Cadence McShane Construction Company v. Ryan BB-Blockhouse Creek

2025 Tex. Bus. 43

The Business Court of Texas,
Third Division
CADENCE MCSHANE §
CONSTRUCTION COMPANY §
LLC, §
§ Cause No. 25-BC03B-0002
Plaintiff,
§
v. §
§
RYAN BB-BLOCKHOUSE CREEK,
§
LLC,
§
Defendants.
═══════════════════════════════════════
Syllabus *
═══════════════════════════════════════

This opinion addresses Defendant’s plea to the jurisdiction which challenged
the Court’s jurisdiction over Plaintiff’s third-party claims filed against multiple
subcontractors who performed work on a construction project. The Court denied
Defendant's plea to the jurisdiction, concluding the third-party claims met the
definition of an “action arising out of a qualified transaction” under Section
25A.004(d)(1). Further, the Court found the third-party claims were neither
“conjectural, hypothetical or remote” and therefore ripe.

*
The syllabus was created by court staff and is provided for the convenience of the reader. It is not
part of the Court’s opinion, does not constitute the Court’s official description or statement, and
should not be relied upon as legal authority.
FILED IN
BUSINESS COURT OF TEXAS
BEVERLY CRUMLEY, CLERK
2025 Tex. Bus. 43 ENTERED
11/3/2025

The Business Court of Texas,
Third Division

CADENCE MCSHANE §
CONSTRUCTION COMPANY §
LLC, §
§ Cause No. 25-BC03B-0002
Plaintiff,
§
v. §
§
RYAN BB-BLOCKHOUSE CREEK,
§
LLC,
§
Defendants.
═══════════════════════════════════════
OPINION AND ORDER
═══════════════════════════════════════

I. Introduction

¶1 This breach of contract case arose from the construction of a large 347-

unit apartment complex in Leander, Texas. The general contractor of the project,

Cadence McShane Construction Company LLC (“CMC”), filed a breach of contract

lawsuit against Ryan BB-Block House Creek, LLC (“Ryan”), the landowner. In

turn, Ryan filed counterclaims complaining of CMC’s alleged mismanagement of

the project and a litany of alleged construction defects.

1
¶2 Later, CMC filed third party claims against 18 subcontractors who per-

formed work on the project. Here, Ryan filed a plea to the jurisdiction challenging

the Business Court’s jurisdiction over the third-party claims. In this case, the Court

must determine whether it has jurisdiction of CMC’s claims against the third-party

subcontractors. Because the Court concludes that the lawsuit and third-party claims

meet the definition of an “action arising out of a qualified transaction” under Sec-

tion 25A.004(d)(1) and are within the Business Court’s jurisdiction, the Court

denies Ryan’s plea to the jurisdiction. 1

II. Background

A. Case History

¶3 CMC and Ryan are the original parties to this action. In 2021, Ryan

contracted with CMC to serve as the general contractor of a 347-unit apartment

complex known as “Blockhouse Creek Farm Multifamily” in Leander, Texas in ex-

change for a maximum contract payment of $60,547,244.

¶4 Construction began on the project in 2022. By 2024, the relationship

between the parties had soured. Ryan allegedly terminated the contract on Novem-

ber 7, 2024, claiming CMC failed to fulfill its duties as general contractor. In turn,

1
Ryan’s plea to the jurisdiction also included motions to strike and sever. The Court’s Opinion and
Order addresses only the jurisdictional challenges outlined in Ryan’s plea to the jurisdiction, the
other motions are addressed in a separate order and forthcoming order. See Ryan BB-Block House
Creek’s Plea to the Jurisdiction, or in the Alternative, Motion to Strike or Sever Cadence McShane
Construction Company Third Party Claims.

2
CMC asserted that Ryan breached the contract when it failed to pay for construction

services performed by CMC.

¶5 On February 6, 2025, CMC filed a lawsuit in the Business Court.

CMC’s petition challenged Ryan’s termination of the contract, alleged Ryan had

failed to pay amounts due under the parties’ contract, and alleged that Ryan had

effectively locked CMC out of the project in violation of the contract. CMC’s origi-

nal petition pled causes of action for breach of contract, violations of the Texas

Construction Trust Fund Act, quantum meruit, money had and received, promissory

estoppel, violation of the Prompt Payment Act violations, and foreclosure of their

lien.

