Pleading Amount in Controversy Suffices for Business Court Jurisdiction Absent Sham Evidence
Read the Court's Opinion (PDF)
Judge Marialyn Barnard
In Kampmann v. Smith, Division 4 denied a plea to the jurisdiction challenging counts seeking declaratory relief and breach-of-fiduciary-duty damages in a dealership partnership dispute, holding that a plaintiff's allegation of damages exceeding the $5 million threshold satisfies Section 25A.004(b) unless the defendant proves the figure is a sham. The court rejected the argument that failure to quantify specific dollar losses defeats jurisdiction, distinguishing between merits questions (proving damages) and jurisdictional questions (alleging concrete injury traceable to defendant's conduct).
Court Staff Summary
This case presents several issues: (i) whether this court has subject-matter jurisdiction over this action; if so, (ii) whether an earlier filed lawsuit between some of the same parties requires abatement of this action under the doctrine of dominant jurisdiction, and (iii) whether, at this court’s discretion, the case should be transferred to a different county.
Background: Decade-Long Auto Dealership Partnership Breakdown
Kampmann v. Smith arises from the dissolution of a business partnership between Abigail Kampmann and Mark Smith formed in 2014 to operate automobile dealerships through a web of Texas entities. Kampmann holds a 50.5% interest in Principle Auto Group, LLC ("PAG GP"), which serves as general partner of Principle Auto Management, Ltd. ("PAM LP"), a limited partnership managing dealership operations. The parties are also joint owners with a third partner in three Mississippi-related entities (the "MS Entities"). The partnership breakdown spawned multiple lawsuits across Texas forums, including an August 2024 breach-of-fiduciary-duty suit Smith filed against Kampmann in Tarrant County that proceeded to jury verdict, and two pending Kendall County suits involving related claims.
Kampmann filed this action in the Business Court on April 3, 2026, seeking declarations that the entities must be wound up and dissolved, alleging Smith breached the MS GP Company Agreement by failing to comply with purchase-option terms in his February 5, 2026 buyout offer, and asserting breach of fiduciary duty. Smith moved to dismiss Counts One (in part), Two, and Three via plea to the jurisdiction, arguing Kampmann failed to plead a case or controversy because the petition "does not quantify damages or identify 'a single dollar of loss.'" Smith separately moved to abate or transfer the entire case in deference to the Kendall County litigation.
The Jurisdictional Challenge: Amount in Controversy vs. Proof of Damages
Judge Barnard framed the central issue as whether Kampmann adequately alleged the concrete, particularized injury required for subject-matter jurisdiction under Section 25A.004(b), which requires an amount in controversy exceeding $5 million. Smith contended that the absence of quantified damages defeated jurisdiction. The court rejected this argument, holding that Smith "confuses two different issues: (1) whether Plaintiffs can ultimately prove damages, and the dollar amount of those potential damages, which is a merits question, and (2) whether Plaintiffs have alleged a concrete, particularized injury traceable to Defendant's conduct, which is, in this case, the jurisdictional question."
Applying the Texas Supreme Court's framework from Bland Independent School District v. Blue, Division 4 emphasized that a plea to the jurisdiction "should be decided without delving into the merits of the case" and is "not to force the plaintiffs to preview their case on the merits but to establish a reason why the merits of the plaintiffs' claims should never be reached." The court quoted Bland's critical holding that
a plaintiff's "allegation of damages in excess of jurisdictional limits suffices to show the amount in controversy, even if damages cannot ultimately be proved at all."Because Kampmann pled an amount in controversy exceeding $5 million and Smith "did not contend the figure is a sham or submit evidence showing the amount in controversy does not meet the jurisdictional threshold," the court declined to look beyond the pleaded amount.
Practical Significance for Texas Commercial Practice
Kampmann provides important guidance on the evidentiary burden defendants face when challenging Business Court jurisdiction based on amount in controversy. The opinion makes clear that merely pointing to a petition's failure to itemize specific dollar losses is insufficient—defendants must affirmatively prove the pleaded amount is a sham, consistent with Division 11's approach in ET Gathering & Processing LLC v. Tellurian Production LLC. This places a meaningful burden on defendants seeking dismissal on jurisdictional grounds and protects plaintiffs from being forced to preview their damages case at the pleading stage.
The decision also reinforces that the Business Court will apply traditional Texas jurisdictional principles, treating pleas to the jurisdiction as dilatory pleas that must be resolved without reaching the merits. For practitioners, Kampmann confirms that pleading an amount in controversy above the statutory threshold—particularly in cases involving partnership dissolution, breach of fiduciary duty, and declaratory relief regarding entity governance—will typically survive jurisdictional challenge unless the defendant produces evidence demonstrating the figure is facially implausible. The opinion's citation to Pradera SFR, LLC v. American Housing Ventures, LLC further underscores Division 4's commitment to the principle that absent a sham pleading, the plaintiff's allegations control the jurisdictional analysis.