The decision regarding whether or not the NCUA will take over as plaintiff in the Western Corporate FCU negligence suit will likely be finalized on Monday, July 12.
On that date, both parties are due in court to hear a judge's decision regarding the NCUA's motion and the plaintiffs' responding opposition, the latter of which was filed Monday in U.S. District Court.
In court documents, plaintiffs argue against the NCUA's claim to exclusive WesCorp rights, saying other cases have allowed parties to "maintain derivative actions after the imposition of a conservatorship." In one case involving FDIC, plaintiffs cite what they consider to be a loophole: if removing a stockholder's right to action would produce an "absurd or impracticable" result.
Because the NCUA may share in the blame for WesCorp's failure, for the NCUA to serve as plaintiff would be absurd, plaintiffs said. The seven credit unions also asserted in their response that they are making direct claims against volunteer and employee defendants; therefore, the NCUA's derivative claim argument does not apply.
"If the NCUA prevails they will quite likely file a subsequent motion to dismiss the lawsuit. Eliminating the plaintiff credit unions from prosecuting this civil suit denies credit unions from engaging in discovery," said Stuart Perlitsh, CEO of plaintiff Glendale Area Schools FCU.