League Cent. Credit Union v. Mottern

• Decision Date: 25 August 1983
• Citation: 660 S.W.2d 787
• Parties: LEAGUE CENTRAL CREDIT UNION, Plaintiff-Appellant, v. Thomas C. MOTTERN, Commissioner of Banking, State of Tennessee, and American Sunbelt Credit Union, Defendants-Appellees. 660 S.W.2d 787
• Court: Tennessee Court of Appeals

Page 787

660 S.W.2d 787

LEAGUE CENTRAL CREDIT UNION, Plaintiff-Appellant, v. Thomas C. MOTTERN, Commissioner of Banking, State of Tennessee, and American Sunbelt Credit Union Defendants-Appellees.

660 S.W.2d 787

Court of Appeals of Tennessee Middle Section, at Nashville.

Aug. 25, 1983.

Permission to Appeal Denied by

Supreme Court Nov. 28, 1983.

Stuart E. Duncan, Duncan & Morton, Chattanooga, Joseph S. Reeves, III, Broemel & Reeves, Nashville, for plaintiff-appellant.

Kate Eyler, Asst. Atty. Gen., Nashville, for defendant-appellee Thomas C. Mottern, Commissioner of Banking, State of Tenn.; William M. Leech, Jr., Atty. Gen. & Reporter State of Tenn., of counsel.

Davis H. Carr, John E. Murdock, III, Boult, Cummings, Conners & Berry, Nashville, for defendant-appellee American Sunbelt Credit Union.

OPINION

CONNER, Judge.

This dispute involves an existing "central credit union," ¹ a new "credit union" (both created pursuant to T.C.A. Sec. 45-4-101, et seq.) and the then Tennessee Commissioner of Banking (now the Commissioner of Financial Institutions) charged with approving the charters of both "central credit unions" and "credit unions" and thereafter regulating them.

Plaintiff-appellant, League Central Credit Union, sued the defendants-appellees, American Sunbelt Credit Union, and the commissioner, ² challenging the action of the commissioner in approving the charter and by-laws of American Sunbelt as a credit union because there was no "common bond" as required by T.C.A. Sec. 45-4-301, infra. The suit was brought under alternative theories of relief, either for declaratory judgment pursuant to T.C.A. Sec. 29-14-101, et seq., or for a writ of certiorari pursuant to T.C.A. Sec. 27-9-101, et seq., as directed in T.C.A. Sec. 45-1-108, infra. The latter statute provides for judicial review of orders of the commissioner under certain conditions. Both defendants tested the sufficiency of the complaint, as amended, by filing motions to dismiss pursuant to T.R.C.P. 12.02(6) for lack of standing and the failure of plaintiff to exhaust its administrative remedies. The chancellor granted the respective motions to dismiss and denied plaintiff's motion to alter that judgment. League Central appeals contending that it indeed has standing and that it was unnecessary to exhaust its administrative remedies. We believe the standing question is dispositive and accordingly will deal solely with it.

A T.R.C.P. 12.02(6) motion to dismiss admits the truth of all relevant and material averments contained in a complaint, Garrison v. Graybeel, 202 Tenn. 567, 308 S.W.2d 375 (1957), but asserts that such facts do not constitute a cause of action. Henderson v. Lawrence, 212 Tenn. 247, 369 S.W.2d 553 (1963). We therefore review the allegations as well as the relevant statutory framework with which the chancellor was faced.

According to the complaint League Central is a Tennessee central credit union with offices in Nashville and Chattanooga. On or about July 20, 1982, the Commissioner of Banking approved the by-laws of Sunbelt Credit Union. Subsequently, the charter was amended to name the entity American Sunbelt. The by-laws of American Sunbelt provided for membership as follows:

All stockholders, directors, employees, and customers of Nashville City Bank and Trust Company or entities affiliated with Nashville City Bank and Trust Company; all employees of such affiliated entities; and members of the families of all such persons shall be eligible for membership.