¶6 CMC’s petition asserted this Court had subject matter jurisdiction be-

cause the contract was a qualified transaction pursuant to Section 25.004(b), and

the amount in controversy exceeded $10 million dollars.

¶7 On March 26, 2025, Ryan filed counterclaims against CMC. Ryan al-

leged CMC breached its contract and failed to fulfill its duties as general contractor

and asserted “CMC and its subcontractors failed to properly install and construct,

among other things, the roofs, window system, stucco, and balconies.” 2 Ryan de-

tailed construction deficiencies throughout the project including the roofing

system, shingles, exterior sheathing, air and water barriers, balconies, fire rated

2
Ryan’s Counterclaim ¶21, Mar. 26, 2025.

3
assemblies and structural connections and other defective work. Further, Ryan as-

serted “CMC’s failure to provide and maintain a sufficient number of experienced

personnel resulted in an overall lack of supervision by CMC of its own people and

the subcontractors it engaged.”3 Ryan pleaded causes of action of breach of

contract damages, fraud by nondisclosure, fraudulent inducement, and filing of a

wrongful lien. Ryan asserted the Business Court had subject-matter

jurisdiction over its counter claims because the “dispute arises out of a

qualified transaction and the amount in controversy exceeds $10,000,000.”4

¶8 On June 23, 2025, CMC filed a third-party petition naming 18 different

subcontractors that performed work on the Blockhouse Creek Farm Multifamily

apartment construction project. CMC’s claims were based on a uniform subcontract

that it entered with each of the subcontractors that worked on the project.5 Each

subcontract references the “Prime Contract” which is defined as the Con-tract

between CMC and Ryan. CMC’s subcontractor contracts range in amounts

from $40,070 for aluminum storefront doors, to $13,059,500 for wood framing and

3
Id. ¶17.
4
Id. ¶4.
5
CMC alleged causes of action against the subcontractors for breach of contract (additional insur-
ance coverage), breach of contract (contract indemnity), breach of express and implied warranties,
and breach of contract, negligence, contribution and comparative responsibility.

4
various other specified construction work on the project. 6 Only one subcontract ex-

ceeded $5 million. 7

B. Ryan’s Plea to the Jurisdiction

¶9 On July 23, 2025, Ryan filed its plea to the jurisdiction challenging the

Business Court’s jurisdiction over CMC’s third-party claims against the subcontrac-

tors. Ryan does not dispute that the claims between it and CMC “arise from or relate

to a qualified transaction under Section 25A.004(d)(1),” 8 but argues this Court’s

“original jurisdiction” does not extend to CMC’s claims filed against the third-party

claims against the 18 subcontractors. 9

¶10 Specifically, Ryan contends CMC “cannot aggregate” claims against

multiple defendant subcontractors with “separate, independent and distinct

claims.” 10 Instead, Ryan asserts that “the claims asserted against each defendant

are judged separately and must independently lie within the jurisdictional parame-

ters of the court.” 11

¶11 Ryan argues CMC’s third-party claims also do not fall within the

Court’s supplemental jurisdiction because this Court’s supplemental jurisdiction

6
See Ryan’s Reply 4, Sept. 12, 2025.
7
Id.
8
Ryan’s Plea to the Jurisdiction 4, July 23, 2025.
9
See id. at 5.
10
Id.
11
Id. (citing French v. Moore, 169 S.W.3d 1, 7 (Tex. App.—Houston [1st Dist.] 2004, no pet.)).

5
does not extend to claims requiring the joinder of third parties. Alternatively, Ryan

challenges the Business Court’s jurisdiction on the grounds that CMC’s third-party

claims for contribution, negligence, breach of contract and breach of warranty are

contingent future injuries that may never occur and are therefore unripe.

