Cal Coast–SDCCU Lawsuit: SDCCU’s Exit, NCUA Pause, Court Ruling

The lawsuit between Cal Coast Credit Union and San Diego County Credit Union ended, for practical purposes, on April 30, 2026, when a San Diego Superior Court judge refused to force the two institutions to complete their planned $13.5 billion merger. Judge Carolyn M. Caietti denied Cal Coast’s motion for a preliminary injunction, finding SDCCU’s evidence of “widespread institutional compliance issues” at Cal Coast persuasive and calling it “impractical” to compel a merger between two institutions locked in bitter litigation. The underlying breach-of-contract case remains open, but SDCCU’s lead attorney said the ruling “signals the end of any merger between the two institutions.”¹

What the Two Credit Unions Had Agreed To

The two San Diego institutions announced their merger on April 11, 2025. SDCCU, chartered in 1938, holds roughly $9.3 billion in assets. Cal Coast, founded by teachers in 1929, holds more than $3.4 billion.² Under the deal, the combined institution would have operated under the Cal Coast name, with Cal Coast CEO Todd Lane leading it and SDCCU CEO Teresa Campbell retiring. A supplemental agreement gave Cal Coast’s leadership a majority of the combined board.³

Why SDCCU Walked Away

Integration work in the months after signing produced what SDCCU described as systemic noncompliance with California’s credit union regulatory framework at Cal Coast. In court filings and public statements, SDCCU alleged failures to prevent discriminatory lending practices, weak internal oversight and training, and deficient compliance systems.⁴

Specific problems SDCCU flagged included unreported “hard” loan modifications, no monitoring of whether employees followed loan procedures, and Spanish-language marketing materials that were not backed by Spanish-language contracts or disclosures. SDCCU also raised concerns about Cal Coast’s QCash product, an unsecured payday-style loan carrying a 28% APR issued to borrowers with low credit scores, and about auto loans approved through alternative scoring that bypassed low FICO scores.⁵

One episode sharpened the conflict. SDCCU Chief Risk Officer Carolyn Kissick submitted a sworn declaration alleging that Lane told her at a September 2025 meeting: “I am a dictator and I run a dictatorship. I do not care what you say or what you think.” Lane called the allegation “categorically inaccurate.”⁶ SDCCU also disclosed that Cal Coast’s Chief Audit and Risk Officer, Kellen Gill, had been arrested for DUI in August 2023 and later convicted; Cal Coast responded that a misdemeanor DUI is not a crime of moral turpitude under California law and that Gill had no obligation to report it.⁷

SDCCU terminated the merger agreement in November 2025, invoking what it described as its contractual right to exit for uncured material breaches.⁸

Why Cal Coast Sued

Cal Coast told the court a different story. It accused SDCCU of buyer’s remorse and of manufacturing excuses to renegotiate core terms, including demands for control of more than 90% of board seats and a change in leadership.⁸ Lane described the operational and risk-tolerance gaps SDCCU cited as normal for a large integration, defended lending in underserved neighborhoods such as Logan Heights as intentional mission-driven work, and pointed to annual NCUA examinations, biennial state exams, and continuous external audits as evidence of oversight.⁹

Cal Coast also attacked Campbell personally, noting in filings that she was paid over $18 million in 2024 and alleging she had mismanaged a “severe liquidity crisis” at SDCCU in 2022. Campbell responded that SDCCU “remains well-capitalized, well-managed, and financially sound.”¹⁰

The NCUA Pause

The federal regulator complicated Cal Coast’s case. On January 27, 2026, NCUA Western Region Director Julie Cayse sent Campbell a three-page letter stating that the agency was not prepared to approve the merger, citing “multiple weaknesses in governance practices and strategic planning” and laying out nine provisions the parties would have to address before the NCUA would reconsider.¹¹ Those requirements included a defined governance and reporting structure for day one, projected cost savings, accounting and recordkeeping policies, and an independent technology consultant to plan integration of core processing, digital banking, and payment networks. Cal Coast’s Robert Scheid called the letter “procedural, not punitive.”¹²

What the Judge Ruled

Judge Caietti issued an 11-page order on April 30, 2026, denying Cal Coast’s motion for a preliminary injunction. The ruling turned on three findings.

Cal Coast was unlikely to succeed on its breach-of-contract or specific-performance claims. The judge found SDCCU’s compliance evidence “persuasive,” including the undisclosed loan modifications and the absence of systems to prevent discriminatory practices.13
Specific performance was “discretionary and inappropriate.” The supplemental merger agreement provided for monetary damages on termination and said nothing about specific performance, and NCUA approval remained ungranted, which the judge found made the remedy futile.³
The balance of harms cut against Cal Coast. Forcing the merger would strip SDCCU of operational autonomy, while Cal Coast’s claimed injuries, including reputational damage and the loss of a “unique merger opportunity,” could be addressed through money damages.¹³

The judge wrote that it was “impractical” and “unrealistic” to force two institutions into a merger while they were engaged in bitter litigation against each other.¹

Where Things Stand

The denial did not formally end the case. The underlying breach-of-contract lawsuit is still active, and Cal Coast said it was “evaluating the decision” and remained “confident in the merits of our case.”¹³ What is off the table is a court-ordered merger. Any recovery Cal Coast wins from here would be in money, not in a combined institution. No trial date has been set, and there is no public indication of settlement talks.

1
San Diego Union-Tribune. Judge to San Diego Credit Unions: Court Will Not Force Merger
2
California Coast Credit Union. CCCU and SDCCU Merger Press Release
3
Credit Union Times. California Judge Denies Cal Coast’s Preliminary Injunction Over SDCCU Merger
4
San Diego County Credit Union. SDCCU Merger Update
5
CorpGov. Corporate Governance Turned Asunder at Cal Coast Credit Union
6
American Banker. I Did Not Call Myself a Dictator, Credit Union CEO Says
7
Credit Union Times. NCUA Letter Says Contested California Merger Cannot Move Forward
8
San Diego Business Journal. Cal Coast Denied Injunction to Save SDCCU Merger
9
CU Today. Not a Dictatorship: Todd Lane Breaks Silence on Cal Coast-SDCCU Battle
10
American Banker. When M&A Goes Sideways: Lessons From a Messy Credit Union Deal
11
Credit Union Times. NCUA’s Three-Page Letter Could Sink California CU Merger
12
CU Today. NCUA’s Pause Triggers Fresh Salvos in $13B CU Merger Dispute
13
The CU Daily. Court Rules Against Cal Coast CU’s Motion for Preliminary Injunction in Merger With SDCCU