The Business Court has ruled that it has jurisdiction over a breach of contract action involving a frac sand company’s alleged failure to pay royalties to a sales representative for the company.
Angela Yaun v. Battle & Sands Energy Corp., et al. (2026 Tex. Bus. 9; March 3, 2026) arose from a contract dispute between a frac sand sales and distribution company and a sales representative over royalties on sales of frac sand from a quarry in Beeville. Plaintiff asserted breach of contract, equitable estoppel, quasi-estoppel, fraud, and statutory relief under the Texas Sales Representative Act, alleging breach of contract, equitable estoppel, quasi-estoppel, fraud, and statutory relief under the Texas Sales Representative Act. Defendants removed the action to the Business Court. Plaintiff moved to remand on the basis that the dispute does not involve a qualified transaction and that the amount in controversy does not meet the jurisdictional threshold.
In an opinion by Judge Dorfman, the court denied the motion to remove. The contract at issue, a royalty agreement that Plaintiff alleged was made verbally and confirmed in writing by Defendants, met the definition of a qualified transaction, as long as Plaintiff was entitled to receive consideration that meets the $5 million threshold. Plaintiff argued that since the case was filed a week before SB 40 took effect, that threshold should be $10 million. But SB 40 backdated the effective date to actions commenced on or after September 1, 2024. Defendants, in their notice of removal, pled that the royalty obligations and other rights exceeded $5 million, exclusive of interest, statutory damages, punitive damages, penalties, attorney’s fees, and court costs. Plaintiff contended that they asserted the threshold without offering any evidence for it, but the court pointed out that since Plaintiff’s pleadings didn’t allege an amount in controversy, Defendants’ removal notice did. And in the absence of evidence that the amount pleaded in the notice is “falsely asserted to wrongly obtain or avoid jurisdiction” or a “different amount in controversy is readily established, such as statutorily set fees,” the removal notice controls.
Plaintiff tried again, submitting a declaration purporting to establish an amount in controversy based a $1.00-per-ton royalty on all sand sold by Defendants and Defendants’ COO’s statement that when fully up and running the quarry could produce up to 200,000 tons of frac sand per month. Plaintiff thus calculated that, taking into account a ramp-up phase in the first two quarters of 2025, the maximum amount of frac sand sold would be nearly 1.6 million tons, thereby producing a $1.6 million royalty. But that was just the first year. Over a three-year period that number would rise to $6.4 million, well in excess of the statutory threshold. Since the royalty was “perpetual,” the $6.4 million figure “plainly establishes the possibility—plausibility, even—that [Plaintiff’s] damages claim could satisfy the Business Court’s jurisdictional minimum for a qualified transaction under §25A.004(d)(1).”The court thus denied Plaintiff’s motion to remand.
