Judge Melissa Andrews
The Business Court has held that Plaintiffs’ notice of removal was timely, rejecting Defendant’s argument that the notice was untimely because a previous pre-suit demand letter put Plaintiff’s on notice that if Defendant actually filed those claims, it would push the case above the $5 million threshold.
The Bakery LLC and Ken Media LLC v. Naterra International, Inc. (2026 Tex. Bus. 64; September 15, 2026) arose from a suit on a sworn account. Plaintiffs asserted that Defendant owed more than $1.3 million for services provided. Defendant subsequently filed counterclaims alleging more than $60 million in damages. Plaintiffs responded by removing the case to the Business Court, arguing that the action arose out of a qualified transaction with a total amount in controversy exceeding $5 million. Defendants moved to remand on the basis that the removal was untimely.
In an opinion by Judge Andrews, the court denied the motion. A party seeking to remove a case to the Business Court must file its notice of removal within 30 days after the later of (1) the date of service or (2) “discovered, or reasonably should have discovered, facts establishing the business court’s jurisdiction over the action.” § 25A.006(f)(1)(A)-(B), Gov. Code. Plaintiffs argued that their notice was timely under the second of the alternatives on the basis that Defendant’s counterclaims pushed the amount in controversy over the threshold. Defendant countered that removal was untimely “because, in response to a pre-suit demand letter, Defendant threatened to file its counterclaims and asserted the value of those counterclaims to be over $60 million.” Consequently, it contended, Plaintiffs knew or should have know the amount in controversy at that time.
The court rejected Defendant’s argument. As Judge Andrews wrote, “[t]here is no basis in the record on which the Court could conclude that it had jurisdiction over this action before Defendant filed its counterclaims, much less that Plaintiffs knew or should have known of facts establishing such jurisdiction.” Alleged pre-suit demand letters lie outside the court’s jurisdiction, which extends only to all joined parties’ claims, the collective amount of which determines the amount in controversy. “Counterclaims that have not been pleaded generally are not ‘claims in the suit’ nor part of what has been ‘joined’ in the action,” Judge Andrews wrote, “even if they might be brought in the future and even if a party has threatened to bring them.”
Here the amount in controversy, prior to Defendant’s counterclaims, was what Plaintiffs said it was in their pleading. Counterclaims can put the amount in controversy over the threshold, but they have to be filed. And as the court observed, “a defendant who threatened counterclaims before suit could merely wait more than 30 days after the plaintiff’s petition to file their counterclaims and thus deprive all other parties of any timely opportunity to remove.” The court denied the motion.
