Utah Bankers Ass'n v. America First Credit Union, 940248

• Decision Date: 28 February 1996
• Docket Number: No. 940248,940248
• Citation: 912 P.2d 988
• Parties: The UTAH BANKERS ASSOCIATION, a Utah nonprofit corporation, Plaintiff and Appellant, v. AMERICA FIRST CREDIT UNION, Goldenwest Credit Union, Ogden Government Credit Union, Beehive Credit Union, USU Community Credit Union, Credit Union Service Centers of Utah, Inc., a Utah corporation, Mountain America Credit Union, Granite Credit Union, Utah Central Credit Union, Cyprus Credit Union, Jordan Credit Union, Salt Lake City Credit Union, Metrowest Credit Union, Salt Lake City Firemen's Credit Union, Deseret First Credit Union, Transwest Credit Union, Chevronwest Credit Union, Hercules Credit Union, G. Edward Leary, as Utah Commissioner of Financial Institutions, and Doe Credit Unions 1-99, Defendants and Appellees.
• Court: Utah Supreme Court

Page 988

912 P.2d 988

The UTAH BANKERS ASSOCIATION, a Utah nonprofit corporation Plaintiff and Appellant, v. AMERICA FIRST CREDIT UNION, Goldenwest Credit Union, Ogden Government Credit Union, Beehive Credit Union, USU Community Credit Union, Credit Union Service Centers of Utah, Inc., a Utah corporation, Mountain America Credit Union, Granite Credit Union, Utah Central Credit Union, Cyprus Credit Union, Jordan Credit Union, Salt Lake City Credit Union Metrowest Credit Union, Salt Lake City Firemen's Credit Union, Deseret First Credit Union, Transwest Credit Union Chevronwest Credit Union, Hercules Credit Union, G. Edward Leary, as Utah Commissioner of Financial Institutions, and Doe Credit Unions 1-99, Defendants and Appellees.

No. 940248.

Supreme Court of Utah.

Feb. 28, 1996.

Don B. Allen, Herschel J. Saperstein, Kevin Glade, Salt Lake City, for plaintiff.

Robert R. Wallace, Salt Lake City, Bruce L. Richards, Sara D. Nelson, for defendant Credit Unions.

Jan Graham, Att'y Gen., Bryce H. Pettey, Asst. Att'y Gen., Salt Lake City, for Commissioner of Financial Institutions.

HOWE, Justice:

Plaintiff Utah Bankers Association (UBA) appeals from the trial court's summary judgment dismissing its action against defendants, who are a number of Utah credit unions, Credit Union Service Centers of Utah, Inc., and G. Edward Leary, Utah Commissioner of Financial Institutions.

UBA's action is based upon part of the Utah Credit Union Act which authorizes the Commissioner of Financial Institutions to approve the formation of nonprofit corporations to conduct credit unions. ¹ Utah Code Ann. § 7-9-6(1). Under the Act, applicants may form a corporation if they belong to a "group of 200 persons or more" having a geographic or associational "limited field of membership." Id. The Act defines a geographic limited field of membership as a group of persons who "reside within an identifiable neighborhood, community, rural district, or county," id. § 7-9-3(5)(b), and an associational limited field of membership as a group of persons who belong to a formal association or work for the same employer. Id. § 7-9-3(5)(a), (c)-(f). Approximately twelve years ago, Elaine B. Weis, who was then the Commissioner, adopted a policy of authorizing credit unions with geographic limited fields of membership to expand to include members from more than one county. Since then, at least fourteen credit unions have expanded their fields of membership under this policy, and several have included members from every county in the state. ²

UBA filed this lawsuit on behalf of its member banks against defendants, seeking declaratory relief in the form of a statutory interpretation of sections 7-9-3 and -6 of the Act which would limit credit union membership to the residents of one county. ³ It also sought a permanent injunction ordering each defendant credit union to select one county as its "limited field of membership," to cease soliciting members outside the selected county, and to terminate the membership of those not residing within the county. However, the trial court did not reach the merits of this case because it determined that UBA lacked standing to bring this action and that laches and estoppel barred its complaint. Defendants were therefore awarded summary judgment. UBA appeals.

I. STANDING

Because the parties do not dispute issues of material fact, we review the summary judgment for correctness, according no deference to the trial court's decision. CIG Exploration, Inc. v. Utah State Tax Comm'n, 897 P.2d 1214, 1215 (Utah 1995), cert. denied, --- U.S. ----, 116 S.Ct. 699, 133 L.Ed.2d 656 (1996). We initially note that the requirement of standing is equally applicable to UBA's claims for both declaratory and injunctive relief. Jenkins v. Swan, 675 P.2d 1145, 1148 (Utah 1983). An association has standing for both of these claims where (1) the individual members of the association have standing to sue, and (2) the individual participation of each injured party is not indispensable to the proper resolution of the case. Utah Restaurant Ass'n v. Davis County Bd. of Health, 709 P.2d 1159, 1163 (Utah 1985). We examine the two components separately.

