A California judge has denied California Coast Credit Union’s bid to force San Diego County Credit Union (SDCCU) to move forward with their abandoned merger, dealing a major setback to a deal that would have created the fourth-largest credit union in California.
With the new ruling, SDCCU said it was pleased with what it called Judge Carolyn Caietti’s “thoroughly reasoned decision” denying the injunction request, and finding “multiple reasons why Cal Coast is unlikely to succeed in its litigation on the merits.”
Meanwhile, Cal Coast said in a separate statement that it is reviewing the ruling and expressed disappointment with the court’s decision on the motion.
In the April 30 ruling, San Diego Superior Court Judge Carolyn Caietti denied Cal Coast’s motion for a preliminary injunction seeking to compel SDCCU, San Diego’s largest and longest-serving credit union, to proceed with a merger agreement the two institutions first announced in spring 2025.
The proposed transaction would have combined the $9.2 billion SDCCU and the $3.3 billion Cal Coast into a $13.5 billion institution with more than 1,400 employees. The combined entity was projected to become the 16th-largest credit union in the country.
The merger fight escalated after SDCCU terminated the agreement in November 2025, citing what it called “an abjectly lax and deficient compliance culture” at Cal Coast, the firm said this month.
Months earlier, SDCCU had discovered what it called “alarming lapses and an utter lack of compliance infrastructure at Cal Coast.”
Subsequently, SDCCU said it repeatedly warned Cal Coast that its lack of a compliance management system, deficient training programs, incomplete regulatory reporting, misleading reporting to credit bureaus, and discriminatory practices were impediments to moving forward with the merger. However, Cal Coast’s leadership dismissed the concerns.
Cal Coast then sued SDCCU in California Superior Court, alleging SDCCU improperly terminated the merger agreement.
In Caietti’s opinion denying Cal Coast’s motion for a preliminary injunction, the judge wrote that evidence presented to the court “supports the conclusion that there were widespread institutional compliance issues and that Cal Coast failed to implement systems preventing discriminatory practices,” among other reasons.
Mike Carlinsky, managing partner at Quinn Emanuel and counsel for SDCCU, said the ruling “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 in a statement.
Cal Coast said in a statement that it is disappointed in the court’s decision on the motion and is evaluating the decision.
“We respect the Court and remain confident in the merits of our case,” said Cal Coast. “As we evaluate the ruling, our top priority continues to be serving our members and maintaining full compliance with all applicable laws and regulations.”
Judge’s comments
In the ruling, the court’s opinion cited concerns about Cal Coast’s compliance systems and management oversight.
According to the ruling, the evidence “supports the conclusion that there were widespread institutional compliance issues and that Cal Coast failed to implement systems preventing discriminatory practices.”
Judge Caietti also wrote that “SDCCU could not have been expected to be aware of alleged compliance issues that Cal Coast itself had no knowledge of,” while further finding “that there is an overall lack of compliance and lack of knowledge of the alleged compliance problems by Cal Coast.”
The court cited evidence alleging 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; and had a lack of confidence that Spanish-speaking call center staff knew what to do when dealing with Spanish-speaking loan applicants.
The judge additionally questioned whether regulators would approve the merger, writing that “As of now, the [National Credit Union Association (NCUA)] will not approve the merger and therefore any injunction would be futile.”
The NCUA, according to the ruling, identified “some areas of concern which appear to form the basis by SDCCU to seek termination of the merger.”
SDCCU had alleged Cal Coast made student loans tied to laptop purchases for San Diego State University students without complying with applicable student loan regulations, offered inconsistent auto loan pricing without documented controls, and allowed call center employees to modify delinquent loans without proper reporting.