Pre-Suit Demand Letters Establish Amount in Controversy for Business Court Removal Deadlines
Judge Jerry D. Bullard
Decided May 14, 2026
Mem. Op.
Jurisdiction & Remand
In DrinkPAK v. PRIII Crow Building C, Division 8 remanded a commercial lease dispute after finding defendants' removal notice untimely under Section 25A.006(f)(1), holding that pre-litigation demand letters and the underlying transaction's monetary terms established the $5 million jurisdictional threshold well before the 30-day removal window expired. The court rejected defendants' argument that a generic Rule 47 pleading alleging damages "over $1 million" prevented them from discovering jurisdictional facts, emphasizing that courts may consider the petition as a whole, the nature of claims, the underlying transaction, and pre-suit correspondence when determining when a party "reasonably should have discovered" facts establishing jurisdiction.
Court Staff Summary
Remanding a case back to district court because a notice of removal was untimely. The amount in controversy was known to be over $5 million on the date of service, and the notice of removal was filed more than 30 days after service. Pre-litigation demand letters may establish the amount in controversy. Rule 408 does not prohibit the court from considering pre-suit demand letters when determining jurisdiction.
Background: A Multi-Million Dollar Build-to-Suit Lease Gone Wrong
DrinkPAK, LLC, a canned-beverage manufacturer, entered into a July 2023 lease with PR III/Crow Building C, LP to lease 1.3 million square feet of warehouse space in the Dallas-Fort Worth area and build a beverage manufacturing facility known as "35 Eagle." Trammell Crow Company, LLC served as PR III's commercial real estate broker. The lease required DrinkPAK to pay approximately $700,000 to $1,054,000 monthly for 12 years—a cumulative obligation exceeding $100 million. By October 2023, DrinkPAK discovered extensive foundation failures at the site. The parties exchanged demand letters seeking millions in damages beginning in January 2024, with formal demands sent by March 2024. DrinkPAK sued in Denton County in November 2025, asserting fraud, negligence, and breach of implied warranty claims. After service in mid-December 2025, defendants removed to federal court based on diversity jurisdiction, then stipulated to remand back to state court in January 2026. On March 10, 2026—88 days after the last service date—defendants filed their notice of removal to the Business Court.
The Timeliness Dispute
DrinkPAK moved to remand, arguing defendants' removal notice violated the 30-day deadline imposed by Section 25A.006(f)(1) and Rule 355(c)(2)(A). Defendants countered that DrinkPAK's original petition alleged only damages "over $1 million" pursuant to Rule 47, providing no objective basis to determine whether the amount in controversy exceeded the Business Court's $5 million jurisdictional threshold. They claimed they discovered quantified damages only after filing their counterclaim in March 2026, making their removal timely under the "discovery" prong of Section 25A.006(f)(1)(B).
Judge Bullard's Analysis: Looking Beyond the Pleadings
Judge Bullard rejected defendants' narrow construction of the jurisdictional inquiry. While acknowledging that a Rule 47 allegation seeking relief "over $1 million" does not alone establish Business Court jurisdiction, the court emphasized that
the relevant question under Section 25A.006(f)(1)(B) is when Defendants discovered, or reasonably should have discovered, facts establishing the Business Court's jurisdiction.Drawing on C Ten 31 LLC v. Tarbox, the court held that in making this determination,
the Business Court may consider the petition as a whole, the nature of the claims asserted, the underlying transaction, and other evidence bearing on the amount in controversy.
The court found three independent bases establishing that defendants knew or should have known the jurisdictional threshold was met well before March 2026. First, the lease itself: a 12-year agreement netting defendants over $100 million made it "wholly unreasonable" that defendants claimed unawareness that litigation over the leased building would exceed $5 million. Second, the pre-suit demand letters: beginning in January 2024 and formalized by March 2024, the parties exchanged communications "seeking millions of dollars in damages." Third, the nature of the claims: fraud and negligence allegations concerning a massive commercial build-to-suit project inherently involved substantial damages. The court concluded that defendants discovered jurisdictional facts no later than their respective service dates in mid-December 2025, making the March 10, 2026 removal notice facially untimely.
Significance for Texas Commercial Practice
This decision provides critical guidance on two fronts. First, it clarifies that pre-litigation demand letters are fair game for establishing when a party discovered jurisdictional facts, and that Rule 408 does not shield such letters from consideration in jurisdictional determinations. Practitioners cannot rely on generic Rule 47 pleadings to extend removal deadlines when the underlying transaction, pre-suit correspondence, or the nature of the claims themselves make clear that the amount in controversy exceeds $5 million. Second, the opinion reinforces that the 30-day removal clock typically starts running at service, not at some later point when damages become "quantified" through discovery or counterclaims. For defendants in high-value commercial disputes, the message is clear: evaluate Business Court jurisdiction immediately upon service and remove promptly if the case qualifies. Waiting for formal damage calculations or the filing of counterclaims risks waiving removal rights entirely. The decision also signals that Division 8 will apply a holistic, practical approach to the "reasonably should have discovered" standard, examining all circumstances surrounding the transaction and dispute rather than focusing myopically on pleading technicalities.