League Central further alleged that:

... the State Credit Union Share Insurance Corporation and representatives of Nashville City Bank and Trust Company conceived the common bond of American Sunbelt Credit Union for the purpose of merging Nashville-Asbury Credit Union into the American Sunbelt Credit Union. Plaintiff further believes and therefore avers that Nashville-Asbury Credit Union, whose shares were insured by the said State Credit Union Share Insurance Corporation, was in a troubled financial condition. The State Credit Union Share Insurance Corporation also approached Plaintiff for the purpose of discussing a proposed plan of merger between Nashville-Asbury Credit Union and Plaintiff pursuant to T.C.A. Sec. 45-4-903. Plaintiff submitted a bid to the State Credit Union Share Insurance Corporation in connection with a proposed plan of merger between Plaintiff and Nashville-Asbury Credit Union, but the bid was not accepted. Instead, the Defendant Commissioner of Banking subsequently approved a merger between Nashville-Asbury Credit Union and the Defendant American Sunbelt Credit Union.

League Central also asserted that American Sunbelt would be in direct competition with it and that the charter and by-laws of American Sunbelt were unlawful. Plaintiff contended that it would be adversely affected economically because of the chartering of American Sunbelt. League Central additionally alleged that the "common bond" of American Sunbelt was so broad as to constitute a de facto central credit union. Finally, plaintiff alleged that the commissioner failed to take into account the impact of the chartering of American Sunbelt on League Central as required by T.C.A. Sec. 45-4-101(c). ³

Plaintiff sought revocation of the charter of Sunbelt, its dissolution and/or liquidation. Alternatively, League Central requested that the court order charter and by-law amendments "to comply with the credit union laws of the State of Tennessee." Finally, and also in the alternative, plaintiff sought a ruling that the commissioner acted unlawfully and exceeded his statutory authority, and requested that the commissioner be ordered to either revoke the charter of American Sunbelt or require amendments "to comply with the laws of the State of Tennessee."

League Central maintains that it has standing because it has alleged a substantial and definite interest in the case and has asserted economic injury by reason of the commissioner's unlawful chartering of American Sunbelt. Plaintiff contends that T.C.A. Sec. 45-1-108 ⁴ must be read to give League Central standing because if it does not, then no competing financial institution or member of the public will ever be able to contest the decision of the commissioner in granting a credit union charter. Finally, plaintiff says that if T.C.A. Sec. 45-1-108 is inapplicable to this case, then it has standing to maintain a declaratory judgment action because there is no other available remedy.

Defendants, of course, contend that no declaratory judgment action will lie because there is no justiciable controversy and that T.C.A. Sec. 45-1-108(a) here prohibits that review because plaintiff is not a "person who is aggrieved and directly affected by an order of the Commissioner...."

Against this backdrop the chancellor ruled:

The Tennessee statutes which permit the establishment of state regulated credit unions limit membership in a credit union to "groups having a common bond of occupation or association or to groups within a well-defined neighborhood, community, or rural district." T.C.A. Sec. 45-4-301. Persons affiliated with Nashville City Bank and Trust Company have organized American Sunbelt. The by-laws provide that membership will include "all stockholders, directors, and employees and customers of Nashville City Bank and Trust Company...." League Central complains about the inclusion of Nashville City Bank's customers in the proposed membership, asserting that bank customers are not people having a "common bond" or people "within a well-defined neighborhood."

* * *

The complaint does not allege sufficient standing under either of League Central's theories, declaratory judgment and certiorari. The only allegation of an interest in the Commissioner's American Sunbelt approval is League Central's allegation that the two companies' fields of membership overlap and that they will be in direct competition.

To maintain this declaratory judgment action, League Central must allege some substantial, definite and immediate economic consequence of the Commissioner's action. A mere fear of competition does not meet the test. A legally protectable interest must be at stake in order to maintain a declaratory judgment suit; League Central has no protectable right to be free from competition. Moreover, the complaint does not allege how competition will have an adverse effect on League Central or, for that matter, even allege that competition will have such an effect.

Review by certiorari is available to those "aggrieved and directly affected" by an order of the Commissioner of Banking. T.C.A. Sec. 45-1-108. The allegation of possible potential competition does not meet the "directly affected" test. There are no facts alleged which reflect how League Central is or will be directly affected.

Though the Court does not reach a decision on the other grounds asserted in the defendants' motions, they do appear to have merit. The statute is confusing, but T.C.A. Sec. 45-1-107(d) seems to give League Central an opportunity to seek a declaratory judgment from the Commissioner. League Central asserts that the statute does not apply; the Commissioner asserts that it does. If League Central pursued that remedy, the Commissioner would be hard pressed to deny the statute's applicability, having asserted in this Court that League Central should have acted pursuant to it. In addition, it seems well established that declaratory judgment is not available to one who seeks judicial review of an administrative decision. It is, after all, the responsibility of the Commissioner...