issue, the Supreme Court held that the notice of removal was

not deficient for failing to include evidence that the amount in controversy exceeded

$5 million, as required under the Class Action Fairness Act. 78 The Court reasoned

that good faith amount-in-controversy allegations in a notice of removal should be

treated like those in a petition: accepted unless and until challenged. 79 It concluded

that “a defendant’s notice of removal need include only a plausible allegation that

the amount in controversy exceeds the jurisdictional threshold,” and the removal

77
574 U.S. 81 (2014).
78
Id. at 89.
79
Id. at 87 (“When a plaintiff invokes federal-court jurisdiction, the plaintiff’s amount-in-contro-
versy allegation is accepted if made in good faith. Similarly, when a defendant seeks federal-court
adjudication, the defendant’s amount-in-controversy allegation should be accepted when not con-
tested by the plaintiff or questioned by the court.” (citations omitted)).

24
statute requires evidence of that amount “only when the plaintiff contests, or the

court questions, the defendant’s allegation.” 80 The Court agrees with and follows

this portion of Owens. 81

3. Texas and federal courts approach challenges to jurisdictional pleadings
differently.

¶ 40 Under both Texas and federal law, when a party pleads in good faith

that the amount in controversy is within the court’s jurisdictional limits, those alle-

gations control unless they are properly challenged. 82 But Texas and federal courts

differ with respect to the burden of proving the amount in controversy when, as here,

a party challenges the amount-in-controversy pleadings.

a. In federal courts, the removing party must prove the amount in contro-
versy by a preponderance of the evidence.

¶ 41 Under federal law, when jurisdictional pleadings are challenged, the

party asserting jurisdiction bears the burden of proving it by a preponderance of the

evidence—regardless of whether that is the plaintiff in a suit initiated in federal

court or the removing party in a suit removed to federal court. 83

80
Id. at 89.
81
Some portions of Owens relate to provisions of the federal removal statute that are not found in
the Texas statute and rule, such that Texas law could differ.
82
St. Paul Mercury Indem. Co. v. Red Cab Co., 303 U.S. 283, 288 (1938); Bland Indep. Sch. Dist. v.
Blue, 34 S.W.3d 547, 554 (Tex. 2000).
83
See Sentry Ins. v. Morgan, 101 F.4th 396, 398 (5th Cir. 2024) (burden on plaintiff filing in federal
court); Guijarro v. Enter. Holdings, Inc., 39 F.4th 309, 314 (5th Cir. 2022) (burden on defendant
removing based on diversity); Hood ex rel. Mississippi v. JP Morgan Chase & Co., 737 F.3d 78, 85
(5th Cir. 2013) (burden on defendant removing under Class Action Fairness Act).

25
¶ 42 Notably, the federal removal statute has a provision specific to amount-

in-controversy allegations that is not enacted in Texas. 84 The federal statute states

that, in diversity actions (where there is an amount-in-controversy minimum), if the

initial complaint specifies the sum demanded in good faith, that amount will be

“deemed to be the amount in controversy,” except that the notice of removal may

assert a different amount in controversy if (a) the plaintiff seeks nonmonetary relief

or (b) state practice either bars demands for a specific sum or permits recovery in

excess of the amount demanded. 85 Federal courts have treated Texas cases as falling

within these exceptions. 86 When a removal notice states the amount in controversy

and a party challenges the stated amount, the court must remand unless it finds that

the amount in controversy is within its jurisdictional limits. 87 In such instances,

“both sides submit proof and the court decides, by a preponderance of the evidence,

whether the amount-in-controversy requirement has been satisfied.” 88

84
Compare 28 U.S.C. § 1446(c)(2), with TEX. GOV’T CODE § 25A.006(d), TEX. R. CIV. P. 355.
85
28 U.S.C. § 1446(c)(2)(A).
86
See, e.g., InVas Med. Devices, LLC v. Zimmer Biomet CMF & Thoracic, LLC, No. 3:21-CV-2947-
G, 2022 WL 4538459, at *7 (N.D. Tex. Sept. 28, 2022) (nonmonetary relief); Medina v. Allstate
Vehicle & Prop. Ins. Co., 458 F. Supp. 3d 591, 596–97 (W.D. Tex. 2020) (“Because plaintiffs in
Texas are not limited to the amount demanded in their complaint, § 1446(c)(2)(A)(ii) permits a re-
moving defendant to assert the amount in controversy in the notice of removal . . . .”).
87
28 U.S.C. § 1446(c)(2)(B).
88
Owens, 574 U.S. at 88; see also, e.g., Durbois v. Deutsche Bank Nat’l Tr. Co., 37 F.4th 1053, 1056
(5th Cir. 2022) (quoting and applying Owens).

