Texas Finance Code 66.401 – Derivative Suit
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(a) The commissioner may bring a derivative suit on behalf of an association 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 association or the shareholders, members, or creditors of the association; and
(2) the association has not brought suit on the action before the 31st day after the date on which the commissioner gives notice to the association 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.
Terms Used In Texas Finance Code 66.401
- Contract: A legal written agreement that becomes binding when signed.
- Damages: Money paid by defendants to successful plaintiffs in civil cases to compensate the plaintiffs for their injuries.
- Equitable: Pertaining to civil suits in "equity" rather than in "law." In English legal history, the courts of "law" could order the payment of damages and could afford no other remedy. See damages. A separate court of "equity" could order someone to do something or to cease to do something. See, e.g., injunction. In American jurisprudence, the federal courts have both legal and equitable power, but the distinction is still an important one. For example, a trial by jury is normally available in "law" cases but not in "equity" cases. Source: U.S. Courts
- Month: means a calendar month. See Texas Government Code 312.011
- Mortgage: The written agreement pledging property to a creditor as collateral for a loan.
- Property: means real and personal property. See Texas Government Code 311.005
- Prosecute: To charge someone with a crime. A prosecutor tries a criminal case on behalf of the government.
- Statute: A law passed by a legislature.
- Venue: The geographical location in which a case is tried.
(c) The commissioner may employ legal counsel to bring and prosecute a derivative suit. The commissioner may:
(1) pay the counsel from funds appropriated for the operation of the Department of Savings and Mortgage Lending; or
(2) require the association 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 association 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 an association on which a suit or other effective action has not been filed or taken by or on behalf of the association 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.