In determining whether the individual members of UBA have standing, we recognize that they must have "suffered some distinct and palpable injury that gives [them] a personal stake in the outcome of the legal dispute." Jenkins, 675 P.2d at 1148. Although a complainant generally cannot make this showing merely by demonstrating that he may suffer from business competition, see Terracor v. Utah Bd. of State Lands & Forestry, 716 P.2d 796, 800 (Utah 1986), this rule does not apply to competitors in a regulated industry which challenge agency action threatening their competitive position. Utah Bankers Ass'n v. Utah Dep't of Fin. Insts., 888 P.2d 714, 717 (Utah Ct.App.1994); Everett Town Taxi, Inc. v. Board of Aldermen, 366 Mass. 534, 320 N.E.2d 896, 899 (1974); Bank of Belton v. State Banking Bd., 554 S.W.2d 451, 453 (Mo.Ct.App.1977); Dairylea Coop., Inc. v. Walkley, 38 N.Y.2d 6, 377 N.Y.S.2d 451, 454-56, 339 N.E.2d 865, 868-69 (1975).

Utah financial institutions clearly qualify as a regulated industry. Title 7 of the Utah Code, entitled "Financial Institutions," is the umbrella title for the Utah Credit Union Act. The title empowers the Department of Financial Institutions with supervisory authority over "all classes of institutions" including banks and credit unions. Utah Code Ann. § 7-1-102(1)(a). The Commissioner has the power to profoundly affect competition between various institutions through his authority to supervise the operation and management of institutions, authorize the expansion of the rights, privileges, and benefits of institutions, and establish criteria for the approval of new institutions. Id. § 7-1-301(2), (3), (5). Because UBA members are completely subject to this scheme, we conclude that they cannot be denied standing to challenge an alleged injurious action by the Commissioner.

As defendants point out, however, a competitor in a regulated industry cannot prove palpable injury solely by alleging competitive disadvantage. It must also show that the alleged injury is within the scope of statutory concerns and is "inconsistent with the aims and purposes of the entire regulatory scheme." Massachusetts Ass'n of Indep. Ins. Agents & Brokers, Inc. v. Commissioner of Ins., 373 Mass. 290, 367 N.E.2d 796, 800 (1977). As indicated above, the scope of title 7 includes the regulation of all "persons, firms, corporations, associations, and other business entities furnishing financial services to the people of this state or owning and controlling those businesses." Utah Code Ann. § 7-1-102(1)(a). More specifically, it contemplates the expansion, modification, and deletion of institutions' "rights, powers, privileges, benefits, or immunities." Id. § 7-1-301(3). Clearly, therefore, UBA's challenge to the Commissioner's policy is within the scope of statutory concerns because the policy implements guidelines for the expansion of credit unions' rights to recruit members.

In addition, UBA's alleged injury of unfair competition is inconsistent with the purposes of the regulatory scheme. One of the main purposes of title 7 is to "grant powers, privileges, and immunities to state chartered institutions at least equal to those possessed by federally chartered or insured institutions of the same class furnishing financial services to the people of this state in order to promote competitive equality in the financial services industry in this state." Id. § 7-1-102(1)(a) (emphasis added). We infer from this language that the legislature intended to promote competitive equality among state financial institutions as well as between federal and state institutions. As the Virginia Supreme Court stated in interpreting part of Virginia's financial regulatory scheme, "[C]ompetition in the financial market is constructive and productive; it can sometimes be destructive and unfair, and the public has a substantial interest in protecting all certified financial institutions against ruinous competition." Front Royal Savings & Loan Ass'n v. First Virginia Bank, 222 Va. 194, 278 S.E.2d 853, 856 (1981) (emphasis added). Also, the legislature has provided specific guidelines on credit union formation in the Act, see Utah Code Ann. §§ 7-9-3(5), -6, and this Act was adopted as part of the overall scheme for competitive quality among financial institutions. Thus, the Commissioner's alleged violation of these guidelines is inconsistent with the purposes of the regulatory scheme.

We next consider whether the individual participation of each member bank is necessary to the proper resolution of this case. We conclude that each member's interest in fair competition under the regulatory scheme would be adequately protected by UBA's claims because their competitive interests are similar. Furthermore, because UBA's claims for declaratory and injunctive relief would not need to be tailored to the needs of each individual member, we cannot find that individual participation would improve the relief available to the members. See Utah Restaurant Ass'n, 709 P.2d at 1163 (examining extent of benefit to each member and degree of protection required by each member in determining whether individual participation of each member is indispensable).

Defendants contend that UBA does not have standing because the Commissioner's policy permitting credit union expansion has been in place for more than twelve years and has become too deeply integrated into the regulatory scheme to be challenged by disgruntled competitors. Citing Association of Data Processing Service Organizations, Inc. v. Camp, 397 U.S. 150, 154, 90 S.Ct. 827, 830, 25 L.Ed.2d 184 (1970), defendants assert that "one who has an interest in freedom from competition has standing to challenge new competition" only, not competition which has been relied upon by the industry and...