26
b. Texas courts apply the summary-judgment burden schemes.

¶ 43 Texas law has a more nuanced approach. Although the removal scheme

for the Business Court is new to Texas law, jurisdictional challenges are not. Parties

in Texas courts can challenge the existence of jurisdictional facts through multiple

different procedural vehicles, including pleas to the jurisdiction and motions for

summary judgment. 89 In turn, the burden for proving disputed jurisdictional facts

depends on which procedural vehicle the party uses to challenge jurisdiction and

how closely the challenged facts intertwine with the merits of the case.

¶ 44 When a party challenges the existence of jurisdictional facts in a plea

to the jurisdiction or a motion for traditional summary judgment, Texas courts fol-

low the framework applicable to traditional summary judgments: the movant bears

the initial burden of putting forth evidence refuting jurisdiction; if the movant does

so, the burden shifts to the nonmovant to put forth evidence that at least raises a fact

issue on jurisdiction. 90 If the evidence creates a fact issue on jurisdiction, the court

89
Bland, 34 S.W.3d at 554 (“The absence of subject-matter jurisdiction may be raised by a plea to
the jurisdiction, as well as by other procedural vehicles, such as a motion for summary judgment.”
(citations omitted)).
90
Tex. Health & Human Servs. Comm’n v. Pope, 674 S.W.3d 273, 281 (Tex. 2023); Mission Consol.
Indep. Sch. Dist. v. Garcia, 372 S.W.3d 629, 635 (Tex. 2012); Tex. Dep’t of Parks & Wildlife v.
Miranda, 133 S.W.3d 217, 221, 227–28 (Tex. 2004); see also TEX. R. CIV. P. 166a(c).

27
cannot grant the plea, and the party asserting jurisdiction must prove it by a prepon-

derance of the evidence at trial. 91

¶ 45 A party can also challenge the existence of jurisdictional facts through

a motion for no-evidence summary judgment. 92 In that instance, the initial burden

of proof is on the nonmovant, though it is a lesser burden: the nonmovant need only

put forward enough evidence to raise a fact issue as to the challenged jurisdictional

facts—i.e., “more than a scintilla.” 93 Here too, if the evidence creates a fact issue

on jurisdiction, the court cannot grant the motion, and the party asserting jurisdic-

tion must prove it by a preponderance of the evidence at trial. 94 Unlike pleas to the

jurisdiction and motions for traditional summary judgment, the rules permit a no-

evidence summary judgment motion only “[a]fter adequate time for discovery.” 95

The Texas Supreme Court relied on both protections—the lighter initial burden and

the opportunity for discovery—in holding that no-evidence motions can be used to

attack jurisdictional facts. 96

91
Miranda, 133 S.W.3d at 228; see also, e.g., Ellis Cnty. State Bank v. Keever, 888 S.W.2d 790, 792
(Tex. 1994) (preponderance-of-the-evidence standard); Gray v. Gray, 354 S.W.2d 948, 949 (Tex.
App.—Houston 1962, writ dism’d) (observing that plaintiff in divorce proceeding had to prove that
she and defendant were actually married at trial, by a preponderance of the evidence, to establish
court’s jurisdiction).
92
Town of Shady Shores v. Swanson, 590 S.W.3d 544, 550 (Tex. 2019).
93
Id. at 552.
94
Id. at 551–52; TEX. R. CIV. P. 166a(i).
95
Swanson, 590 S.W.3d at 552 (quoting TEX. R. CIV. P. 166a(i)).
96
Id. at 551–52.

28
c. In Texas, amount-in-controversy pleadings control unless they are
fraudulent or a different amount is readily established.

