All redactions made pursuant to exemption (b)(6) of the FOIA – personal privacy
UNITED STATES OF AMERICA
BEFORE THE NATIONAL CREDIT UNION ADMINISTRATION
In the Matter of [redacted]
Cal State 9 Credit Union
Decision and Order on Appeal
This matter comes before the National Credit Union Administration Board (Board) pursuant to Section 709.8 of the NCUA Regulations (12 C.F.R. 709.8), as an appeal of the determination by the Liquidating Agent of Cal State 9 Credit Union denying [redacted] claim in the amount of $ [redacted].
Background and Chronology
Cal State 9 Credit Union (Cal State 9 or the Credit Union) was a federally insured, state chartered credit union located in Concord, California. On June 30, 2008, the National Credit Union Administration placed Cal State 9 into liquidation and named staff in both Region V and the Asset Management and Assistance Center as agents for the liquidating agent.1 Patelco Credit Union entered into a purchase and assumption agreement with NCUA, acquiring most of the assets and liabilities of Credit Union 9 upon its liquidation.
[redacted] was a member of Cal State 9. On November 1, 2004, [redacted] executed a durable power of attorney (POA) appointing [redacted], [redacted], with a (POA) for [redacted]. On November 5, 2004, a joint account agreement was signed establishing a joint account for [redacted], [redacted] and [redacted], a friend of [redacted]. [redacted] signed as POA for [redacted], [redacted] and [redacted] signed as joint owners. On January 6, 2005, [redacted] executed a POA appointing [redacted] with a power of attorney. This POA revoked all previous POAs. On February 17, 2006, a court order was signed appointing [redacted] as guardian over the estate and person of [redacted], pending [redacted] qualifying and obtaining required bonding. No bond was ever obtained. On March 6, 2006, [redacted] withdrew the entire proceeds ($[redacted]) from the [redacted] joint account. The check was made out to “[redacted] as Guardian for the Benefit of [redacted]”. On March 7, 2006, a court order was signed on motion withdrawing [redacted] application for permanent guardianship over [redacted]. [redacted] died on July 22, 2006. [redacted] was appointed personal representative of [redacted] estate on November 14, 2006. On November 29, 2007, [redacted], through her attorney, filed suit in California State Court against the Credit Union for the $[redacted] it had paid to [redacted].
The NCUA Board liquidated the Credit Union on June 30, 2008. Pursuant to the FCU Act, NCUA then had the [redacted] lawsuit removed to federal district court, had the NCUA Board substituted for the Credit Union as defendant, and had the case stayed.
On July 29, 2008, AMAC sent [redacted] attorney a creditor claim notice pursuant to §709.4 of the NCUA Regulations (12 C.F.R. §709.4). The preamble to this regulation specifically states that “[a]ll claimants, including those involved in litigation against the credit union at the time of the liquidation, must file a claim within the period provided for the notice.” See 56 Fed.Reg. 56923 (Nov. 7, 1991). On August 15, 2008, [redacted] attorney filed a claim for $ [redacted] plus interest, the same claim as in the above-noted law suit. AMAC denied the claim stating that [redacted] had the right to withdraw the funds from the account as a joint owner of the account.2 We received [redacted] October 2, 2009 appeal on October 13th .
We then notified [redacted] attorney that the appeal would be handled as a creditor claim appeal pursuant to §709.8(c)(1) of the NCUA Regulations, rather than an insurance claim appeal pursuant to §745.202. We further clarified that pursuant to §709.7 of the NCUA Regulations, [redacted] could either pursue her lawsuit or the administrative appeal to the Board, but not both. See discussion in preamble at 56 Fed.Reg. 56923 (Nov. 7, 1991). On February 10, 2010, [redacted] attorney wrote indicating that [redacted] would pursue the administrative appeal to the Board, enclosing a signed stipulation for dismissal of the lawsuit with prejudice.
AMAC disallowed the original claim based on the fact that the share account agreement indicated joint ownership (between [redacted] and [redacted]) and all joint owners had full access to the account. AMAC asserted that [redacted] could legally withdraw the funds from the account as a joint owner. AMAC did not address the fact that the Credit Union distributed the funds to [redacted] based on incomplete documentation that [redacted] was [redacted] guardian. It appears that the Credit Union allowed [redacted] to withdraw the funds based on the (incorrect) conclusion that [redacted] was [redacted] guardian.3
We agree with AMAC’s position that the guardianship issue is irrelevant since [redacted] was a joint owner with rights to withdraw funds from the account. As noted above, [redacted] had a legal POA based on the form executed on November 1, 2004. On November 5, 2004 [redacted] opened the joint account for [redacted] by signing as POA for [redacted] and signing for herself as joint owner; [redacted] signed as the third joint owner. The 3-party joint account gave both [redacted] and [redacted] full rights to all of the funds in the account as joint owners; [redacted] was entitled to make a valid withdrawal on March 6, 2006 as a joint owner. The fact that [redacted] rather than [redacted] at that point had a POA for [redacted] would not affect [redacted] joint ownership interest. [redacted] attorney alleges that [redacted] was no longer joint owner when she made the withdrawal on March 6, 2006. [redacted] attorney presents no conclusive evidence to show that [redacted] was removed as joint owner. As an attachment to [redacted] appeal, her attorney submitted a Credit Union generated document that notes [redacted] as joint owner and does not list [redacted] as joint owner on the account. There is only one line on this form for a joint owner name so perhaps multiple joint owners cannot be listed. In addition, it appears that this document is dated July 26, 2007, seventeen months after the Credit Union distributed the funds to [redacted] and one year after [redacted] death. We do not believe this form evidences that [redacted] was not a joint owner at the time the funds were distributed. The account agreement (signature card) evidencing the three party joint account had never been changed.
Based on the above analysis and documentation that we reviewed, we believe that AMAC appropriately denied the claim. [redacted] was entitled to the funds in the account as a joint owner when the Credit Union distributed the funds to her on March 6, 2006.
For the reasons set forth above, it is ORDERED as follows:
The decision of the National Credit Union Administration’s Asset Management and Assistance Center (AMAC) denying [redacted] claim in the amount of $ [redacted] is affirmed and [redacted] appeal is denied.
The Board’s decision constitutes a final agency determination. Pursuant to 12 C.F.R. §709.8(c)(1)(iv)(B), this final determination is reviewable in accordance with the provisions of Chapter 7, Title 5, United States Code, by the United States Court of Appeals for the District of Columbia or the court of appeals for the Federal judicial circuit where the FCU’s principal place of business was located. Such action must be filed within 60 days of the date of this final determination.
So ORDERED this 18th day of March, 2010 by the National Credit Union Administration Board.
Secretary, NCUA Board