NBA Credit Union, Inc. v. Hargrove, Civ. A. No. 93-4826.
Decision Date | 16 March 1994 |
Docket Number | Civ. A. No. 93-4826. |
Citation | 846 F. Supp. 387 |
Parties | N.B.A. CREDIT UNION, INC., Plaintiff, v. Sarah W. HARGROVE, et al., Defendants. |
Court | U.S. District Court — Eastern District of Pennsylvania |
James A. Backstrom, Vaira, Backstrom, Riley & Smith, Philadelphia, PA, for N.B.A. Credit Union, Inc.
Sue Ann Unger, Office of Atty. Gen., Philadelphia, PA, for Sarah W. Hargrove.
Richard Mentzinger, Jr., Office of U.S. Atty., Philadelphia, PA, Margaret H. Plank, Dept. of Justice, Civ. Div., Washington, DC, John K. Ianno, National Credit Union Admin., Alexandria, VA, for Roger W. Jepsen.
AND NOW, this 16th day of March, 1994, upon consideration of the Motion for Summary Judgment of Defendant Secretary of Banking Hargrove, the Federal Defendant's Renewed Motion for Summary Judgment, and Plaintiff N.B.A. Credit Union's Opposition To Motion for Summary Judgment of Defendant Secretary of Banking Hargrove and Federal Defendant's Renewed Motion for Summary Judgment, and after a hearing,1 it is hereby ORDERED that the defendants' respective motions for summary judgment are GRANTED as set forth below.
Plaintiff, N.B.A. Credit Union, Inc. ("Credit Union"), is a non-profit Pennsylvania corporation chartered and regulated by the Pennsylvania Department of Banking (the "Pennsylvania Department"). Credit Union's members are affiliated through membership in the National Business Association, Inc. ("NBA"), an association of private and public employers and employees that acts as Credit Union's sponsor.2 Defendant Sarah W. Hargrove ("Hargrove") is the Secretary of Banking of the Commonwealth of Pennsylvania. Hargrove is responsible for administration of the Pennsylvania Department, including regulation of Pennsylvania-chartered credit unions. 17 Pa.C.S.A. §§ 101-1504.
The National Credit Union Administration (the "NCUA") is an independent agency in the executive branch of the federal government. 12 U.S.C. § 1752a. Defendant Norman d'Amours ("Amours") is the appointed chairman of the board of the NCUA.3 Credit Union is a federally-insured credit union subject to examination, supervision and regulation by the NCUA. 12 U.S.C. §§ 1752(7), 1784, 1786.4
This litigation concerns the defendants' regulation of Credit Union's field of membership. Credit Union claims that its geographic area of operation has been unjustly restricted. Credit Union claims that this action causes Credit Union to forego longstanding and valuable financial service relationships with members of NBA.
Credit Union was chartered on February 3, 1972 as D.V.B.A. Credit Union. Plaintiffs Proposed Exhibits 1 (filed for the preliminary injunction hearing and hereinafter "Pl Ex."). Credit Union assumed its present name on October 31, 1986, reflecting a change in its sponsor. France Dec. ¶ 3. At that time, Credit Union expanded its field of membership to include all members of NBA. Pl.Ex. 1-4; France Dec. ¶ 3. In March 1990, Credit Union provided services to employee groups5 in approximately forty (40) states. Pl.Ex. 29, p. 1; France Dec. ¶ 11.
In September 1990, Credit Union and the Pennsylvania Department realized that their respective views of Credit Union's authorized field of membership differed. Pl.Ex. 5, 30; France Dec. ¶¶ 8-12.6 Specifically, Credit Union operated under the view that its field of membership was constrained solely by Article 8 of its Amended Articles of Incorporation. This article reads in its entirety:
At the April 18th meeting, the Pennsylvania Department presented a draft cease and desist order to Credit Union. France Dec. ¶¶ 18-19; Pl.Ex. 6-8. The draft order commented negatively on Credit Union's operations, addressed the disagreement over Credit Union's authorized field of membership, and attempted to settle several issues prospectively. Id. Credit Union objected to portions of the draft order and the Pennsylvania Department agreed to some modifications. Id.; Pl.Ex. 9.
On April 29, 1991, the Pennsylvania Department mailed Credit Union two documents: (1) a copy of the draft order that memorialized the modifications agreed to at the April 18, 1991 meeting; and (2) a joint Stipulation and Consent to Entry of Order to Cease and Desist. Pl.Ex. 10. On May 21, 1991, the Pennsylvania Department received an executed copy of the stipulation making final the Order to Cease and Desist (the "Order"). Pl.Ex. 14; See Joint Stip. of Facts (titled "Stipulation" and submitted for preliminary injunction hearing, hereinafter referred to as "Stip.") Exs. A, B, C, D.
The Order stated that Credit Union expanded its field of membership beyond the parameters established by the Pennsylvania Department. Stip.Exs. A, B, C. With regard to day to day operations, the Order concluded that Credit Union:
Stip.Ex. C. The Order also reported that "the Department has determined that the Board of Directors has not fulfilled its fiduciary duties or exercised reasonable care and due diligence in supervising operations of the Credit Union." Id.; see also, Kunyzka Dep. at 15-16.
Finally, the Order provided a definition of Credit Union's authorized field of membership. The Order defined Credit Union's authorized field of membership as follows:
Stip.Ex. C.10 By stipulating to the Order, Credit Union waived its right to appeal the findings and determinations of the Order. Stip.Ex. C.
As directed by the Order, Credit Union sought authorization to operate in New Jersey from the New Jersey Department of Banking (the "New Jersey Department"). Pl.Exs. in Op. 5, 9-10; Pl.Ex. 17. Credit Union received a letter on August 8, 1991 from the New Jersey Department forbidding Credit Union from taking on "any new employee groups from the State of New Jersey" and permitting Credit Union to "service existing employees throughout the State of New Jersey who are members of NBA, Inc. including adding new employees from the existing employee groups." Id. (emphasis added).
France Dec. ¶¶ 20, 25-27; Pl.Ex. 25 (emphasis added). The Pennsylvania Department also asserts that Credit Union's authorized field of membership was further limited by the New Jersey Department's unilateral determination that Credit Union was not authorized to enroll new employee groups from anywhere in New Jersey, including the Four Counties.12 Pl.Ex. 17.
Credit Union's position is that negotiations and correspondence with the Pennsylvania Department in the months prior to, and subsequent to the entry of the Order, coupled with the New Jersey Department's authorization to enroll new employees from existing...
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