Residents of two Kansas University scholarship halls have filed a lawsuit claiming Bank of America has improperly administered the trust designed to maintain their buildings.
The lawsuit, which includes 26 residents of the Watkins and Miller halls, was filed Tuesday.
Residents say the bank hasn't used money left by Elizabeth Miller Watkins in 1939 to fix their aging buildings. Instead, the bank has sent the money to KU, which has passed it on to the Kansas University Endowment Fund.
The students are asking the bank to repay "more than $75,000" to the trust fund, although documents indicate the bank has transferred several million dollars from the trust to KU since 1984. The suit also alleges KU improperly used the money when it was transferred to the Endowment Fund.
David Brown, the students' attorney, said he and representatives from Bank of America and KU began settlement negotiations almost immediately after the suit was filed.
"We are at the very beginnings of discussions of settlement," he said. "The specifics haven't even really come up. The real issue we've talked about so far is whether we think settlement is possible. The good news is I think it might be."
Douglas County District Judge Jack Murphy paved the way for the suit last year when he ruled that the scholarship hall residents were beneficiaries to the trust, making them eligible to legally question the bank's practices as trustee.
The suit also claims Bank of America hasn't filed the proper paperwork to document the trust. It said the bank had "misrepresented or concealed" reports "with the intent to deceive or mislead the District Court."
According to the suit, the trust's interest rate has decreased from 11 percent in 1984 to 2.4 percent in 1999. However, the market value of the fund increased from $1.8 million to $3.5 million during the period.
The students say bank officials should focus as much on upkeep at the halls as they do increasing the value of the trust.
Brown said students have had many concerns with maintenance, including inadequate air conditioning and heating, improper wiring and a faulty lock on the front door at Watkins Hall.
An attorney for Bank of America declined comment Wednesday. The attorney handling the case for KU could not be reached for comment.
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