Jurisdictional Breakthrough: Texas Business Court Upholds Aggregation of Claims in Construction Disputes
San Antonio attorney Justin Rorick wrote an article for the March edition of Construction News magazine. In this article, Justin covers a significant jurisdictional win in the Texas Business Court, where the court upheld the aggregation of related claims in a complex construction dispute. In Cadence McShane Construction Company, LLC v. Ryan BB-Blockhouse Creek, LLC, the court confirmed that claims arising from a single project and interconnected contracts can be combined to meet the jurisdictional threshold, strengthening the Business Court’s role in resolving multi-party construction litigation efficiently.
In a significant victory for contractors navigating complex multi-party disputes, the Texas Business Court recently affirmed its jurisdiction over third-party claims in a high-stakes construction litigation. The ruling in Cadence McShane Construction Company, LLC v. Ryan BB-Blockhouse Creek, LLC, No. 25-BC03B-0002, marks an important development in the application of jurisdictional thresholds under the newly established Business Court system. This decision not only reinforces the court’s role in handling intricate commercial matters but also provides a roadmap for general contractors to efficiently consolidate related claims. As counsel for the prevailing party, Cadence McShane Construction Company LLC (CMC), we delve into the case’s background, key legal battles, the court’s reasoning, and the broader implications for the construction industry and complex commercial litigation in Texas.
Case Background: A Multifaceted Construction Dispute
The litigation stems from the development of a 347-unit apartment complex in Leander, Texas, known as the Blockhouse Creek project. CMC, serving as the general contractor, entered into a Prime Contract with the property owner, Ryan BB-Blockhouse Creek, LLC (Ryan). The project involved a network of subcontracts with 18 specialized subcontractors, each governed by a uniform subcontract agreement that incorporated the terms of the Prime Contract.
Tensions escalated in February 2025 when CMC filed suit against Ryan, alleging wrongful termination and non-payment for work performed. Ryan countered with claims of project mismanagement and construction defects, including improper installation of roofs, window systems, stucco, and balconies. These allegations implicated not only CMC but also its subcontractors. In response, CMC brought third-party claims against the 18 subcontractors, seeking indemnification and contribution based on the interconnected contracts.
The case was filed directly in the Third Division of the Texas Business Court, which has specialized jurisdiction over business-related disputes. However, Ryan challenged this venue through a plea to the jurisdiction, arguing that the third-party claims did not independently meet the Business Court’s jurisdictional requirements and could not be aggregated to satisfy the amount in controversy threshold under Texas Government Code Section 25A.004(d)(1).
Key Legal Issues: Interpreting “Qualified Transactions” and Aggregation of Claims
At the heart of the dispute was the interpretation of Texas Government Code § 25A.004, which outlines the Business Court’s supplemental jurisdiction. Specifically, subsection (d)(1) grants jurisdiction over claims arising out of a “qualified transaction” if the amount in controversy exceeds $10 million. Section 25A was recently amended to lower the amount in controversy to $5 million in cases filed after September 1, 2025 (excluding interest, exemplary damages, penalties, and attorneys’ fees).
Ryan vigorously argued that each third-party claim against the subcontractors was separate and distinct, lacking a unified “qualified transaction,” because Ryan terminated CMC and assumed the subcontracts. They argued that aggregation was impermissible because the claims did not constitute a single, cohesive dispute. CMC, on the other hand, asserted that all claims (original, counter, and third-party) arose from “one construction project carried out through a network of related contracts.” This interconnectedness, CMC argued, qualified the entire litigation as a series of related transactions under the statute.
The timing of the case added another layer of complexity. The Texas Legislature’s House Bill 40 (HB40), effective September 1, 2025 (the same piece of legislation which amended the qualified transaction threshold from $10 million to $5 million), amended Section 25A.004 to explicitly define a “qualified transaction” as including a “series of related transactions.” Additionally, new subsection (i) clarified that the amount in controversy for jurisdictional purposes is “the total amount of all joined parties’ claims.” These amendments bolstered CMC’s position, emphasizing the Legislature’s intent to allow aggregation in multifaceted disputes.
The Court’s Ruling: A Win for Consolidated Jurisdiction
In a decisive order, the Business Court denied Ryan’s plea to the jurisdiction, upholding its authority over the third-party claims. The court adopted CMC’s framing, concluding that the claims collectively arose from a qualified transaction involving a single construction project and its web of related contracts. As such, it was unnecessary to evaluate each third-party claim’s amount in controversy individually, as the aggregate value of the joined claims satisfied the threshold.
The ruling highlighted the practical realities of construction litigation, where defects and delays often involve multiple parties under interdependent agreements. By rejecting Ryan’s narrow interpretation, the court prevented the fragmentation of disputes, which could otherwise force parallel proceedings in different venues, which would be inefficient and costly for all involved and fly in the face of the intention behind the creation of the business courts, which is to attract companies to Texas by providing efficiency and predictability in complex commercial litigation disputes.
Notably, the decision referenced the recent HB40 amendments, interpreting them as confirmatory of the aggregation approach. This alignment with legislative updates underscores the Business Court’s role as a forward-looking forum for resolving complex business matters.
Implications for Contractors and the Texas Business Court
This jurisdictional victory has far-reaching implications for the construction sector in Texas. First and foremost, it empowers contractors like CMC to bring comprehensive actions in the Business Court, even when individual claims fall below monetary thresholds. By allowing aggregation, the ruling facilitates the resolution of disputes arising from large-scale projects in a single, specialized venue with judges experienced in commercial law.
For property owners and developers, the decision signals potential challenges in contesting jurisdiction, particularly in projects with layered subcontracting. It may encourage more strategic forum selection, with parties opting for the Business Court’s expertise over traditional district courts.
Broader still, this case exemplifies the evolving landscape of Texas’ judicial system. Established to handle high-value business disputes, the Business Court is proving itself in complex construction matters, which often involve intricate contractual networks and significant economic stakes. As more cases test its boundaries, we anticipate a uniform approach emerging favoring predictability, efficiency, and aggregation.
Contractors should take note: When drafting agreements, emphasize the interrelated nature of project contracts to strengthen jurisdictional arguments and perhaps incorporate consent to the Business Court’s jurisdiction. Additionally, staying abreast of legislative tweaks, such as those in HB40, is crucial for leveraging the Business Court’s advantages before a dispute even arises.
In conclusion, this decision is a testament to the efficacy of Texas’ Business Court in promoting efficient and predictable justice. For CMC, it paves the way for a merit-based resolution of the underlying claims. As the construction industry continues to grapple with rising complexities, from supply chain disruptions to defect litigation, this ruling offers a playbook for asserting jurisdiction in multi-party battles.
As a special thank you, trial counsel Stephanie O’Rourke and Tracy Glenn were pivotal in securing this landmark victory. Their expertise in navigating the intricacies of construction litigation and the Texas Business Court system exemplifies the highest standards of legal excellence.
About the Author
Justin Rorick is a results-driven litigator in the San Antonio office of Cokinos | Young, focusing on high-stakes commercial and construction disputes across Texas. Drawing on experience in government, private, and nonprofit roles, he brings a strategic approach to complex litigation. Justin can be reached at 210-293-8708 or jrorick@cokinoslaw.com.
About Cokinos | Young
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