Opinion ID: 2545615
Heading Depth: 2
Heading Rank: 8

Heading: The AIFA

Text: The AIFA is a public corporation and public instrumentality of the State. See § 41-10-540, Ala.Code 1975. It was created by the legislature to fund incentives and commitments to industries that agree to locate in Alabama. By law, the governor acts as the president of the AIFA, the state treasurer as its vice president, and the finance director as its secretary. § 41-10-545, Ala.Code 1975. The AIFA argues that it is entitled to the immunity protections of Article I, § 14, Alabama Constitution of 1901, when it acts as an arm of the State. Southdale and Wheeler/Phillips argue that the AIFA is not entitled to immunity because the legislature has given it the authority to institute and defend legal proceedings. § 41-10-546(2). Nevertheless, if an action against a body such as the AIFA is in actuality an action against the State within § 14 of the Alabama Constitution, then the AIFA may be entitled to immunity. In Armory Commission of Alabama v. Staudt, 388 So.2d 991 (Ala.1980), this Court held that [w]hether a governmental body is immune from suit cannot turn on labels placed on the body by the legislature and that the legislature may not deny immunity from suit when that immunity is constitutionally granted. 388 So.2d at 992. The Court further stated: Whether a lawsuit against a body created by legislative enactment is a suit against the state depends on the character of power delegated to the body, the relation of the body to the state, and the nature of the function performed by the body. All factors in the relationship must be examined to determine whether the suit is against an arm of the state or merely against a franchisee licensed for some beneficial purpose. State Docks Commission v. Barnes, 225 Ala. 403, 406-07, 143 So. 581, 584 (1932). 388 So.2d at 993. The AIFA argues that it meets the three Staudt factors to entitle it to immunity as an arm of the State. As to the first factor, the AIFA contends that it is granted the authority to finance the State's obligations to companies that bring needed industry to Alabama. As to the second factor, the AIFA contends that it is so closely intertwined with the State that it is entitled to the immunities afforded agencies and arms of the State. As to the third factor, the AIFA states that it does not negotiate or make commitments on behalf of the State, but it is authorized to fund existing commitments through the use of AIFA obligations, primarily bonds. In Stallings & Sons, Inc. v. Alabama Building Renovation Finance Authority, 689 So.2d 790, 792 (Ala.1996), the Court stated that the Staudt test examines the complete relationship between the state and the entity seeking immunity from suit.... The Court examined the powers delegated to the Alabama Building Renovation Finance Authority by the legislature, the relationship between the Authority and the State, and the nature of the function performed by the Authority. After examining the three factors, the Court in Stallings concluded that the Authority was not immune from suit, distinguishing the facts in that case from those found in State Docks Commission v. Barnes, 225 Ala. 403, 143 So. 581 (1932), a case relied on by the Court in Staudt. The facts in this case are clearly distinguishable from those found in State Docks Commission v. Barnes , a case relied on by this Court in Staudt, in which this Court held that the State Docks Commission was an arm of the state and thus immune from suit for the following reasons: the state owned the docks facilities in its own name; the Commission operated the docks facilities as an agent of the state and not as a separate entity; the funds generated by the state docks facilities belonged to the state, and in the lawsuit at issue in that case, those funds would have been subjected to liability, because `a lawsuit directly affecting a state contract or property right is tantamount to a suit against the state.' Staudt, 388 So.2d at 993. Stallings, 689 So.2d at 793. Article I, § 14, of the Constitution of 1901, provides: [T]he State of Alabama shall never be made a defendant in any court of law or equity. This Court has held that `the use of the word State in Section 14 was intended to protect from suit only immediate and strictly governmental agencies of the State.' Tallaseehatchie Creek Watershed Conservancy Dist. v. Allred, 620 So.2d 628, 631 (Ala. 1993) (quoting Thomas v. Alabama Mun. Elec. Auth., 432 So.2d 470, 480 (Ala.1983)). After reviewing the character of the power delegated to the AIFA, the AIFA's relationship to the State, and the nature of the function it performs, we conclude that it is a State agency for purposes of State immunity. Therefore, the summary judgment entered in favor of the AIFA is due to be affirmed on this alternative ground.