LOS ANGELES – Seven credit unions are continuing to fight NCUA for the right to sue over the failure of WesCorp FCU but they now will do so in federal court, where a state judge agreed to NCUA’s request to transfer the suit.
The two sides are fighting over the remnants of the one-time $34 billion corporate credit union, including potential multi-million dollar insurance claims under directors and officers liability policies. "They’re still trying to work out who owns the lawsuit," Randy Moore, a La Jolla attorney representing WesCorp officers and directors in the suit, told Credit Union Journal yesterday.
The seven credit unions: 1st Valley CU, Cascade FCU, Glendale Area Schools FCU, Kaiperm Northwest FCU, Northwest Plus CU, Stamford FCU and Tulare County FCU, have filed suit against the former management and directors of WesCorp claiming negligence and breach of fiduciary duties in the failure of the giant corporate, which has cost 1,100 member credit unions at least $2 billion so far.
The defendants read like a Who’s Who of western credit unions: former WesCorp CEO Bob Siravo, senior vice presidents Robert Burrell and Dwight Johnston, former director Bill Cheney, the current president of the California CU League who once headed Xerox FCU [now Xceed FCU], as well as credit union CEOs Robert Harvey (Seattle Metropolitan CU), Gordon Dames (retired Mountain America CU), Wayne Hope (Enrichment FCU), John Merlo (Premier America CU), Diana Dykstra (San Francisco Fire CU), Warren Nakamura (Honolulu FCU), James Jordan (Schools Financial CU), Timothy Kramer (KeyPoint CU), Suzanne Longson (Sonepco FCU), Darren Williams (Wescom Central CU), Adam Denbo (California Agribusiness CU) and Robin Lentz (Cabrillo CU), among others.
NCUA claims as conservator of the corporate giant since last March it has the legal right to file any suits on behalf of all of the credit union members/owners. "The Conservator, and not individual member credit unions, thus has the exclusive right to pursue claims against current and former officers and directors for breaches of duty resulting in losses to the credit union and its members," NCUA told the state court in a motion to intervene in the case.
"As the Conservator represents the interests of the federal credit union system and all of the members, its interests are not adequately represented by the existing parties," NCUA told the court.
