Montgomery County Circuit Judge James Anderson on Wednesday dismissed Birmingham-Southern College’s lawsuit against State Treasure Young Boozer over Boozer’s denial of a $30 million loan request.
After a one-hour hearing, Anderson told lawyers and others in the courtroom that he sympathized with Birmingham-Southern’s position but said the law gave Boozer the authority to deny the loan.
Birmingham-Southern had claimed Boozer exceeded his authority and undermined the intent of the Legislature when he denied the college’s request for the loan, which school officials said they needed to keep the private institution open.
The Legislature created the Alabama Distressed Institutions of Higher Education Revolving Loan Fund this year in response to Birmingham-Southern’s requests.
Boozer turned down Birmingham-Southern’s loan application in an Oct. 13 letter. Boozer wrote that the college did not meet the qualification for the loan. Birmingham-Southern disputed that in the lawsuit.
Birmingham-Southern President Daniel Coleman said the college is considering its next move.
“We are disappointed with this ruling and are exploring our options, which may include an appeal to the Alabama Supreme Court with a request for an expedited briefing,” Coleman said. “While the Alabama Constitution provides for immunity to state officials, such immunity should not apply to those who act arbitrarily or capriciously, or in bad faith, or who have misinterpreted the law in question.
“Our good faith was betrayed over the several months of working with Treasurer Boozer to deliver this bridge loan to the College,” Coleman added. “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.”
Lawyers with the attorney general’s office represented Boozer in the case. Boozer was not at the hearing but issued a statement.
“I am pleased with the dismissal of this lawsuit and confirmation that I have acted in accordance the law,” Boozer said.
In the statement, Boozer said Selma University also applied for a loan from the Distressed Institutions of Higher Education fund. Boozer said Selma University applied on Aug. 24 and that he informed the university of his decision to deny the application on Oct. 13 because he said it did not meet the minimum criteria to qualify.
Judge Anderson took note of the wording of the bill lawmakers passed to create the loan fund. The bill put the state treasurer in charge of the fund and said the treasurer “may” award loans from the fund to colleges that meet the eligibility criteria.
The judge said even assuming that Birmingham-Southern’s factual claims about its qualifications were correct, the law gives the treasurer the discretion over whether to award a loan.
“The mountain y’all have got to get past is that word ‘may,” Anderson told Birmingham-Southern’s lawyers at the start of Wednesday’s hearing.
It was a point Judge Anderson made during a previous hearing in the case, when he noted that lawmakers could have written that the state treasurer “shall” issue a loan to a college that qualifies.
In a one-sentence order, Anderson said the dismissal was pursuant to Rule 12(B) of the Alabama Rules of Civil Procedure, which is about lack of jurisdiction.
Birmingham-Southern sought $16 million of the $30 million this academic year, asking for the first $8.8 million in November.
Rep. Juandalynn Givan, D-Birmingham, who helped spearhead the legislation creating the Distressed Institutions fund, said she was angry that Birmingham-Southern did not get the loan that the program was intended to provide. Givan said she respected Anderson and understood his reasoning about the word “may” in the legislation.
“The problem is there was not good faith on the side of Young Boozer,” Givan said. “He did everything he could to stop the legislation even after the legislation was passed.”
After the bill became law in June, Boozer asked for an attorney general’s opinion on whether lending money to colleges would violate the state constitution. Boozer said he received a response from the AG’s office on Aug. 22 and made loan applications available two days later.
Boozer, in his motion to dismiss the Birmingham-Southern lawsuit, said he “strenuously disputes” that he acted in bad faith.
Givan said Birmingham-Southern’s campus makes up the heart of the Bush Hill community in her district and that the city had much to lose if it closes. She said she did not want it to disappear like other Birmingham institutions, such as Daniel Payne College, which closed in 1979, and Carraway Methodist Medical Center, which closed in 2006.
“What is the city of Birmingham doing?” Givan said. “What is the county commission doing? Do we not care enough about our institution, this college that was at one time a storied institution? I mean come on.
“I want someone to tell me what happens next. Because if it were me, I would have those students marching. What does corporate Birmingham want to do? What are they doing?”