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Appeals court rules for NMMI

The litigation has its origins under the leadership of Maj. Gen. Jerry Grizzle, president and superintendent of the New Mexico Military Institute, shown at an October Board of Regents meeting. (Lisa Dunlap Photo)

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Alumni group members upset with ruling

[This post has been updated to correct the date when Maj. Gen. Jerry Grizzle joined NMMI and when discussions that eventually led to a lawsuit began.]

The head of an alumni group that once had close ties to New Mexico Military Institute said he and other members are disappointed at a New Mexico Court of Appeals ruling that found in favor of the school in the latest chapter of a five-year legal battle.

“We are very disappointed,” said Daniel Whitfield of Roswell, executive secretary of what is now the Institute Alumni Association and a 1963 high school and 1965 junior college graduate of the school. “We think the district court got the law wrong, the facts wrong, and ruled that we were an agent of the Institute and we don’t believe we were.”

Whitfield said he and association board president John A. Phinizy II will talk with the group’s lawyer this week. He expects that the entire eight-member board will convene by the end of the month to decide what to do about the legal matter and the future of the alumni group, which has about 2,500 members.

In its decision rendered Monday, the New Mexico Court of Appeals confirmed a 2014 ruling by a 5th District Court judge in Carlsbad. That lower court decision found, among other things, that the New Mexico Alumni Association Inc. operated as an agent under the control of the Institute, that the Institute had the right to sever its relationship with the association even if no wrong had occurred, and that any donations raised by the group had to be turned over to the school.

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NMMI senior leadership declined to comment on the litigation when contacted by email Wednesday.

According to the published Court of Appeals opinion, the nonprofit New Mexico Military Institute Alumni Association Inc. was created in 1964 and was originally staffed by NMMI employees.

But alumnus David McGee, a 1948 and 1950 graduate and an alumni association board member, said that the group had its roots in an athletics booster club started in 1929.

In 1993, court documents indicate, the alumni group became a separate nonprofit with its own employees, although the Institute provided the group with free office space, utilities, phone lines and email.

For decades, the association worked in conjunction with the Institute and the NMMI Foundation staff under a series of Memoranda of Agreements to coordinate alumni records, databases, membership activities and communications and to raise funds for the school and NMMI cadets.

In 2009, Maj. Gen. Jerry Grizzle became the school’s president and superintendent. In 2010, he began to express his concerns to various alumni association directors and staff about the functioning of the association. Grizzle, who has an academic background in accounting, saw many difficulties with the group’s operations, but put a lot of emphasis on the lack of audited financial statements and audited tax returns, according to the Court of Appeal documents.

In April 2013, the Institute and Board of Regents notified the alumni group that the school was terminating its relationship and removing the group from Institute premises. In June 2013, the school filed the lawsuit.

A one-week bench trial held in the 5th District Court in Carlsbad concluded that the alumni group did not breach its contract regarding financial matters. But the judge also found that the association had been acting as an agent of the school and that the school had the right to terminate the relationship “at will” — for any reason. It also ruled that donations should be turned over to a trust until a decision was made about how the money would be given to the school.

Whether the group operated as an agent of the school or as an independent organization for the benefit of its members is a point of great import to association members interviewed for this article. They characterized their organization after 1993 as an independently governed nonprofit that considered alumni networking and friendships as important as any fundraising activities.

“There were signed agreements between us that we weren’t (an agent), and they (NMMI) filed their tax returns, their 990s, saying we weren’t their agent. In their audits, they always said we weren’t their agent. Now a district court judge in Carlsbad found we were their agent. It is kind of hard to understand how that could happen,” said Whitfield.

Whitfield said the group changed its name after the district court ruling and turned over about $4 million to the NMMI Foundation, as well as some physical assets. The school now has an alumni relations office to coordinate alumni activities and communications.

McGee said the alumni group has not been engaged in any formal activities other than holding annual meetings and issuing an annual report. Member contributions have allowed it to maintain an office in Roswell for the past five years.

“It was a real shock,” McGee said about the Court of Appeals decision. “The people who shut the alumni association down — and that was what they did because they took all our funds — were not members of the alumni association. They were the Institute itself. And the Institute club was formed not only to serve the Institute but to serve the members of the alumni association to meet and greet and have friends and support whatever athletics we wanted to.”

McGee said he feels that the school made its decision simply because it wanted control of the money raised by the group. The litigation has cost more than $1 million for both parties, according to prior press reports.

McGee said he considers the ruling unfair.

“It has just been a club that has meant a lot to us,” he said. “I’ve been a member for a long time since the 1960s. We supported the Institute, too, but we also supported our alumni association.”

Senior Writer Lisa Dunlap can be reached at 575-622-7710, ext. 311, or at reporter02@rdrnews.com.