BIRMINGHAM, Ala. (CN) – A new report on Jefferson County’s $3.2 billion sewer debt has led to another class action complaint against the county and two banks – JP Morgan and Bank of America – for their part in the interest rate swap agreements that have left the county on the verge of bankruptcy.
Lead plaintiffs Mark and Joy Barron filed the lawsuit in Jefferson County Court after two special masters submitted their final report on the debt, which said that the defendants allowed money for general county purposes to be diverted to the swap agreements. The complaint alleges the defendants should have known that any general obligation debt is limited by the Alabama Constitution and that if Jefferson County exceeded the allowed debt, the agreements were void.
The Barrons say Jefferson County has exceeded its constitutional debt limit, so they and other taxpayers should not be required to “replenish” the county’s general fund. They ask the court to order the defendants to refund the excessive amounts paid and received, and to declare the swap agreements null and void.
The class is represented by Gary B. Holder of Birmingham.