SAN DIEGO—A California court has denied California Coast Credit Union’s bid for a preliminary injunction in its dispute with San Diego County Credit Union, leaving the proposed $13-billion “merger of equals” effectively stalled as litigation over the deal’s collapse continues.
In a minute order issued April 30, the Superior Court of California (San Diego County) rejected Cal Coast’s request to force SDCCU to continue operating under merger-agreement restrictions while the broader breach-of-contract case is decided. The court found Cal Coast had not shown it was likely to prevail on the merits or that the balance of harms favored granting such extraordinary relief.
The ruling is a significant setback for Cal Coast, which has argued the injunction was necessary to preserve the “status quo” and prevent SDCCU from taking actions that could undermine the court’s ability to later enforce the deal. As CUToday.info previously reported, Cal Coast has framed the dispute as a straightforward contract issue—“a deal is a deal”—while SDCCU has maintained the merger became untenable due to compliance and governance concerns uncovered after signing.
In denying the injunction, the court pointed to evidence suggesting SDCCU’s concerns were not pretextual. The order cites internal and third-party reviews indicating “widespread institutional compliance issues” and breakdowns in how policies were communicated and followed within Cal Coast, undercutting the argument that SDCCU lacked grounds to terminate the agreement.
The judge also emphasized structural limits of the merger agreement itself, noting it does not include a specific performance clause—meaning the court is unlikely to force the parties to complete the transaction even if a breach is ultimately found.
Additionally, the court found Cal Coast’s requested order would impose significant operational burdens on SDCCU, effectively requiring ongoing coordination, approvals and restrictions on business decisions during litigation. That level of court oversight, the judge said, would be impractical and inappropriate given the deteriorated relationship between the parties.
The decision comes after weeks of escalating legal arguments detailed in CUToday.info’s prior reporting, including a March hearing in which both sides clashed over whether SDCCU could walk away from the deal based on post-signing compliance findings. SDCCU has consistently argued that forcing the merger forward would create a dysfunctional institution, while Cal Coast has warned that losing the transaction would cause irreparable harm.
California Coast commented on the court's decision.
"California Coast Credit Union is disappointed in the court’s decision on the motion," said Cal Coast spokesperson Robert Scheid 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.”
SDCCU offered its perspective.
“We are extremely pleased with Judge Caietti’s carefully reasoned decision denying the preliminary injunction. 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," said attorney Michael Carlinsky of Quinn Emanuel Urquhart & Sullivan LLP, which is representing SDCCU. "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.”