An Alabama judge has dismissed Birmingham-Southern College's lawsuit against the state treasurer over a loan denial, a decision that could put the future of the 167-year-old private college in jeopardy.
Birmingham-Southern College filed a lawsuit last week against state Treasurer Young Boozer, saying Boozer wrongly denied a $30 million loan from a program created by lawmakers to provide a financial lifeline to the college. On Wednesday, Montgomery Circuit Judge James Anderson granted the state's request to dismiss the lawsuit on the grounds that the state treasurer could not be sued for exercising his duties. Anderson said the legislation gave discretion to the treasure to decide who qualified for a loan.
"I'm sympathetic to the college and the position they are in, but I'm looking at the legislative language," Anderson said.
Birmingham-Southern is exploring an appeal to the Alabama Supreme Court, college President Daniel Coleman said in a statement. The college had argued it met the loan requirements set out in the law and that Boozer was acting in bad faith or under a misinterpretation of the requirements.
"Our good faith was betrayed over the several months of working with Treasurer Boozer to deliver this bridge loan to the college," Coleman 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 Alabama Legislature created the Alabama Distressed Institutions of Higher Education Revolving Loan Program this year after Birmingham-Southern officials, alumni and supporters lobbied for money to help the college stay open. Supporters of the loan legislation said it was a way to provide bridge funding while the college worked to shore up its finances.
Birmingham-Southern applied for a loan and was told by Boozer this month that that the loan was being denied.
The college will likely close without emergency relief from the court, lawyers wrote in the lawsuit. The private college, located a few miles from downtown Birmingham, has 731-full time students and 284 employees.
During a hearing Wednesday, Deputy Attorney General Jim Davis, who is representing the state treasurer, said the college was seeking to have the judge supplant his judgement for that of the state treasurer.
"The application has been looked at," Davis said. "Whether the assets were sufficient, that requires judgement."
