New Plaintiff In Suit Against DFCU Former Board Member Joins Effort To Have Board Recalled

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Margaret Blohm, a member of DFCU Financial Credit Union who has been active in the group fighting that credit union's attempt to convert to a bank charter, has asked the courts to allow her to join two members in a lawsuit filed against DFCU Financial and two of its board members.

In documents filed with the U.S. District Court, Eastern District of Michigan Southern Division Monday, Blohm has asked to join plaintiffs Richard Sly of Northville Township and Raymond Ward of Dearborn, in their complaint alleging personal damages as a result of the CU's alleged breach of bylaws, misuse of CU funds and employees and failure to provide members access to records related to a proposed conversion attempt.

On May 25, Sly and Ward filed a suit against DFCU Financial and two board members, Harold Lowman and J. Paul Conway, asking that the court grant them a preliminary injunction requiring a special meeting for the purpose of recalling nine board members.

In the defendants' Brief in Opposition to the Preliminary Injunction submitted a week earlier, attorneys stated that any action in favor of the plaintiff's request would be "illegal, unsafe and unsound." They also filed a motion to dismiss the case, in part, because plaintiffs never made any official requests to view the records, therefore lack any standing to complain.

Blohm, Sly and Ward said while they disagree with the defendants' position on this particular issue, they wanted to ensure that the request for injunctive relief is not thrown out of court on a technicality.

By joining the suit, Blohm gives credence to the charge that members made several requests through legal counsel to inspect records related to its proposed conversion attempt, they said.

"Blohm is one of the members of DFCU who did submit a written demand for inspection of the records that are at issue in this lawsuit," according to a motion by Blohm to join the plaintiffs. As a representative of DFCU Owners United, a group that opposed the CU's conversion attempt and launched a petition drive in support of a special meeting for the purpose of recalling board members, Blohm pointed out that she also signed the written demand for the special meeting.

"Blohm's claims and the claims of the current plaintiffs are identical, and therefore this standard is easily met," the papers state. "Defendants will suffer no prejudice if Blohm's motion is granted."

In a separate document in response to the defendants' opposition asking for dismissal of the case, attorneys for the plaintiffs said any argument to dismiss should be rejected for four independent reasons:

* "First, because defendants already refused to provide these records to other members, any demand by plaintiffs was futile."

* "Second, the complaint itself serves as a written demand upon defendants for these records."

* "Third, plaintiffs recently made written demand by letter upon defendants." Among the exhibits was a letter dated June 29, 2006 and addressed to the defendants' attorney, Daniel E. Loeb, of Fried, Frank, Harris, Shriver & Jacobson, LLP, of Washington D.C., that demanded inspection by plaintiffs of specific records, documents, PowerPoint presentations and studies related to the conversion. "Please let me know by July 5, 2006, whether your clients will comply with this demand..." wrote Attorney Bryan R. Walters, of Varnum, Riddering, Schmidt & Howlett, LLP., Grand Rapids.

"Finally, Margaret Blohm, one of the members who made the original written demand for inspection of DFCU in March 2006, has moved to intervene as a plaintiff."

Both sides were due to meet in U.S. Courthouse, Port Huron on Thursday, July 6, for a preliminary injunction hearing. (c) 2006 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.

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