DEARBORN, Mich. — On Oct. 12, a Michigan state court heard the first arguments in whether the $1.7 billion DFCU Financial would have to finally hold the special meeting at which members could recall one or all members of the board.
But rather than clarifying the dispute, which stemmed from the credit union's attempt to change its charter to a mutual bank earlier this year and the withdrawal of its application, little was decided.
According to Margaret Blohm, one of the plaintiffs in the case, and other sources on the scene, the confusion got underway when it became evident that a mistake on the part of the court had resulted in Wayne County Circuit Court Judge Cynthia Stephens not being shown the complete briefs of both arguments. The situation got even more confusing when, in chambers, Judge Stephens heard for the first time that DFCU Board Chairman Harold Lowman and Susan Smulsky, also a board member as well as chair of the supervisory committee, had stepped down.
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This muddied matters since it raised a question about whether Lowman, who was named in the lawsuit as chairman, will continue as a defendant. DFCU put forth a motion that the case be dismissed and included dropping Lowman from it, but the plaintiffs opposed the motion. Judge Stephens issued an order that prohibited the credit union from making any additional board changes until after the next hearing on Nov. 17.
Legal sources familiar with the case said whether or not Lowman is named in the suit was immaterial to the heart of the case.
The credit union made no announcement of the board changes, Blohm said, and members had to discern the changes from the new names, Jim Cowper and Keith Moss, on the ballot for the board election this coming February. DFCU has not responded to requests for comment about the board changes.
The outcome of the case disappointed the plaintiffs because it seemed in her comments that Judge Stephens's judgment in the matter was leaning in their direction.
Blohm and other observers noted that the five lawyers DFCU hired to convince the court that the credit union should not have to hold a special meeting appeared to make little headway with their case.
According to observers, Judge Stephens spoke tartly to DFCU's lawyers when they said the CU did not know which of the more than 1,700 signatures on petitions calling for the special meeting were valid or not.
The judge's attitude grew even sterner when the CU said it no longer had the original petitions, even though the members group had delivered them to the credit union, Blohm said. The judge instructed the members group to provide copies to DFCU and for the credit union to validate the signatures by Nov. 17, the next hearing date.
Blohm said Judge Stephens had also knocked down DFCU's suggestion that the signatures were not valid because the credit union members did not know what they were signing. "Essentially, she said you can't trump a signature," Blohm said. –[email protected]
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