Special intermediate appellate courts advance in Texas (business) and Washington (tax); introduced in Pennsylvania (business)

Legislatures in three states are now debating creation of special intermediate appellate courts (IACs), or divisions of existing IACs, to handle business and tax matters.

Pennsylvania: Pennsylvania already has two IACs. The Superior Court (created in 1895) handles most appeals while the Commonwealth Court (1968) is primarily responsible for appeals involving state and local governments and regulatory agencies. HB 323 as introduced last week would create a Commerce Division of the Superior Court made up of 2 Superior Court Judges and 3 Senior Superior Court Judges appointed by the President Judge of the Superior Court to hear business cases. That bill is pending in the House Judiciary Committee.

Texas: previously discussed here, HB 1603 would create Chancery Courts (trial) and a Court of Chancery Appeals (IAC) to handle specified actions relating to certain for-profit or nonprofit organizations and their owners or other members and certain business transactions. Judges of the Court of Chancery Appeals would be selected by the Governor from a list of the state’s elected IAC (Court of Appeals), that list provided by a new Advisory Council made up of lawyers that deal with business law. If this selection system runs afoul of the state’s constitution the court would be staffed by sitting or retired justices who are appointed by the Supreme Court. HB 1603 was approved by the House Business & Industry Committee on April 21 and is on the House Calendars Committee.

Washington: previously discussed here, SB 5449 and its House companion HB 2111 would create a special Tax Appeal Division of the state’s existing Court of Appeals made up of 3 Court of Appeals judges and eventually 3 judges elected specifically to the Division. This new division would consist of a “Main” Department for 1-judge trials on complex tax matters and the “Commissioners” Department for other proceedings. A judge of the tax appeal division would have to have “three years’ of experience practicing in state or local tax law” before election to office. Judges would have to render decisions within 6 months after hearing and appeals from the Main Department would be directly to the Supreme Court.

At issue in the legislature was the question of how this division would be created given the state constitution’s grant of trial power to the Superior Court and whether a constitutional amendment was needed to create such a court/division. It was also unclear how the Secretary of State would measure or calculate “three years’ of experience practicing in state or local tax law” needed for candidates to appear on the ballot. Nevertheless the Senate version of the bill was approved 33-16 by the full Senate on April 15. The legislature then adjourned but the bill was reintroduced when a special session was called in on April 29.