A former credit union that converted to a mutual bank charter is suing its former corporate credit union for $580,000 that the bank maintains it had on deposit with the corporate while it was a credit union.
According to court documents filed first in Rhode Island Superior Court and then transferred to the U.S. District Court For Rhode Island, Coastway Community Bank, then Coastway Credit Union, headquartered in Cranston, R.I., alleged that it had $1 million on hand with Members United Corporate credit union in a membership capital share account.
The bank complained that under the capital share deposit agreement, it was to have been able to withdraw the money from the account with three years notice and that it notified the corporate of its intent to withdraw the funds in September 2006. Coastway further complained that the corporate acknowledged in October 2006 that the money would be available in September 2009. But on the date agreed, the bank says only $420,000 was available in the transaction account and that the corporate has not made the balance available.
Under NCUA's Letter To Credit Unions 09-CU-10, which addressed paid in capital accounts and membership capital accounts, it is unclear that the bank has any claim for money lost in by Members United. Phone calls to law firms representing both institutions have yet to be returned.
The court has ordered Members United to deliver a response to Coastways's complaint by Oct. 30.