TRAVERSE CITY, Mich.—4Front Credit Union here has been ordered to pay $1.132 million in damages to John M. Floyd & Associates, the Texas-based provider of overdraft services to credit unions.
A jury assessed the penalty after a trial here over a contract dispute that lasted nearly a year, according to the Record Eagle. The trial followed two rounds of unsuccessful mediation.
At issue was a contract signed by the former Members First Credit Union, which merged with Bay Winds CU in 2015 to create 4Front, CEO David Leusink told the Record Eagle.
Floyd & Associates had argued that contract was to be extended through 2017 if the credit union shared the company’s services with another entity, according to records filed in 13th Circuit Court.
“The Agreement provides that JMFA would be compensated for another 36 months beginning on the date of the merger,” the amended complaint states, the Record Eagle reported.
Floyd & Associates contended in its suit that 4Front benefitted from Floyd & Associates’ overdraft and courtesy pay program but that the credit union was not paying for them.
The Record Eagle reported that after the three-day trial jurors ruled in favor of the company.
4Front’s Leusink was quoted by the Record Eagle as saying it expected it would pay some damages to John M. Floyd & Associates, but the $1-million order was “much greater” than had been expected.
Leusink told the Record Eagle it’s too early to say whether 4Front will appeal the decision.