¶ 46 Another layer of complexity is added when the disputed jurisdictional

fact is the amount in controversy. Because it is often closely intertwined with the

merits of the case, Texas courts have often distinguished amount-in-controversy

challenges from other jurisdictional challenges. 97 Over the last 140 years, the Texas

Supreme Court has repeatedly held that, when a party challenges whether a suit is

within the court’s amount-in-controversy limits, the pleadings control unless the

challenger shows that:

(a) the pleadings are fraudulent, alleging a false amount as a “sham” to
wrongfully obtain jurisdiction; 98 or

97
In Bland, for example, the Texas Supreme Court explained that requiring a plaintiff to prove his
damages in response to a plea to the jurisdiction would improperly require him to “try his entire
case” at that early stage of development. 34 S.W.3d at 554.
98
Miranda, 133 S.W.3d at 223 (“[W]hen the defendant contends that the amount in controversy
falls below the trial court’s jurisdictional limit, the trial court should limit its inquiry to the plead-
ings. In that situation, we concluded, ‘the plaintiff’s pleadings are determinative unless the
defendant specifically alleges that the amount was pleaded merely as a sham for the purpose of
wrongfully obtaining jurisdiction.’” (citations omitted, quoting Bland, 34 S.W.3d at 554)); Cont’l
Coffee Prods. Co. v. Cazarez, 937 S.W.2d 444, 448–49 (Tex. 1996) (upholding jurisdiction where
original petition alleged damages below $100,000, even though plaintiff later amended to seek
$250,000, because neither petition itself nor defendant’s evidence proved that original amount
pleaded was fraudulent when made); Hoffman v. Cleburne Bldg. & Loan Ass’n, 85 Tex. 409, 410–
11, 22 S.W. 154, 155 (1893) (stating, in the context of amount-in-controversy challenge, “[t]he
jurisdiction of the court cannot be defeated when the case stated in the petition is within its juris-
diction, unless it is made to appear that the allegations upon which the jurisdiction depends were
fraudulently inserted in the petition for the purpose of conferring the jurisdiction. Such fraud exists
when the jurisdictional averments are not only untrue, but are made by the pleader for the purpose
of deceiving, and without being believed to be true”); Tidball v. Eichoff, 66 Tex. 58, 60, 17 S.W.
263, 263 (1886) (holding that amount in controversy pleaded controls, even if plaintiff may have
been mistaken about amount, absent evidence of fraudulent intent); Dwyer v. Bassett & Bassett, 63
Tex. 274, 276 (1885) (“If it was thought that the averments of the petition by which the amount in

29
(b) the amount in controversy is “readily establish[ed]” as outside the
Court’s jurisdiction. 99

¶ 47 Thus, when a jurisdictional challenge is based on the amount in contro-

versy, it “must ordinarily be decided solely on the pleadings.” 100 “The subjective

value of a privilege, if asserted in good faith, establishes jurisdiction if that value

meets the requisite amount in controversy,” 101 and the court generally will not look

