Court Rules Against Cal Coast CU’s Motion for Preliminary Injunction in Disputed Merger with San Diego County CU

SAN DIEGO — A California judge has denied a request by California Coast Credit Union to halt a proposed merger with San Diego County Credit Union, finding the plaintiff failed to demonstrate it was likely to succeed on its claims or that the balance of harms justified an injunction.

In a minute order issued April 30, Judge Carolyn M. Caietti of the Superior Court of California, County of San Diego, rejected Cal Coast’s motion for a preliminary injunction that sought to block SDCCU from proceeding with the merger while litigation continues. 

The proposed merger would have created a $13-billion credit union.

The court ruled that Cal Coast did not establish a likelihood of success on either its breach of contract or specific performance claims, both of which stem from SDCCU’s termination of a strategic merger agreement between the two institutions.

“We are extremely pleased with Judge Caietti’s carefully reasoned decision denying the preliminary injunction,” Michael Carlinsky, an attorney with Quinn Emanuel Urquhart & Sullivan LLP, which is representing SDCCU, said in a statement. “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.” 

About the Dispute

As the CU Daily has been reporting, the dispute centers on SDCCU’s November 2025 decision to terminate the agreement “for cause,” citing alleged compliance deficiencies and operational concerns identified during due diligence. Cal Coast argued the termination was improper and sought to enforce the merger agreement or prevent SDCCU from moving forward independently.

However, the court found that SDCCU presented sufficient evidence of compliance concerns and that Cal Coast failed to show SDCCU lacked a contractual basis to terminate the agreement. The ruling noted that documentation and testimony suggested “widespread institutional compliance issues” at Cal Coast that could reasonably justify SDCCU’s actions. 

Cal Coast Responds

“California Coast Credit Union is disappointed in the Court’s decision on the motion,” Cal Coast Spokesperson Robert Scheid said in a statement. “We respect the Court and remain confident in the merits of our case. As we evaluate the ruling, our top priority continues to be serving our members and maintaining full compliance with all applicable laws and regulations.”

Additional Rulings

Judge Caietti also rejected Cal Coast’s request for specific performance — a legal remedy that would compel completion of the merger — stating such relief is discretionary and inappropriate given the circumstances. The court emphasized that the merger still requires regulatory approval from the National Credit Union Administration, which has not yet been granted and could ultimately render the issue moot. 

In assessing the request for injunctive relief, the court concluded that the balance of harms weighed against Cal Coast. It cited potential operational disruption to SDCCU, including restrictions on employee compensation and business decisions, as well as the impracticality of forcing two adversarial parties to proceed with a merger.

The judge further determined that Cal Coast’s claimed injuries — including reputational harm — were not sufficient to justify an injunction, particularly since monetary damages could address certain losses.

What the Court Said

Among the statements made by the court:

• “SDCCU’s argument that there is an overall lack of compliance and lack of knowledge of the alleged compliance problems by Cal Coast, which is the primary material breach here, is persuasive.”
• “The overall evaluation of this evidence supports the conclusion that there were widespread institutional compliance issues and that Cal Coast failed to implement systems preventing discriminatory practices.”
• “The evidence demonstrates Cal Coast was not reporting hard loan modifications and did not disclose those to SDCCU; did not monitor employees to ensure compliance with proper loan procedures; procedures are not distributed to employees; there was a lack of confidence that Spanish-speaking call center staff knew what to do when dealing with Spanish-speaking loan applicants…”
• “The evidence suggests Cal Coast leadership was either unaware of or impliedly/constructively approved the alleged issues of noncompliance and discriminatory practices.”
• “The merger requires regulatory approval, which to date, has not occurred and is questionable whether it will occur. The Court would not order specific performance where the merger would be barred by futility.”
• “As of January 27, 2026, the NCUA deferred its decision… citing in part, identification of ‘…multiple weaknesses in governance practices and strategic planning related to this proposed merger.'”
• “It is noteworthy the NCUA letter of January 27, 2026, identifies at least some areas of concern which appear to form the basis by SDCCU to seek termination of the merger.”
• “The Court finds the harm to SDCCU is greater if the injunction were granted than the harm to Cal Coast if the injunction is not.”
• “Should the Court grant this injunction, SDCCU will lose its operational autonomy… This will greatly impair SDCCU’s ability to operate and govern itself.”

What Now?

The court’s order leaves SDCCU free to continue its operations and merger-related decisions while the underlying case proceeds.

The lawsuit, filed in November 2025, seeks specific performance and damages related to the failed merger agreement.

In an earlier interview with the CU Daily, Cal Coast CEO Todd Lane denied many of SDCCU’s allegations, said there is no “bad blood” between the credit unions, and expressed his desire for the merger to continue.