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Company sues mayor, city over loan

April 09, 2003|by GREGORY T. SIMMONS

gregs@herald-mail.com

A Halfway couple and a company owned by their son have filed a $2.9 million lawsuit against Hagerstown's Mayor and City Council, alleging that city officials didn't follow rules governing applications when they sought two loans through the city's Business Revolving Loan Program.

Lester L. Burger Jr., his wife, Betty Ann Burger, and Merchanteer Inc., which is owned by their son, Lester L. Burger III, filed the suit March 20 in Washington County Circuit Court.

In the lawsuit, the Burgers and Merchanteer claim they were denied due process because city officials waited nearly nine months to notify the family that their loan applications were rejected and tell them why.

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In the lawsuit, the family members and the business also claim they suffered damages because city officials failed to appropriately administer the loan program.

Hagerstown Mayor William M. Breichner said last week neither he nor the City Council members had been officially served with the lawsuit. Asked if the suit had merit, Breichner said because it is a lawsuit involving the city, "We simply are not going to comment."

Breichner said Monday when he and the council members were properly served with the lawsuit, it would be forwarded to the city's insurance company.

According to the suit, the Burgers applied for two loans in April and August 2001 under the city's Business Revolving Loan Program. The loan program is administered by the Hagerstown Redevelopment Authority, but the City Council has final say on loan approval, according to the lawsuit.

According to information provided by the Burgers' lawyer, J. Calvin Jenkins of Towson, Md., the Burgers sought to borrow a total of $225,000 through the city.

In the suit, the Burgers claim city officials didn't say whether their loans had been approved or rejected until city officials filed a court document in October 2002, in response to a filing by the Burgers asking why they had been rejected for the loan. That was nearly nine months after the mayor and City Council met to discuss the status of the family's loans.

City officials said in that document that the Burgers didn't have the required 20 percent equity to qualify for the loans.

In the lawsuit, the Burgers allege "not one reason given (by city officials) is either consistent with the program, or factually supported by the totality of the circumstances."

"A decision sooner than later is necessary from a business point of view because you have fallow ground that is hopefully going to be improved by somebody to the community benefit," Jenkins said.

Jenkins said the family members and the business are seeking $400,000 in compensatory damages from the city, which he said represents how much the family lost from Jan. 15, 2002, until now by the loans not being approved.

The family also is asking for $2.5 million in punitive damages, according to the suit.

"The purpose (of the $2.5 million) is to send a message," Jenkins said.

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