Utah credit unions on Dec. 30 claimed a legal victory over bankers when an appeals court unanimously upheld their right to share jointly owned branches.
The Utah Court of Appeals rejected the Utah Bankers Association's argument that a system of shared branches was illegal.
The association argued that the shared branches weren't authorized under state law. The bankers also contended that the facilities were illegal because they would allow credit unions to operate in more than one county, which Utah law prohibits.
In a nine-page ruling, Judge Norman H. Jackson wrote that although state law didn't specifically authorize shared branches, he would yield to the state regulator's judgment, noting that the branches are in the public interest.
Bankers can claim a victory as well, because the court ruled that the association has standing to sue. This decision breaks with a state precedent.
In a case concerning credit union expansion, a state district court ruled in March that banks lacked standing to sue over common-bond requirements.
That suit has been appealed to the Utah Supreme Court. Both sides now are wondering which precedent the state's highest court will follow.
"That's a good question," said G. Edward Leary, state commissioner of financial institutions and a defendant in both cases. "That's what we're asking ourselves now."
Bankers were heartened by the appeals court's ruling on the right to sue.
"We were disappointed in the overall decision, but took comfort in that the court ruled we have standing, which is an issue of concern," said Lawrence Alder, president of the association.
"The supreme court isn't bound by the court of appeals decision, but one would hope it would reverse the district court ruling," said Michael Crotty, deputy general counsel of litigation for the American Bankers Association.
Bruce Richards, a Salt Lake City lawyer who represented Credit Union Shared Service Centers of Utah in the case, said the ruling won't affect the field-of-membership case.
The banking association gained standing, he said, because it had opposed the shared branches in an administrative hearing, giving it aggrieved party status.
