Montgomery judge dismisses Birmingham-Southern College lawsuit against state

A Montgomery Circuit Court Judge Wednesday dismissed a lawsuit from Birmingham-Southern College that accused State Treasurer Young Boozer of wrongfully withholding a loan from the financially troubled school.

Judge James Anderson said he was “sympathetic” to the college, but he dismissed the case after a roughly 60 minute hearing that examined the word “may” in the law and looked at legal precedent around state contracts.

“The basic question is with the statute worded with the word ‘may,’” Anderson said at the beginning of the hearing.

Over the course of the hearing, attorneys for the college argued that Boozer acted outside of his jurisdiction as a State Treasurer, and that his decision to not provide the college with a loan amounted to a the use of a vito he did not possess.

Adam Plant, one of the college’s attorneys, said that the school is “fighting and scratching” to remain open. He said that whatever discretion the treasurer had, he “abuse[d] that discretion.”

Anderson returned to the question of whether or not he had the power to compel a contract from the state. At points, he cited a June decision in a dispute over a bridge being built in Baldwin County against Alabama Department of Transportation. The case also involved state contracts and allegations of personal vendettas.

“The touchstone is not whether a claim can be framed as falling within one of the Moulton categories — it is whether the claim is against the State, that is, whether a result favorable to the plaintiff would directly affect a contract or property right of the State,” wrote Supreme Alabama Justice Jay Mitchell in a portion quoted by Anderson.

The referenced case, Teplick vs. Moulton, outlines some exceptions to state immunity. The college attorneys had argued that the treasurer could be sued under “arbitrary and capricious manner” exception.

The decision leaves the future of Birmingham-Southern unclear. School officials have said for over a year that without public help, the college will have to close its doors.

The Alabama Legislature this spring approved a bill creating the Distressed Institutions of Higher Education Revolving Loan Program. The bill authorized the state treasurer to provide up to $30 million in loans to certain higher education institutions under the law

BSC applied for a loan this summer, but Boozer denied their request. Birmingham Southern filed a lawsuit on October 18, accusing Boozer of denying the loan in part due personal enmity toward ServisFirst bank, one of BSC’s prime lenders. The school asked for a relief of $16 million.

“The  Legislature disagreed with the Treasurer and created this program to save Birmingham-Southern  College, but the Treasurer has unlawfully exercised a veto by delay of a law the Legislature passed  and the Governor signed,” the college wrote in the lawsuit. “Rather than fulfill his duty, the Treasurer has undermined the Legislature. “

Attorneys for the state treasurer moved to dismiss the case, arguing that BSC was “wrong on the facts” and that the case was barred by sovereign immunity.

In a Wednesday afternoon statement, BSC President Daniel Coleman said he was disappointed with the ruling and reiterated that they felt Boozer was inconsistent.

“Our good faith was betrayed over the several months of working with Treasurer Boozer to deliver this  bridge loan to the College,” the statement said. “The timeline of our interactions clearly demonstrates that his  behavior was arbitrary and capricious. We also believe he is misinterpreting the language of the Act pertaining collateral.”

The statement did not say what the decision would mean for the future of the college. Coleman said that the school might appeal to the Alabama Supreme Court with an appeal for an expedited briefing.

Boozer said in a statement Wednesday that he was “pleased with the dismissal of this lawsuit  and confirmation that I have acted in accordance with the law,” said Boozer in a Wednesday afternoon statement.

A message seeking comment was left Wednesday with Sen. Jabo Waggoner, R-Vestavia Hills, who sponsored the legislation.

Updated at 6:12 p.m. with additional comments from attorneys and State Treasurer Young Boozer.

Updated at 5:08 a.m. with the addition that Coleman said they might appeal.