A splashy plan to merge San Diego County Credit Union and California Coast Credit Union has veered from celebration to litigation, with Cal Coast now asking a judge to force the deal to close after SDCCU moved to walk away. The lawsuit in San Diego Superior Court halts a transaction that would have created one of Southern California’s largest credit unions. For now, both institutions insist members can keep using branches and online services as usual.
What landed in court
In November, SDCCU filed a notice saying it would terminate the merger for cause. In court papers, the credit union accuses Cal Coast of a “worrisome lack of controls and outright non-compliance.” Those allegations are now front and center in a state court fight, according to the The San Diego Union-Tribune.
Cal Coast’s counterattack
California Coast Credit Union has fired back with its own lawsuit in Superior Court, arguing SDCCU’s termination was improper and manufactured. Cal Coast is asking the court to force the merger to close. The complaint, filed by law firm Latham & Watkins, seeks specific performance, compensatory damages and an order requiring SDCCU to pay legal costs, according to Credit Union Daily.
What SDCCU says
SDCCU is standing by its decision in court filings. Spokesman Nathan Schmidt told the paper that the matter is in litigation and SDCCU’s positions are set out in its court filings. Cal Coast’s complaint counters that independent due diligence and consultant reviews found no material adverse credit issues and accuses SDCCU of a deliberate campaign to derail the closing, according to Credit Union Daily.
Scale of the deal
Announced in April, the merger was pitched as a heavyweight combo: roughly 65 branches and about 1,400 employees brought together into an organization with nearly $13.5 billion in assets and more than 630,000 members across Southern California. The plan was always contingent on approvals from state and federal regulators and a member vote at Cal Coast, according to the original announcement from SDCCU…