behind such pleadings absent evidence that the amount pleaded is fraudulent. 102

controversy was made to exceed in value $500 were made fraudulently, and only for the purpose of
giving to the court jurisdiction of the case, then it was necessary that this should not only have been
pleaded, but an issue thereon should have been tried under proper instructions.”); Ross v. McGuffin,
2 Willson 403, 404, 1884 WL 8426, at *1 (Tex. Ct. App. 1884) (upholding denial of plea to the
jurisdiction when “the amount claimed in plaintiff's petition is the amount in controversy, and is
within the jurisdiction of the court, and there is no evidence of a fraudulent or improper attempt to
give jurisdiction, apparent upon the face of the petition, or shown by the record”).
99
Bland, 34 S.W.3d at 554 (“[W]hen a defendant asserts that the amount in controversy is below
the court’s jurisdictional limit, the plaintiff's pleadings are determinative unless the defendant spe-
cifically alleges that the amount was pleaded merely as a sham for the purpose of wrongfully
obtaining jurisdiction, or the defendant can readily establish that the amount in controversy is in-
sufficient, as for example when the issue in dispute is a license or right rather than damages.” (citing
Tune v. Tex. Dep’t of Public Safety, 23 S.W.3d 358, 362 (Tex. 2000), in which Texas Supreme Court
held that appeal from denial of concealed-handgun license satisfied $100 amount-in-controversy
requirement even though claimant had paid only $70 for two-year handgun license, because $140
fee charged for four-year license established that minimum value of license was more than $100));
see also Tex. Dep’t of Public Safety v. Barlow, 48 S.W.3d 174, 176 (Tex. 2001) (rejecting objection
to failure to pleaded or prove amount in controversy in appeal from suspension of driver’s license
because statutory fees for license established that $100 minimum was met).
100
Bland, 34 S.W. 3d at 555; see also Cazarez, 937 S.W.2d at 449 (“Jurisdiction is based on the
allegations in the petition about the amount in controversy.”). This is true even if the damages
sought later increase beyond the jurisdictional limit due to the passage of time or the amount ulti-
mately recovered in the judgment falls outside the jurisdictional limit. Cazarez, 937 S.W.2d at 449.
101
Tune, 23 S.W.3d at 362.
102
See fn. 98, supra. Texas courts have applied the same standard to disputes over the amount in
controversy raised in pleas in the abatement. E.g., Tex. Land & Irrigation Co. v. Sanders, 101 Tex.
616, 617, 111 S.W. 648, 648 (1908) (plaintiff alleged value disputed portion of rice crop was $960,
just below court’s $1,000 maximum, but defendants proved actual value was over $1,000).

30
4. CTen bears the initial burden on its motion, and Defendants’ pleadings
control unless fraudulent or a different amount is readily established.

¶ 48 The Court follows the Texas approach discussed above and adopts the

following procedures for amount-in-controversy disputes in this Court:

¶ 49 First, when the plaintiff’s petition alleges the amount in controversy,

that pleading controls unless (a) a party presents evidence that the amount pleaded

is falsely asserted to wrongly obtain or avoid jurisdiction, or (b) a different amount

in controversy is readily established, such as by statutorily set fees. 103

¶ 50 Second, when the plaintiff’s pleadings are silent as to whether the

amount in controversy falls within this Court’s jurisdiction, but a removing party’s

notice of removal properly pleads that the amount is within the Court’s jurisdiction,

those pleadings will be given the same deference in the remand analysis: they will

control absent the circumstances described in (a) or (b) above.

¶ 51 Third, in either case, if a party presents evidence demonstrating that

the amount in controversy is outside the Court’s jurisdiction, the Court will remand

the case unless another party presents controverting evidence that, at a minimum,

raises a fact issue. 104 And if there is a fact issue, the party asserting jurisdiction will

bear the burden of proof on the issue at trial. 105

103
Cf. Bland, 34 S.W.3d at 554; see also Miranda, 133 S.W.3d at 224.
104
Cf. Pope, 674 S.W.3d at 281; Miranda, 133 S.W.3d at 227–28; TEX. R. CIV. P. 166a(c).
105
Cf. Miranda, 133 S.W.3d at 227–28.

31
¶ 52 Applying the Texas approach rather than the federal approach means

that amount-in-controversy pleadings will be treated the same in this Court regard-

less of whether they are made by a plaintiff or defendant, and parties challenging

such pleadings bear the same burden regardless of whether the challenge is brought

in a plea to the jurisdiction, motion for traditional summary judgment, or motion to

remand. 106 In each case, the movant bears the burden on a motion filed before trial,

while the burden of proof at trial—if jurisdiction is in question at the time of trial—

remains on the party asserting jurisdiction. And in each case, amount-in-controversy

pleadings control absent specific circumstances.

¶ 53 Adopting the federal approach here would mean that parties alleging

jurisdiction in this Court would face different burdens depending on whether the

allegations were made in a petition or a notice of removal. Moreover, while the fed-

eral approach has appeal, it is not entirely consistent with the reasoning and policy

considerations adopted by the Texas Supreme Court in the cases discussed above.

Federal courts require parties facing a jurisdictional challenge at the outset of the

case to meet the same evidentiary burden (preponderance of the evidence) they

would have to satisfy at trial, but the Texas Supreme Court has repeatedly held that

a party should not have to marshal its evidence or prove its claims to survive early

106
While this differs from motions for no-evidence summary judgment, those motions are distin-
guishable in that they apply a lower initial burden of proof and cannot be brought until after an
adequate time for discovery has passed. See TEX. R. CIV. P. 166a(i)); Swanson, 590 S.W.3d at 552.