¶12 In response, CMC primarily argues that Ryan has produced no evidence

to refute its assertion that the third-party claims meet the threshold amount in con-

troversy. CMC also asserts that the Business Court has jurisdiction because CMC’s

third-party claims against the subcontractors “arise out of a qualified transaction,”

that CMC’s claims against the subcontractors—when aggregated—satisfy the juris-

dictional limits of the Business Court, and that alternatively the Business Court may

exercise supplemental jurisdiction over the third-party claims. 12

III. Analysis

A. Plea to the Jurisdiction

¶13 A plea to the jurisdiction challenges the subject matter jurisdiction of

the court. 13 Whether a court has subject matter jurisdiction is a question of

law. 14 Subject-matter jurisdiction “exists when the nature of the case falls within

12
CMC’s Response 8, Sept. 9, 2025.
13
See Tex. Dep't of Transp. v. Jones, 8 S.W.3d 636, 638–39 (Tex. 1999) (per curiam).
Texas Dep’t. of Parks & Wildlife v. Miranda 133 S.W.3d 217, 226 (Tex. 2004) (citing Tex. Natural
14

Res. Conservation Comm'n v. IT–Davy, 74 S.W.3d 849, 855 (Tex. 2002)).

6
the general category of cases the court is empowered, under applicable statutory and

constitutional provisions, to adjudicate.” 15

¶14 Ryan’s plea to the jurisdiction calls for the interpretation of statutes to

determine the Business Court’s subject-matter jurisdiction to hear this suit. When

interpreting a statute, courts generally “‘rely on the plain meaning of the statute’s

words’ to discern legislative intent.” 16

1. Section 25A.004

¶15 Through the passage of HB 19, the 88th Legislature created the Busi-

ness Court as a “specialty trial court” with jurisdiction over defined complex

business cases. 17 H.B. 19 added Chapter 25A to the Texas Government Code which

establishes, among other things, the court’s jurisdiction, procedures for removal and

remand, venue, appellate procedure, and qualifications of judges. Section 25A.004

of the Government Code defines the Business Court’s jurisdiction. Relevant here,

Section 25A.004(d)(1) provides:

15
Diocese of Galveston-Houston v. Stone, 892 S.W.2d 169, 174 (Tex. App.—Houston [14th Dist.]
1994, no pet.) (citing City of El Paso v. Madero Development, 803 S.W.2d 396, 399 (Tex. App.—El
Paso 1991, writ denied)).
Aleman v. Texas Medical Board, 573 S.W.3d 796, 802 (Tex. 2019) (citing Cadena Comercial USA
16

Corp. v. Tex. Alcoholic Beverage Comm'n, 518 S.W.3d 318, 325 (Tex. 2017)).
17
See Act of May 25, 2023, 88th Leg., R.S., ch. 380, 2023 Tex. Sess. Law Serv. 919 (hereafter,
“H.B. 19”).

7
(d) The business court has civil jurisdiction concurrent with district
courts in the following actions in which the amount in controversy ex-
ceeds $5 million, excluding interest, statutory damages, exemplary
damages, penalties, attorney’s fees, and court costs:

(1) an action arising out of a qualified transaction. 18

¶16 In turn, Section 25A.001 defines a qualified transaction as “a transac-

tion or series of related transactions . . . under which a party: (A) pays or receives,

or is obligated to pay or is entitled to receive, consideration with an aggregate value

of at least $5 million.” 19 To determine whether jurisdiction exists, the Court must

decide whether CMC’s third-party claims fit within the definition of “an action aris-

ing out of a qualified transaction” under Section 25A.004(d)(1). 20

2. Courts have construed “action” to mean the entire lawsuit and broadly in-
terpreted the term “arising out of”

¶17 The Court starts with a review of the term “action,” a term not defined

in Section 25A. The “term ‘action’ is generally synonymous with ‘suit,’ which is a

demand of one’s rights in court.” 21 The Texas Supreme Court has defined “action”

to include “an entire lawsuit or cause or proceeding, not to discrete ‘claims’ or

‘causes of action’ asserted within a suit, cause, or proceeding.” 22 Black’s Law

18
TEX. GOV’T CODE § 25A.004(d)(1).
19
Id. § 25A.001(14).
20
Id. § 25A.004(d)(1).
21
See Jaster v. Comet II Const., Inc., 438 S.W.3d 556, 564 (Tex. 2014) (plurality op.) (citing Thomas
v. Oldham, 895 S.W.2d 352, 356 (Tex. 1995)).
22
Id. at 563–64.

