Texas Causes of Action & Affirmative Defenses

Texas Causes of Action & Affirmative Defenses

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Monday, November 9, 2009

Trust Fund Act: Civil Liabilty for Misapplication of Construction Trust Funds


STATUTORY CAUSE OF ACTION UNDER THE TEXAS CONSTRUCTION TRUST FUND ACT 

The Texas Construction Trust Fund Act makes construction funds "trust funds" if the payments are made to a contractor or subcontractor or to an officer, director, or agent of a contractor or subcontractor, under a construction contract for the improvement of specific real property in this state. Tex. Prop. Code Ann. § 162.001 (West Supp. 2009). Beneficiaries of the trust fund include artisans, laborers, mechanics, contractors, subcontractors, or materialmen who furnish labor or material for the construction or repair of an improvement. Id. § 162.003 (West Supp. 2009).

CIVIL LIABILITY FOR VIOLATION OF CONSTRUCTION TRUST FUND ACT 

A party who misapplies trust funds under the Trust Fund Act is subject to civil liability to trust fund beneficiaries whom the Act was designed to protect. Id. § 162.031 (West Supp. 2009); Dealers Elec. Supply Co. v. Scoggins Constr. Co., 52 Tex. Sup. Ct. J. 1088, 2009 Tex. LEXIS 475, at *16-17 (Tex. July 3, 2009).

SOURCE: 03-06-00636-CV (Austin Court of Appeals (11/6/09)