32
jurisdictional challenges. 107 That policy applies equally here, where an alternative

approach would often require a defendant or third party to prove up the plaintiff’s

potential damages—evidence of which is likely to be in the plaintiff’s hands at a pre-

discovery stage of trial—even when the plaintiff has never affirmatively pleaded

that damages are outside the Court’s jurisdictional limits. 108

¶ 54 Under these holdings, CTen bears the burden of presenting evidence

that Defendants’ amount-in-controversy pleadings are fraudulent (i.e., falsely assert

that the value of the rights at issue exceed $5 million to wrongly obtain jurisdiction)

or that the amount in controversy is readily established as $5 million or less. 109 CTen

was not aware of this burden when it moved for remand, and the Court previously

told the parties that they would be afforded an opportunity to conduct discovery in

107
See, e.g., Alamo Heights Indep. Sch. Dist. v. Clark, 544 S.W.3d 755, 805 (Tex. 2018) (“The plain-
tiff is not required to marshal all her evidence and conclusively prove her claim to satisfy this
jurisdictional hurdle.”); Mission Consol., 372 S.W.3d at 637 (noting that plaintiff was not required
to “marshal evidence and prove her claim” to show jurisdiction before trial and would “only be
required to submit evidence if the defendant presents evidence negating” key jurisdictional facts);
Bland, 34 S.W.3d at 554 (“A plea to the jurisdiction . . . should be decided without delving into the
merits of the case. The purpose of a dilatory plea is not to force the plaintiffs to preview their case
on the merits but to establish a reason why the merits of the plaintiffs’ claims should never be
reached.”); see also Swanson, 590 S.W.3d at 551–52 (holding that allowing jurisdictional chal-
lenges in motions for no-evidence summary judgment would not improperly require parties to
marshal their evidence because of lower burden of proof).
108
Notably, while a party may specially except to request that a plaintiff amend its pleadings to
assert the maximum amount of damages sought, the Court is aware of no similar mechanism for
requiring a plaintiff to place a maximum value on the nonmonetary relief sought. See TEX. R. CIV.
P. 47(c). Additionally, the damage ranges that must be specified under Rule 47—$250,000 or less,
between $250,000 and $1 million, or over $1 million—will not resolve disputes of whether the
amount in controversy exceeds $5 or $10 million, as required under Section 25A.004(b) and (d).
109
Because CTen bears the initial evidentiary burden, the Court does not reach the evidence filed
by Defendants in response to CTen’s motion to remand or CTen’s objections to that evidence.

33
the event that jurisdiction could not be decided as a matter of law. Therefore, the

Court GRANTS CTen’s request to supplement the record and CARRIES its request

for remand. Both parties are afforded 45 days (through Monday, February 17, 2025)

to conduct any discovery on the value of the subject matter of this case. CTen must

file any supplemental briefing and evidence in support of its motion to remand by

Monday, February 24, 2025. Defendants must file any responsive briefing and con-

troverting evidence by Monday, March 3, 2025. Absent remand by agreement, 110 an

evidentiary hearing will be held on Friday, March 7, 2025 at 10 a.m.

Choice-of-Venue Analysis

¶ 55 In its motion, CTen also argued that the Court should remand because

“[t]he Company Agreement provides for exclusive jurisdiction in the Travis County

District Courts.” CTen did not provide the language of the venue clause or attach

the Company Agreement. In response, Defendants asserted that they are not signa-

tories to the Company Agreement and argued (among other things) that CTen had

failed to meet its burden of proving that the venue clause applies to this action or

that they are bound by it. Defendants asserted that the reason CTen did not quote or

attach the contract is because it would have revealed that the venue clause applies

110
The parties previously came close to negotiating an agreed remand, and the Court recognizes that
this opinion might assist the parties in narrowing or resolving the impediments to agreement.

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only to suits among members, which this is not. CTen did not reply, electing to stand

on its motion to remand.

