Montgomery judge dismisses Birmingham-Southern College lawsuit against state

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By Jemma Stephenson, Alabama Reflector

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 said after a roughly hour-long hearing that phrasing in the law favored the treasurer.

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

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

But the statute said the state treasurer “may” award a loan to an educational institution that meets requirements for receiving one. Harlan Winn, an attorney for BSC, argued the “may” was restrictive, requiring Boozer to grant a loan to an entity that met the requirements. The state treasurer’s office said in response briefs that “may” did not equal “shall,” which Anderson agreed with.

The decision leaves the future of Birmingham-Southern unclear. School officials have said for a year that without public help, the college — facing enrollment declines and years of deficits — could  close its doors.

BSC applied for a loan this summer, but Boozer denied their request. Birmingham Southern filed a lawsuit on October 18, accusing the treasurer 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,” President Daniel Coleman in a statement. “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. 

Messages seeking comment were left with the state treasurer’s office, and with Sen. Jabo Waggoner, R-Vestavia Hills, who sponsored the legislation.