Tuesday, May 5, 2026
Judge rejects bid to force credit union merger
Judge Carolyn M. Caietti on Thursday denied Cal Coast's bid for a preliminary injunction that would have forced the San Diego County Credit Union back to the negotiating table.
A Superior Court judge has refused to force a multibillion-dollar credit union merger between California Coast Credit Union and San Diego County Credit Union, finding the plaintiff failed to show a likelihood of success and that federal regulators had not approved the deal.
Judge Carolyn M. Caietti on Thursday denied Cal Coast's bid for a preliminary injunction that would have forced SDCCU back to the negotiating table. Her minute order leaves SDCCU's Nov. 14, 2025, termination of the Supplemental Merger Agreement intact. SDCCU walked away for cause, citing what it called Cal Coast's misrepresentations about its regulatory compliance. *California Coast Credit Union v. San Diego County Credit Union*, 25CU063843C, (S.D. Super., Ct., filed Nov. 25, 2025)
Michael B. Carlinsky, firmwide co-managing partner at Quinn Emanuel Urquhart & Sullivan and counsel for SDCCU, praised Caietti's denial of the preliminary injunction, calling the ruling carefully reasoned.
"It affirms SDCCU's decision to terminate the merger agreement with Cal Coast and we believe signals the end of any merger between the two institutions. We hope that the court's decision will persuade Cal Coast to drop its baseless litigation so that the parties can move on with their respective businesses," Carlinsky said.
Blair Connelly, a partner at Latham & Watkins LLP in New York represents California Coast Credit Union, but was not available for comment
Caietti held that the requested relief was mandatory, not prohibitory, triggering a heightened standard reserved for "extreme cases where the right thereto is clearly established." She rejected Cal Coast's characterization of the order as merely preventing termination, writing that "no matter the wording of the request, the substance of the injunction would affirmatively require SDCCU to continue with the merger and affirmatively notify, discuss, and receive permission from Cal Coast before engaging in conduct outlined in Sections 5.1.1, 5.1.5, and 5.1.6 of the SMA."
On the merits, the court credited SDCCU's evidence that Cal Coast's senior leadership was unaware of unwritten policies governing individualized interest-rate negotiations, indirect auto-loan pricing, ad hoc loan modifications and Spanish-language disclosures. "If these policies were not written and Cal Coast leadership was not aware of these policies, Cal Coast's argument that SDCCU should have been aware of these policies during the due diligence period falls short," Caietti wrote.
The court also relied on a Jan. 27 letter from the National Credit Union Administration deferring action on the merger application and identifying "multiple weaknesses in governance practices and strategic planning." Caietti wrote that "the Court would not order specific performance where the merger would be barred by futility."
The order details compliance concerns cited in SDCCU's termination notice, including memoranda from Sheppard Mullin LLP addressing certificate-of-deposit rate negotiations, an indirect lending program, alternative credit scoring in indirect auto finance and hardship modifications. SDCCU alleged Cal Coast failed to report certain student loans on its quarterly NCUA Forms 5300 and that call-center employees modified delinquent loans without reporting them.
Caietti recounted a September 2025 meeting in which SDCCU Chief Risk Officer Carolyn Kissick confronted Cal Coast President and CEO Todd Lane regarding the findings. According to Kissick's sworn declaration, Lane responded: "I run a dictatorship and I am the dictator. I do not care what you say or what you think. I do not care what anyone says or what anyone thinks. I am a dictator and I run a dictatorship and I do not care what you say or think."
The court rejected Cal Coast's contention that any compliance gaps would be cured by adopting SDCCU's policies, noting Cal Coast's leadership would control a majority of the combined board and that it declined to adopt certain recommendations.
Balancing the equities, Caietti found Cal Coast's claimed loss of a "unique merger opportunity" and reputational harm could be remedied with damages, while a mandatory injunction would strip SDCCU of "operational autonomy."
Judge Carolyn M. Caietti on Thursday denied Cal Coast's bid for a preliminary injunction that would have forced SDCCU back to the negotiating table. Her minute order leaves SDCCU's Nov. 14, 2025, termination of the Supplemental Merger Agreement intact. SDCCU walked away for cause, citing what it called Cal Coast's misrepresentations about its regulatory compliance. *California Coast Credit Union v. San Diego County Credit Union*, 25CU063843C, (S.D. Super., Ct., filed Nov. 25, 2025)
Michael B. Carlinsky, firmwide co-managing partner at Quinn Emanuel Urquhart & Sullivan and counsel for SDCCU, praised Caietti's denial of the preliminary injunction, calling the ruling carefully reasoned.
"It affirms SDCCU's decision to terminate the merger agreement with Cal Coast and we believe signals the end of any merger between the two institutions. We hope that the court's decision will persuade Cal Coast to drop its baseless litigation so that the parties can move on with their respective businesses," Carlinsky said.
Blair Connelly, a partner at Latham & Watkins LLP in New York represents California Coast Credit Union, but was not available for comment
Caietti held that the requested relief was mandatory, not prohibitory, triggering a heightened standard reserved for "extreme cases where the right thereto is clearly established." She rejected Cal Coast's characterization of the order as merely preventing termination, writing that "no matter the wording of the request, the substance of the injunction would affirmatively require SDCCU to continue with the merger and affirmatively notify, discuss, and receive permission from Cal Coast before engaging in conduct outlined in Sections 5.1.1, 5.1.5, and 5.1.6 of the SMA."
On the merits, the court credited SDCCU's evidence that Cal Coast's senior leadership was unaware of unwritten policies governing individualized interest-rate negotiations, indirect auto-loan pricing, ad hoc loan modifications and Spanish-language disclosures. "If these policies were not written and Cal Coast leadership was not aware of these policies, Cal Coast's argument that SDCCU should have been aware of these policies during the due diligence period falls short," Caietti wrote.
The court also relied on a Jan. 27 letter from the National Credit Union Administration deferring action on the merger application and identifying "multiple weaknesses in governance practices and strategic planning." Caietti wrote that "the Court would not order specific performance where the merger would be barred by futility."
The order details compliance concerns cited in SDCCU's termination notice, including memoranda from Sheppard Mullin LLP addressing certificate-of-deposit rate negotiations, an indirect lending program, alternative credit scoring in indirect auto finance and hardship modifications. SDCCU alleged Cal Coast failed to report certain student loans on its quarterly NCUA Forms 5300 and that call-center employees modified delinquent loans without reporting them.
Caietti recounted a September 2025 meeting in which SDCCU Chief Risk Officer Carolyn Kissick confronted Cal Coast President and CEO Todd Lane regarding the findings. According to Kissick's sworn declaration, Lane responded: "I run a dictatorship and I am the dictator. I do not care what you say or what you think. I do not care what anyone says or what anyone thinks. I am a dictator and I run a dictatorship and I do not care what you say or think."
The court rejected Cal Coast's contention that any compliance gaps would be cured by adopting SDCCU's policies, noting Cal Coast's leadership would control a majority of the combined board and that it declined to adopt certain recommendations.
Balancing the equities, Caietti found Cal Coast's claimed loss of a "unique merger opportunity" and reputational harm could be remedied with damages, while a mandatory injunction would strip SDCCU of "operational autonomy."