8
Dictionary defines “action” as “[a] civil or criminal judicial proceeding; esp., law-

suit.” 23 And the Texas Business Court has repeatedly recognized that the term

“civil action” is synonymous with lawsuit. 24

¶18 The Court next reviews whether the subcontractors claims “arise out

of a qualified transaction.” Chapter 25A does not define “arising out of,” but courts

have interpreted the phrase as denoting a broad causal relationship. 25 The Texas

Supreme Court has made clear that “arising out” of has “broad significance” and

that the plain and common meaning of the phrase means “originating from,” “stem-

ming from,” “flowing from,” or “resulting from.” 26 The Court has analogized

“arising out of” to “but for causation” which it describes as one “without which

the event could not have occurred.” 27 The reach of but-for causation is wide, and

the Court has described its temporal limitations as having “in itself no limiting prin-

ciple; it literally embraces every event that hindsight can logically identify in the

23
Action, Black’s Law Dictionary (12th ed. 2024).
24
See C Ten 31 LLC ex rel. Summer Moon Holdings LLC v. Tarbox, 2025 Tex. Bus. 1, ¶ 26, 708
S.W.3d 223, 235 (3rd Div.); Tema Oil & Gas Co. v. ETC Field Servs., LLC, 2024 Tex. Bus. 3, ¶ 15,
705 S.W.3d 226, 231 (8th Div.); Yadav v. Agrawal, 2025 Tex. Bus. 7 ¶ 41, 708 S.W.3d 246, 258
(3rd Div.).
25
Atlas IDF, LP v. NexPoint Real Estate Partners, LLC, 2025 Tex. Bus. 16, ¶ 29, 715 S.W.3d 390,
395 (1st Div.).
26
Barrett v. Barrett, 2025 Tex. Bus. 37 ¶ 12, 2025 WL 2715321 *3; Pinto Tech. Ventures, L.P. v.
Sheldon, 526 S.W.3d 428, 437 (Tex. 2017).
27
Pinto, 526 S.W.3d at 438.

9
causative chain.” 28 Similarly, the Fifth Circuit has concluded that the words

“‘[a]rising out of’ are of much broader significance than ‘caused by.’” 29

¶19 Read together, then, the Court must decide whether this lawsuit (ac-

tion) including all properly joined counterclaims and third-party claims “originate

from” or “flow from” or “result from” a qualified transaction. The Court concludes

that it does.

¶20 CMC’s third-party contract claims are based on a Standard Subcontrac-

tor Agreement executed by CMC and each of the 18 subcontractors. 30 The Standard

Subcontractor Agreement defines the project as construction services in connection

with the “Blockhouse Creek Farm Multifamily” in Leander, Texas, the subject of

CMC and Ryan’s original lawsuit and counterclaim. 31

¶21 Additionally, each Standard Subcontract Agreement references the

“Prime Contract” and each defines the Prime Contract as the contract between

“Owner and General Contractor” (CMC and Ryan). The Standard Subcontract

Agreement also contains a requirement that the subcontractor’s work must be

28
Id.
29
Red Ball Motor Freight, Inc. v. Employers Mut. Liab. Ins. Co., 189 F.2d 374, 378 (5th Cir. 1951);
see also Am. States Ins. Co. v. Bailey, 133 F.3d 363, 370 (5th Cir. 1998).
30
Ryan’s Plea to the Jurisdiction 3, July 23, 2025.
31
Ryan’s Reply, Exhibit C, Sept. 12, 2025.

10
performed in accordance with the “Contract Documents” which includes the Prime

Contract. 32

¶22 In sum, this case concerns one construction project carried out through

a network of related contracts. In fact, CMC’s subcontract covers not only work to

be performed on the same project, it also names the original contract between CMC

and Ryan and contains requirements that the subcontractor’s work must adhere to

the original contract. The statute places this kind of “action” squarely within the

Court’s jurisdiction. Ryan’s efforts to carve the dispute into smaller, disconnected

pieces, finds no support in the statute, or the evident purpose of Section 25A.004.

¶23 Thus, the Court holds that the Business Court has jurisdiction of this

action under Section 25A.004(d)(1). The Court does not hold that every individual

claim in an “action” must independently “aris[e] out of a qualified transaction” for

it to be “an action arising out of a qualified transaction.” 33 But when, as here, all of

the of the claims in the action arise out of a qualified transaction, there can be little

doubt that Section 25A.004(b)(1) is satisfied, so long as the amount-in-controversy

is also met. Neither party disputes that both CMC’s original lawsuit and Ryan’s

counterclaims meet the amount-in-controversy requirements. And since CMC’s

third-party claims are filed in the same action, and arise out of a qualified

32
Id.
33
TEX. GOV’T CODE § 25A.004(d)(1).

11
transaction, the Court finds the amount in controversy requirement is met. The

Court need not independently assess the amount-in-controversy of the third-party

claims individually. 34

¶24 Finally, in view of its holding that CMC’s third-party claims are author-

ized by Section 24.004(d)(1), the Court need not address the parties’ remaining

statutory contentions based on Chapter 25A.

