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N.B.A. CREDIT UNION, INC. v. HARGROVE
March 16, 1994
N.B.A. CREDIT UNION, INC., Plaintiff,
SARAH W. HARGROVE, et al., Defendants
The opinion of the court was delivered by: MARVIN KATZ
AND NOW, this day of October, 1993, upon consideration of plaintiff's Motion for Preliminary Injunction and the submissions of the parties, and after a hearing, it is hereby ORDERED that the plaintiff's motion is DENIED.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
1. Plaintiff N.B.A. Credit Union, Inc. ("Credit Union") is a non-profit Pennsylvania corporation chartered and regulated by the Pennsylvania Department of Banking ("Department").
2. Credit Union is comprised of a group that has a common bond of association through membership in the National Business Association, Inc. ("NBA"), a voluntary association of private and public employers and employees.
3. Defendant Sarah W. Hargrove ("Hargrove") is the Secretary of Banking of the Commonwealth of Pennsylvania, with responsibility for administration of the Department, including regulation of Pennsylvania-chartered credit unions. 17 Pa.C.S.A. §§ 101-1504.
4. The National Credit Union Administration ("NCUA") is an independent agency in the executive branch of the federal government, 12. U.S.C. § 1752a. Defendant Roger W. Jepsen ("Jepsen") is the appointed chairmen of NCUA.
5. Credit Union is a federally-insured credit union subject to examination, supervision and regulation by the NCUA. 12 U.S.C. § 1752(7); 12 U.S.C. §§ 1784, 1786.
FIELD OF MEMBERSHIP DISPUTE
6. Pennsylvania chartered credit unions are permitted to accept and service members in accordance with Pennsylvania Law. Pursuant to 17 Pa. C.S.A. § 701 the Department has the duty to regulate membership of Pennsylvania chartered credit unions.
7. Credit Union was chartered on February 3, 1972 as D.V.B.A. Credit Union and was then sponsored by the Delaware Valley Business Association. Credit Union assumed its present name on October 31, 1986, reflecting the change in its sponsor. At that time, its field of membership was expanded to include all members of NBA. Pl. Ex. 1-4.
8. As of March 1990, Credit Union provided services to employer groups in approximately forty (40) states. Pl. Ex. 29, p. 1.
9. In September of 1990 it became apparent to Credit Union and Department that their respective views of Credit Union's authorized field of membership differed. Pl. Ex. 5, 30, p. 2.
10. Specifically, in September of 1990, Credit Union was operating under the view that its field of membership was constrained by Article 8 of its Amended Articles of Incorporation which reads in its entirety:
The membership of the credit union will be limited to: Members of the National Business Association; associations of such persons; employees of the credit union; retired members who retain their membership in the credit union; and members of their immediate families.
Pl. Ex. 4. Department was operating under the view that "Pennsylvania State Chartered Credit Unions are restricted in membership to common associational groups within well defined community or rural districts in Pennsylvania." Pl. Ex. 5.
11. Several discussions between NCUA, Department and Credit Union concerning Credit Union's field of membership culminated in a meeting on April 18, 1991, between the Credit Union Board of Directors, Mary D. France, then Deputy Chief Counsel for the Department, Victor H. Seesholtz, Pennsylvania Bureau of Supervision and Enforcement, and representatives of NCUA.
12. At the April 18, 1991 meeting, the Department presented a draft Cease and Desist Order (the "Order") to Credit Union. The Order addressed the disagreement over Credit Union's field of membership. Credit Union suggested changes to the Order and the Department agreed to some modifications.
13. On April 29, 1991, the Department mailed to Credit Union a copy of the Order which memorialized the modifications agreed to at the April 18, 1991 meeting.
15. The paragraph of the Order pertaining to Credit Union's field of membership ("Field Definition") reads in its entirety:
The Credit Union shall limit its field of membership to members of NBA in the following geographic locations:
(a) the counties of Bucks, Chester, Philadelphia, Delaware and Montgomery, or elsewhere in the Commonwealth of Pennsylvania if prior authorization is granted by the Department pursuant to the requirements of Section 701(a) of the Code.
(b) the counties of Camden, Mercer, Gloucester and Burlington in the State of New Jersey, if prior authorization is obtained form the New Jersey Department of Banking; and
(c) the State of Delaware north of the Delaware Canal, if prior approval is obtained from the appropriate state agency.
All individual members of the Credit Union and all business/employer members of the Credit Union enrolled as of May 1, 1991, not within the above described field of membership may remain members of the credit union if not in violation of the law of the state in which the member is located. No new employee members employed by existing business/employer members located outside the Commonwealth of Pennsylvania may be admitted to membership after May 1, 1991. No new business/employer members outside the field of membership may be admitted to membership after April 18, 1991.
16. The present controversy centers on (a) the parties' differing interpretations of the Field Definition and (b) the parties' differing views regarding refinement or modification of the Field Definition by (i) discussions between the parties subsequent to the Stipulation and (ii) discussions between Credit Union and New Jersey regulators. Complaint PP 18-20, 34-45.
17. Specifically, the dispute is over the ability of New Jersey business/employer groups to enroll new members in Credit Union.
18. Credit Union maintains that the Order is ambiguous. In particular, Credit Union claims the phrase (the "Disputed Phrase"), "No new employee members employed by existing business/employer members located outside the Commonwealth of Pennsylvania may be admitted to membership after May 1, 1991," is inconsistent with provision (b) of the Field Definition which permits Credit Union to operate in four New Jersey counties (the "Four Counties").
19. Credit Union has operated under the assumption that the Disputed Phrase was not intended as a limit on Credit Union's authority, but rather an expression of what Department could authorize without infringing on New Jersey's regulatory authority.
20. Credit Union asserts that the validity of this assumption was confirmed by the Department.
21. Credit Union received a letter on August 8, 1991 from the New Jersey Department of Banking forbidding Credit Union from taking on "any new employee groups from the State of New Jersey," and permitting Credit Union to "service existing employees throughout the State of New Jersey who are members of NBA, Inc. This ...
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