In DrinkPAK, LLC v. PR III/Crow Building C, LP, the Texas Business Court addressed a critical procedural question: When must a party file a removal notice to transfer a case to the Texas Business Court? The ruling may provide guidance for litigants navigating the Texas Business Court’s jurisdictional requirements. The opinion also confirms that courts may take a practical, holistic approach when determining when parties knew or reasonably should have known that Texas Business Court jurisdiction existed.
Background
DrinkPAK, a canned-beverage manufacturer, entered into a multi-million-dollar lease agreement with PR III/Crow Building C, LP to build out a beverage manufacturing facility in the Dallas–Fort Worth area. Trammell Crow Company, LLC served as PR III’s broker. After alleged foundation failures at the facility, DrinkPAK sued both defendants in Denton County District Court, asserting fraud, negligence, and breach of implied warranty claims.
After an initial removal to federal court by PR III on diversity grounds, the parties filed a joint stipulation, and the federal court remanded the case back to Denton County in January 2026. Defendants then filed their answer and counterclaim on March 3, 2026, and their notice of removal to the Texas Business Court on March 10, 2026.
The Legal Issue: Timeliness of Removal
Under Texas Government Code Section 25A.006(f), a contested removal to the Texas Business Court must be filed within 30 days of the later of: (1) the date the removing party was served with process, or (2) the date the removing party discovered, or reasonably should have discovered, facts establishing the Texas Business Court’s jurisdiction.
The defendants argued that DrinkPAK’s original petition, which sought damages “over $1 million,” consistent with Texas Rule of Civil Procedure 47, did not objectively establish the $5 million amount-in-controversy threshold required for Texas Business Court jurisdiction. They contended the 30-day clock did not start until PR III filed its counterclaim in March 2026, which quantified the damages.
The Court’s Ruling
The Texas Business Court rejected the defendants’ arguments on multiple grounds. The court emphasized that the jurisdictional inquiry is not limited to the plaintiff’s Rule 47 damages allegation. Instead, courts may evaluate the petition as a whole, the nature of the claims, the underlying transaction, and other evidence bearing on the amount in controversy to determine when a party discovered or reasonably should have discovered facts establishing Texas Business Court jurisdiction.
The Lease and Pre-Suit Communications Established Jurisdictional Facts
The court found that the lease itself, a contract worth over $100 million over its 12-year term, put the defendants on notice that any litigation would implicate an amount well exceeding $5 million. The court specifically identified TCC’s service date of Dec. 15, 2025, as the latest date by which both defendants are deemed to have discovered the jurisdictional facts, making the March 10, 2026, removal notice untimely by nearly two months. As sophisticated commercial parties, the court noted that the defendants knew or reasonably should have known from the lease terms and surrounding circumstances that the dispute implicated amounts well above the Texas Business Court’s jurisdictional threshold.
Pre-Suit Correspondence Established Knowledge
Prior to litigation, the parties exchanged demand letters seeking damages in the tens of millions of dollars. DrinkPAK’s March 2024 demand sought over $145 million, while the defendants responded seeking “millions of dollars” in unpaid lease amounts. By March 2025, the defendants had provided DrinkPAK with an accounting claiming $50,524,831 in damages — nearly 10 times the Texas Business Court’s $5 million jurisdictional threshold.
Counterclaims Do Not Reset the Clock
The court firmly rejected the notion that filing a counterclaim creates a new “action” that restarts the removal deadline. An “action” encompasses the entire lawsuit, including all claims and counterclaims. Allowing defendants to file counterclaims to reset procedural deadlines may create opportunities for forum shopping and litigation gamesmanship. The court’s opinion reflects its broader concern with preventing strategic delay and procedural manipulation of removal deadlines.
Rule 408 Does Not Bar Jurisdictional Consideration
The defendants argued that pre-suit demand letters were inadmissible under Texas Rule of Evidence 408, which limits the use of settlement communications. The court disagreed, holding that the letters were not offered to prove liability or the amount of damages, but instead to show when the defendants knew or reasonably should have known facts establishing Texas Business Court jurisdiction.
Practical Takeaways for Texas Businesses
This opinion offers several lessons that parties involved in commercial litigation may wish to consider:
1. Act Quickly After Service. Once served in a case that may qualify for Texas Business Court jurisdiction, parties must evaluate removal within the 30-day window.
2. Look Beyond Pleading Language. A generic Rule 47 damages allegation may not insulate a party from the removal clock. Courts may examine the underlying transaction, contract terms, and pre-suit communications to determine when jurisdictional facts were reasonably discoverable.
3. Pre-Litigation Correspondence Matters. Demand letters and other pre-suit communications can establish a party’s knowledge of the potential scope of a dispute. Businesses should consider that such correspondence may later be used to assess jurisdictional awareness.4. Counterclaims Are Not a Reset Button. Parties may not be able to delay removal by waiting to file counterclaims. The removal deadline runs from service or discovery of jurisdictional facts — not from subsequent filings in the case.