BILL ANALYSIS

C.S.H.B. 2960

By: Hayes

Judiciary & Civil Jurisprudence

Committee Report (Substituted)

BACKGROUND AND PURPOSE

Texas law protects contractors from being forced to litigate disputes out of state, ensuring that businesses do not have to bear the cost of long-distance legal battles or be subjected to laws not aligned with Texas industry standards. The bill author has informed the committee that this protection has been crucial for Texas contractors, particularly smaller businesses that lack the resources to pursue or defend claims in distant jurisdictions. However, the Fourteenth Court of Appeals in Houston, in the case In re MVP Terminalling, LLC, recently determined that these longstanding protections could be waived. According to the Texas Construction Association, this ruling created significant uncertainty in the construction industry, effectively eliminated out-of-state venue protections for contractors, and placed Texas contractors at a disadvantage in contract negotiations. C.S.H.B. 2960 seeks to address this issue by changing the voidable nature of construction contract provisions relating to out-of-state venues and requiring an action arising out of such a contract, to the extent a venue provision is void, to be brought only in the Texas county in which the applicable property is located, unless the parties stipulate to another venue after the dispute arises.

CRIMINAL JUSTICE IMPACT

It is the committee's opinion that this bill does not expressly create a criminal offense, increase the punishment for an existing criminal offense or category of offenses, or change the eligibility of a person for community supervision, parole, or mandatory supervision.

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any additional rulemaking authority to a state officer, department, agency, or institution.

ANALYSIS

C.S.H.B. 2960 amends the Business & Commerce Code to change the voidable nature of a provision contained in a construction contract concerning real property located in Texas or an agreement collateral to or affecting the contract that subjects the contract or agreement or any conflict arising under the contract or agreement to another state's law, litigation in the courts of another state, or arbitration in another state from being voidable by a party obligated by the contract or agreement to perform the work that is the subject of the construction contract to being void as against public policy. The bill requires an action arising out of such a contract, to the extent that a venue provision in the contract is void under the bill's provisions, to be brought only in Texas in the county in which the property that is the subject of the litigation is located, unless the parties stipulate to another venue after the dispute arises.

C.S.H.B. 2960 amends the Civil Practice and Remedies Code to make a conforming change.

C.S.H.B. 2960 applies only to a contract that is entered into or renewed on or after the bill's effective date.

EFFECTIVE DATE

September 1, 2025.

COMPARISON OF INTRODUCED AND SUBSTITUTE

While C.S.H.B. 2960 may differ from the introduced in minor or nonsubstantive ways, the following summarizes the substantial differences between the introduced and committee substitute versions of the bill.

The substitute changes the bill's effective date from having a possible immediate effect, contingent on receiving the requisite constitutional vote, as in the introduced, to September 1, 2025, with no possibility for immediate effect.