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Texas Finance Code - FIN § 96.401. Derivative Suit

Current as of January 01, 2024 | Updated by Findlaw Staff

(a) The commissioner may bring a derivative suit on behalf of a savings bank on an unpursued cause of action if:

(1) the commissioner determines that the suit should be brought to protect the public interest or the interest of the savings bank or the shareholders, members, or creditors of the savings bank;  and

(2) the savings bank has not brought suit on the action before the 30th day after the date on which the commissioner gives notice to the savings bank that suit should be brought.

(b) Except as provided by another statute that provides for mandatory venue, venue is in a district court of Travis County.

(c) The commissioner may employ legal counsel to bring and prosecute a derivative suit.  The commissioner may:

(1) pay counsel from funds appropriated for the operation of the Department of Savings and Mortgage Lending;  or

(2) require the savings bank for which the suit is brought to pay the counsel directly or to reimburse the Department of Savings and Mortgage Lending for the payment.

(d) The savings bank shall be paid an amount equal to the amount of the proceeds of a judgment on a suit brought under this section less unreimbursed costs and expenses, including attorney's fees incurred by the Department of Savings and Mortgage Lending in prosecuting the suit.

(e) In this section, “unpursued cause of action” means an existing claim belonging to a savings bank on which a suit or other effective action has not been filed or taken by or on behalf of the savings bank on or before the last day of the sixth month after the date on which the cause of action arose, involving:

(1) a claim for monetary damages or recovery of property;

(2) a claim for equitable relief;

(3) a cause of action for breach of contract or for enforcement of a contract;  or

(4) a claim on a fidelity bond.

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Cite this article: FindLaw.com - Texas Finance Code - FIN § 96.401. Derivative Suit - last updated January 01, 2024 | https://codes.findlaw.com/tx/finance-code/fin-sect-96-401/

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