Defendants Cite CapCorp in Motions to Dismiss
In three separate lawsuits that involve U.S. Central Federal Credit Union and Western Corporate Federal Credit Union, defendants argue plaintiffs don't have the right to sue, because charges are so-called "derivative claims."
And, they're citing the dismissed 1997 CapCorp case as precedent.
In Corporate Central Credit Union's suit against U.S. Central Federal Credit Union, defendant NCUA cited Lafayette Federal Credit Union v. National Credit Union Administration, which it said was dismissed due to a "lack of standing" per federal law.
NCUA also cited Lafayette in the WesCorp case when it filed a Dec. 30 motion to replace the seven natural credit unions as plaintiffs, stating "only the Board, and not the individual credit union members, could bring a derivative suit."
The NCUA also argued the Financial Institutions Reform, Recovery and Enforcement Act of 1989 applies in the WesCorp case, which has been successfully used by the FDIC in court. FIRREA awards all rights, titles, powers and privileges to regulators in the event of a conservatorship.
Corporate America Credit Union CEO Thomas Bonds, whose credit union is suing U.S. Central for securities fraud, said CACU is alleging U.S. Central specifically defrauded the Alabama-based retail corporate, and therefore should be allowed to pursue a direct claim.
"We're not alleging the defendants caused harm to U.S. Central, we're alleging they harmed us," he said.