¶ 56 The Company Agreement was not in evidence before or at the hearing

on the motion to remand, but it has come before the Court since then in connection

with CTen’s TRO application. It confirms that Defendants are not signatories and

that the venue clause applies to “actions among the members” of Summer Moon,

which Defendants undisputedly are not. 111

¶ 57 Without deciding whether the venue clause otherwise would support

remand, the Court holds that CTen has not shown that this action falls within the

scope of the clause or that Defendants, as non-signatories, are bound by it. At the

hearing on the motion to remand, CTen suggested for the first time that the venue

clause applies because Defendants acted as agents of CU, a member of Summer

Moon. But CTen offered no evidence or explanation for that theory. “Texas courts

do not presume that an agency relationship exists.” 112 Instead, the burden of proving

111
Specifically, the venue clause states: “Each member submits and consents to the exclusive juris-
diction of the district courts of Travis County, Texas and the United States District Court for the
Western District of Texas (Austin Division) and acknowledges and agrees that such courts shall
constitute the exclusive and proper venues and convenient forums for the resolution of any actions
among the members and the company with respect to the subject matter hereof.” (emphases added,
all-caps omitted). The Company Agreement defines “members” as the current and future holders
Summer Moon’s Class A, Class B, or Class C Common Units.
Cmty. Health Sys. Prof'l Servs. Corp. v. Hansen, 525 S.W.3d 671, 697 (Tex. 2017) (citing IRA
112

Res., Inc. v. Griego, 221 S.W.3d 592, 597 (Tex. 2007) (per curiam)).

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agency rests on the party asserting an agency relationship. 113 Because CTen has not

provided any support for its agency theory, the Court cannot rely on it as a basis for

remand. The Court DENIES the request to remand this action based on the venue

clause in the Company Agreement.

Motion for Attorney’s Fees

¶ 58 CTen seeks to recover the attorney’s fees it incurred in seeking remand

of this action, relying on Section 10.001 of the Civil Practice & Remedies Code. 114

The Court DENIES this discretionary request. 115 While Defendants did not prevail

on their argument that there is no amount-in-controversy minimum for Subsection

(e) actions, that argument not without any basis in law, 116 and CTen presented no

evidence that Defendants asserted that argument for the purpose of causing delay or

driving up costs rather than for the permissible purpose of having their case heard in

113
Id.; Exxon Mobil Corp. v. Rincones, 520 S.W.3d 572, 589 (Tex. 2017) (“Agency is not presumed;
a party alleging the existence of an agency relationship bears the burden of proving it.”).
114
See TEX. CIV. PRAC. & REM. CODE § 10.001. Section 10.001 applies to notices of removal filed in
this Court. TEX. GOV’T CODE § 25A.006(h).
115
TEX. CIV. PRAC. & REM. CODE § 10.004(a) (providing that a court “may impose” sanctions).
116
See James Constr. Grp., LLC v. Westlake Chem. Corp., 650 S.W.3d 392, 418 (Tex. 2022) (de-
scribing an argument as “erroneous, but by no accounts frivolous”); Brewer v. Lennox Hearth
Prods., LLC, 601 S.W.3d 704, 730 (Tex. 2020) (“Making groundless arguments in bad faith or for
an improper purpose might warrant sanctions, but arguments that are merely ‘unpersuasive’ do
not.”); Pressley v. Casar, 567 S.W.3d 327, 334 (Tex. 2019) (per curiam) (holding that party “may
be wrong, but her argument . . . is not frivolous” under Chapter 10); see also McCoy v. Court of
Appeals, 486 U.S. 429, 436 (1988) (describing frivolous arguments as those “that cannot conceiv-
ably persuade the court” (quoting United States v. Edwards, 777 F.2d 364, 365 (7th Cir. 1985))).

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this Court. 117 With respect to the pending dispute over the value of the rights at issue

in this action, this ruling is without prejudice to motions by either party seeking to

recover attorney’s fees incurred after the date of this order.

SIGNED ON: January 3, 2025.

Hon. Melissa Andrews
Judge of the Texas Business Court,
Third Division

Courts generally presume that filings are in made in good faith, and the party seeking sanctions
117

bears the burden of overcoming this presumption. Low v. Henry, 221 S.W.3d 609, 614 (Tex. 2007).

37