Nearly 11 months after DFCU Financial in Dearborn, Mich., announced plans to convert to a mutual savings bank - and six months since it withdrew the plan - the $1.8 billion-asset credit union and its members remain embroiled in a legal battle over an alleged bylaw violation.
The two sides are expected to face off in Detroit's Wayne County 3rd Circuit Court on Nov. 17 to plead their cases to Judge Cynthia D. Stephens. This comes after a federal judge refused to hear the case, stating that he lacked jurisdiction.
The member-plaintiffs want the credit union to hold a special meeting at which they could vote on removing certain directors. More than 1,760 members signed a petition, submitted in April, asking for a recall election. The credit union's bylaws require only 500 signatures to call a special meeting, and the recall vote was supposed to be held May 18.
But on May 10, a month after DFCU withdrew its bank application, officials posted a letter on the credit union's Web site, stating that the special meeting was being called off out of concern that the vote would reduce the number of directors below the federal mandate of five, thus threatening its safety and soundness.
The National Credit Union Administration has told DFCU officials that a recall of all nine members would not affect safety and soundness, but the regulator has refused to intervene on members' behalf.
"It's our opinion that the supervisory committee, in the event of a recall, would become the temporary board until a new board is elected," an NCUA spokesman told The Credit Union Journal this year.
In their complaint, filed Aug. 18, four credit union members asked the court to require DFCU to reschedule the special meeting. In addition, they asked that DFCU Financial be required to make available all materials related to the proposed conversion for unfettered inspection. DFCU has said members can view the documents but only if they sign a confidentiality agreement.
