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H.B. No. 3428
AN ACT
relating to financial institution accounts.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Chapter 276, Finance Code, is amended by adding
Sections 276.002 and 276.003 to read as follows:
Sec. 276.002. GARNISHMENT OF FINANCIAL INSTITUTION
ACCOUNT. (a) Notwithstanding the Texas Rules of Civil Procedure,
if a financial institution fails to timely file an answer to a writ
of garnishment issued before or after a judgment is rendered in the
case, a court may enter a default judgment against the financial
institution solely as to the existence of liability and not as to
the amount of damages.
(b) A financial institution against which a default
judgment is entered under Subsection (a) is not deemed to have in
the financial institution's possession or to have knowledge of
sufficient debts, assets, or personal effects of the debtor to
satisfy the debtor's obligations to the garnishor.
(c) After a default judgment is entered against a financial
institution as to the existence of liability as provided by
Subsection (a), the garnishor has the burden to establish the
amount of actual damages proximately caused to the garnishor by the
financial institution's default.
(d) The court may award to the garnishor:
(1) damages in the amount determined under Subsection
(c); and
(2) for good cause shown, reasonable attorney's fees
incurred by the garnishor in establishing damages under Subsection
(c).
(e) Notwithstanding Section 22.004, Government Code, the
supreme court may not amend or adopt rules in conflict with this
section.
Sec. 276.003. USE OF PROCEEDS OF EXTENSION OF CREDIT FOR
FINANCIAL INSTITUTION ACCOUNT. (a) An obligor may use proceeds of
an extension of credit made by a financial institution for
business, commercial, investment, or similar purposes to establish
collateral for the extension of credit by:
(1) making deposits;
(2) purchasing certificates of deposit; or
(3) establishing other accounts at the financial
institution.
(b) The amount of the proceeds used as provided by
Subsection (a) is not considered a reduction in the amount of the
proceeds of the extension of credit for purposes of Title 4 or for
any other purpose.
(c) A determination by the obligor that it is beneficial to
use proceeds of an extension of credit in the manner described by
Subsection (a) is conclusive.
(d) This section may not be construed to imply a contrary
rule for transactions not covered by this section.
SECTION 2. Section 276.002, Finance Code, as added by this
Act, applies only to an action filed on or after the effective date
of this Act. An action filed before the effective date of this Act,
including an action filed before that date in which a party is
joined or designated after that date, is governed by the law in
effect immediately before the change in law made by this Act, and
that law is continued in effect for that purpose.
SECTION 3. This Act takes effect September 1, 2005.
______________________________ ______________________________
President of the Senate Speaker of the House
I certify that H.B. No. 3428 was passed by the House on May
13, 2005, by a non-record vote.
______________________________
Chief Clerk of the House
I certify that H.B. No. 3428 was passed by the Senate on May
25, 2005, by the following vote: Yeas 31, Nays 0.
______________________________
Secretary of the Senate
APPROVED: _____________________
Date
_____________________
Governor