B. CMC’s claims are ripe

¶25 The Court now turns to Ryan’s assertion that CMC’s claims against the

subcontractors are unripe.

¶26 Ryan asserts that CMC’s third-party claims rely on “contingent future

injuries that may never occur” and fail to establish a justiciable controversy. 35 Un-

der the ripeness doctrine, courts must “consider whether, at the time a lawsuit is

filed, the facts are sufficiently developed ‘so that an injury has occurred or is likely

to occur, rather than being contingent or remote.’” 36 Thus, a ripeness analysis

34
The Court notes that HB 40, passed during the 89th Texas Legislative session, added subsection
(i) to 25A.004(d)(1) which provides (i) The amount in controversy for jurisdictional purposes under
Subsection (b) or (d) is the total amount of all joined parties’ claims. See Acts of May 25, 2023,
88th Leg., R.S., Ch. 380, §§1-9, 2023 Tex. Sess. Law Serv. 919, 919–929 (amended 2025) (current
version at TEX. GOV’T CODE § 25A.004(d)). Since neither party contests jurisdiction over CMC’s
petition or Ryan’s counterclaims and the Court finds that the “action”, including CMC’s third party
claims, arose out of a qualified transaction and therefore meets the requirements of Section
25A.004(d)(1), the Court need not reach the question of whether the “total amount of all joined
parties claims” is met under subsection (i).
35
Ryan’s Plea to the Jurisdiction 10, July 23, 2025.
36
Robinson v. Parker, 353 S.W.3d 753, 755 (Tex. 2011) (citing Waco Indep. Sch. Dist. v. Gibson, 22
S.W.3d 849, 851–52 (Tex. 2000)).

12
focuses on whether a case involves uncertain or contingent future events that may

not occur as anticipated or may not occur at all.

¶27 Here, the Court finds that the injuries addressed by CMC third-party

claims are neither contingent nor remote. Both CMC and Ryan’s claims are based

on the construction of the multi-family development project and the events sur-

rounding that project. Ryan alleges injuries arising from the subcontractors

work, among other things, Ryan has alleged that CMC and its subcontractors

failed to properly install and construct “roofs, window system, stucco, and

balconies.”37 Ryan’s counterclaim goes on to list five pages of alleged construction

deficiencies—primarily performed by subcontractors—in granular detail.

Further, Ryan alleges that, “numerous subcontractors were unable to properly,

efficiently, and timely prosecute and complete their work.”38

¶28 In turn, CMC filed its third-party claims against the subcontractors

based on Ryan’s allegations of construction defects at the project site. CMC’s third-

party claims against the subcontractors include causes of action for breach of con-

tract, warranty, indemnity, negligence, contribution and comparative

responsibility. Thus, the subcontractors’ work on the project is already a central,

ripe issue in this litigation. Accordingly, CMC’s alleged injuries, for which they

37
Ryan’s First Amended Counterclaim ¶ 24, Aug. 1, 2025.
38
Id. ¶ 18.

13
seek redress through the filing of their third-party claims against the

subcontractors, is neither “conjectural hypothetical or remote.”39

IV. Conclusion

¶29 For the reasons stated above, the Court denies Ryan’s Plea to the

Jurisdiction.

PATRICK K. SWEETEN
Judge of the Texas Business Court,
Third Division

DATED: November 3, 2025

39
Patel v. Tex. Dep't of Licensing & Regulation, 469 S.W.3d 69, 78 (Tex. 2015).

14
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Clint Fagan fagan@westshorthowell.law 11/3/2025 8:40:25 PM ERROR

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Sallye A.Evans sevans@cokinoslaw.com 11/3/2025 8:40:25 PM SENT
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Case Contacts

Sallye A.Evans sevans@cokinoslaw.com 11/3/2025 8:40:25 PM SENT

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