The $3.3 billion Northwest Federal Credit Union is suing to end its business contracts with the National Association of Realtors (NAR) signed in 2012 when the 1.2 million-member organization agreed to merge its credit union with the Herndon-Va.-based NWFCU.

NWFCU's lawsuit is seeking a declaratory judgment to specifically end the NAR's credit card agreement prior to its termination date, according to the credit union's complaint filed last month in U.S. District Court in Alexandria, Va.

In May 2012, the Chicago-based NAR approved its $75 million Realtors Federal Credit Union to consolidate with NWFCU.

In 2009, when the credit union opened for business, it was heralded as the industry's first national virtual credit union with a potential membership of one million. However, the new credit union lost money and ended up with only 7,928 members when it merged with NWFCU.

Following the consolidation, RFCU kept its trade name and brand, under which financial products and services, including the disputed RFCU branded credit card, continue to be promoted on NAR's website as a division of NWFCU with a link for NAR members to join the credit union under its brand name.

In anticipation of the merger, NWFCU and RFCU signed a banking services agreement and a trademark license agreement to offer banking, loan and other financial products and services to eligible NAR members. And in June 2014, the organizations inked a credit card agreement to offer personal consumer and business credit card products to eligible NAR members, according to NWFCU's civil lawsuit.

In late 2017, NWFCU notified NAR that it wanted to terminate the banking services, trademark licenses and credit card agreements. While the lawsuit said the organizations held “prompt, good faith negotiations,” they came to an impasse in February.

According to the lawsuit, the center of the controversy involves the credit card agreement and whether NAR is entitled to any monetary damages beyond what the credit union has already paid. It appears the banking services and the trademark license agreements are not in dispute because NWFCU claims it is entitled to terminate these agreements at any time.

Because the credit union wanted to end the credit card agreement with NAR before its official termination date of Dec. 31, 2024, NWFCU was required to pay NAR $1.4 million, the equivalent of five minimum annual royalty payments of $280,000.

The credit union argues NAR is not entitled to any additional monetary damages beyond the $1.4 million early termination payment.

In the lawsuit, NWFCU did not specifically state the business or strategic reasons for terminating the agreements with NAR.

On March 13, the same day that the credit union filed its lawsuit, NWFCU provided a 90-day written notice to NAR of its intent to terminate the agreements on June 11.

Although NAR did not, as of Thursday afternoon, file a legal brief in response to the credit union's lawsuit, NAR General Counsel Katie Johnson said, “We are disappointed with NWFCU's decision to not to honor its commitment, but we remain focused on our members and ensuring they have a variety of personal and professional products and resources available to help them achieve their business and financial goals.”