SAN DIEGO— What many expected would be a pivotal courtroom showdown last week over the collapsed merger between California Coast Credit Union and San Diego County Credit Union instead turned into a procedural reset, as a San Diego Superior Court judge declined to rule on Cal Coast’s request to force SDCCU back to the negotiating table, Brandy Bruyere, partner at Honigman, LLP said.
As CUToday.info reported, a planned merger between Cal Coast and San Diego County Credit Union, which would create the fourth-largest credit union in California and the 16th-largest in the U.S., has come to a screeching halt. The credit unions filed a merger application with the NCUA and state regulators last year. Unfortunately, the credit unions reached an impasse that could lead to costly litigation. In various court filings, one side claims significant compliance failures arose that no longer made the merger tenable. The other side claims buyers’ remorse.
On Friday, Feb. 20, a judge in the Superior Court of California, County of San Diego, held a hearing in the case involving the merger breakdown between Cal Coast and SDCCU.
“While it seemed the court would be considering Cal Coast’s request for injunctive relief in the form of an order for SDCCU to perform its obligations under the merger agreement, the hearing turned out to be much more procedural in nature,” Bruyere said. “In short, a more substantive hearing is now tentatively scheduled for early March to decide if the parties must resume progress towards NCUA approval.
“The judge was clear from the outset that she was not going to be deciding on Cal Coast’s motion but rather, needed to clear up some confusion on the various exhibits submitted by each credit unions’ attorneys in support of their filings,” continued Bruyere. “To put this in perspective, the docket has dozens of entries, and each credit union has filed multiple declarations, or statements, from executives and/or senior management.”
The court also received “compendiums” of evidence from each side, made up of numerous exhibits totaling thousands of pages, Bruyere said.
“After confirming the parties’ understanding that ‘very little’ of the various exhibits are actually under seal, much of the hearing focused on aligning on the very administrative issue of how the evidence submitted to the court is organized,” explained Bruyere. “Since no substantive decisions were made, what’s next for this saga?”
Bruyere said the assigned judge is apparently on vacation for most of the month of March, so the parties agreed to a three-hour hearing tentatively scheduled for March 3, 2026.
“However, the court was clear that this was an ambitious deadline given the amount of filings in the record,” she said. “So, it is quite possible the hearing could be pushed to April. If this is the case, a decision on whether or not to order SDCCU to comply with the merger agreement may take a while.”
What about these thousands of pages of evidence? One item that was available is the January 27, 2026, letter from the NCUA Western Region, deferring the decision on the merger until a variety of issues that were identified during the NCUA’s October 2025 merger review were addressed, Bruyere explained.
This included:
- A clearly defined governance structure and executive team that will be responsible for “ultimate decision-making on legal day one”
- A strategic plan for legal day one with both short- and long-term operational goals, the defined composition of the combined credit union’s lending and investment portfolio, risk tolerances, and identifying any potential new products
- A signed engagement letter with a third-party consultant to “assist with the development of project plans and integration” of key functions like the core, online banking, and electronic payments
- “Comprehensive, written integration plans” including a consolidated IT risk assessment, an integration timeline for the core, network infrastructure, standardization of document imaging and formatting, and timelines/milestones for integrating digital banking
“These kinds of detailed requests from the Western Region have become rather standard in what it calls ‘mega mergers’ or mergers of equals,” Bruyere said. “Of note, this was not responsive to the pending litigation, which was filed nearly two months before the NCUA issued its deferral letter.”
Overall, significant integration work by the credit unions would still be required to obtain the NCUA’s approval for the merger, Bruyere emphasized.
“The outcome of next week’s hearing, should the court not delay into April, could drive talks between the parties for how to proceed—such as through some agreed upon settlement,” noted Bruyere. “It is also possible the losing party appeals. This will depend on factors like how much more the credit unions are able or willing to spend on litigation versus whether there is a compromise that both sides can live with. More to come as this case progresses.”
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