In Clean-Co Systems, Inc. v. Enterprise Products Operating, LLC, Judge Grant Dorfman addressed whether parties’ historical transactions under a master service agreement (MSA), when aggregated, are “a series of related transactions” sufficient to bring a dispute over a single purchase order within the definition of a “qualified transaction.” Because the historical transactions were unrelated to the purchase order that gave rise to the claims at issue, the court’s answer was no. The court’s ruling may provide guidance for businesses in drafting MSAs and considering whether certain disputes fit within the limited jurisdiction of the Texas Business Court.

Background: The Dispute Involved a Single Invoice in a Business Relationship Governed by a MSA

Clean-Co Systems, Inc., an industrial cleaning company, performed chemical cleaning services for the defendant. The work was governed by a time-and-materials purchase order with an original value of approximately $154,360, later growing to roughly $688,000 due to scope changes. The purchase order was issued under a 2003 MSA between Clean-Co and a related entity of the defendant.A payment dispute arose, and Clean-Co filed suit in district court. The pipeline company removed the case to the Texas Business Court, asserting the Court had jurisdiction under the “qualified transaction” provision of the Texas Government Code because the MSA as a whole involved more than $5 million in consideration.

Does a Single Invoice Under a Purchase Order in a Series of Historical Transactions Governed by a MSA Constitute a “Qualified Transaction”?

To invoke the Texas Business Court’s qualified transaction jurisdiction, the matter must involve a transaction — or “series of related transactions” — under which a party pays or receives, or is obligated to pay or is entitled to pay or receive, consideration of at least $5 million.

Although the dispute at issue involved approximately $688,000, the defendant argued that the purchase order was part of a “series of related transactions” under the MSA, through which it claimed to have paid Clean-Co over $7.8 million since 2003. The pipeline company also filed a counterclaim seeking approximately $8 million for alleged damages caused by Clean-Co’s work, contending this satisfied the amount-in-controversy requirement. Clean-Co countered that the dispute involved a single unpaid invoice far below the jurisdictional threshold. It contended the historical invoices, which spanned more than two decades and involved different scopes of work and various facilities, were not “related” to the current dispute.

The Court’s Analysis: ‘Related’ Has Limits

The Texas Business Court first addressed whether the MSA itself could establish jurisdiction. It found that the MSA was merely “an umbrella agreement governing general legal rights and obligations of the parties if they do business together in the future.” At the time of execution, neither party paid nor was obligated to pay any consideration. The court ruled that the MSA alone thus could not constitute a qualified transaction.

Although the defendant alleged that it actually paid approximately $7.8 million to Clean-Co under the MSA, the court found the historical purchase orders were not sufficiently “related” to the current dispute. The transactions spanned more than 20 years, involved differing scopes of work, and were performed at diverse facilities — potentially by different affiliated entities. Critically, none of those historical transactions were in controversy: the pipeline company did not claim Clean-Co performed them deficiently, and Clean-Co did not seek recovery under them.

The court emphasized that while the term “related” is broad, it is not unlimited. The transactions were merely “historical background: evidence of a long-standing business relationship between the parties, but nothing more than that with respect to the subject matter of this suit.” The court granted Clean-Co’s motion to remand, holding that it lacked jurisdiction because the MSA and the invoice at issue, taken together, did not constitute “a transaction, or series of related transactions” exceeding $5 million in consideration.

Key Takeaways for Businesses

Texas businesses may wish to consider the following based on the court’s ruling in Clean-Co.

1. Master Service Agreements Alone Don’t Establish Jurisdiction. An umbrella agreement that does not include any immediate payment obligations may be insufficient to serve as the jurisdictional anchor for a qualified transaction.
2. Courts May Consider Whether Historical Transactions Are Truly “Related.” Aggregating all invoices under a long-term MSA to meet the $5 million threshold may not meet the Texas Business Court’s jurisdictional requirement. The transactions must bear a substantive connection to the claims actually in dispute.
3. Timing of Consideration Is Critical. The aggregate value of consideration may be determined at the time of contracting, not through retroactive accumulation.