Talgo Inc. has filed a lawsuit against the state of Wisconsin, alleging the state violated the commitments in a contract and has not paid for two high-speed trains that are sitting idle in the company’s Milwaukee plant.
The lawsuit lists Gov. Scott Walker and Department of Transportation Secretary Mark Gottlieb as defendants.
The suit was filed in Dane County Circuit Court.
The Spanish manufacturer had opened a plant in Milwaukee at 3533 N. 27th St., in the former Tower Automotive and A.O. Smith plant in anticipation of producing trains to serve the state.
The State of Wisconsin had agreed to purchase the 14-car, high-speed trains for $71.8 million to replace the sets currently running on the Amtrak line between Milwaukee and Chicago. A contract between Talgo and the Wisconsin Department of Transportation included both the construction and the long-term maintenance of the trains.
But in April, the Legislature’s Joint Finance Committee struck down the DOT’s request for the $2.5 million in bonding needed to design the passenger rail maintenance facility.
Antonio Perez, Talgo’s chief executive officer, said, “We invested in the State of Wisconsin by building a manufacturing facility in Milwaukee and creating manufacturing jobs. We built the trains and otherwise performed our obligations under our agreements with the State of Wisconsin. In return, rather than being ‘open for business’ the State used every conceivable excuse, whether fair or not and whether lawful or not, to ensure that Talgo did not receive what it bargained for, including by refusing to pay for the trains that Talgo completed. I don’t see how any company would in the future choose to do business with the State of Wisconsin when the State has shown that it cannot be trusted to honor contracts that it signed.”
Transportation officials met with Talgo for a daylong mediation last Thursday, but it was “completely fruitless,” said Lester Pines, a Madison attorney representing Talgo.
“The state is not entitled to get something it didn’t pay for,” Pines said. “The trains are substantially complete and if the state rules in Talgo’s favor, then Talgo would be in a position to find another buyer for the trains.”
He stressed that Talgo is not a political company, but has been caught up in a politicized issue at the expense of its business.
The Amtrak trains running between Milwaukee and Chicago will need to be replaced in the next five to seven years, Pines said. If the state rules in favor of Talgo, the money that has been paid toward the trains would not be refunded.
The state must respond to Talgo’s complaint within 45 days.
BizTimes toured the Milwaukee plant and the mothballed trains and interviewed company officials about the dispute earlier this year. View the BizTimes video here.
