Sec. 66.401. DERIVATIVE SUIT. (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.

(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.

Acts 1997, 75th Leg., ch. 1008, Sec. 1, eff. Sept. 1, 1997.

Amended by:

Acts 2007, 80th Leg., R.S., Ch. 921 (H.B. 3167), Sec. 6.033, eff. September 1, 2007.