NCUA Sued for Breach of Contracts

A lawsuit filed on February 11, 2019 by large banks and their affiliates that alleges breach of contract by the National Credit Union Administration (NCUA).

In March 2013, NCUA entered into a settlement agreement with Plaintiffs and certain affiliates addressing claims arising out of the purchases of mortgage-backed securities (MBS) by Texans Credit Union and five failed corporate credit unions that were underwritten, sponsored, sold, or issued by Plaintiffs or their affiliates.

As part of the settlement agreement, if NCUA later entered into a settlement with certain third parties involved with Plaintiffs MBS, the NCUA was required to “use good faith, best efforts to obtain from the Third Party a release of [Plaintiffs] as to all claims for contribution, indemnification, or any other liability arising out of or relating in any way to such claims then being settled with such Third Party.”

The lawsuit claims that while the Plaintiffs have fulfilled their obligations under the NCUA settlement agreement, NCUA repeatedly breached its contractual obligation to use its “good faith, best efforts” to obtain releases when settling claims with Third Parties as liquidator/conservator of the credit unions.

The Plaintiffs are seeking monetary damages in an amount to be determined at trial, including attorneys’ fees and other costs and expenses.

The complaint was filed with United States District Court for the District of Columbia.