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Canadian Pacific taking high-speed rail claim to state (UPDATE)

By: Dan Shaw, [email protected]//December 8, 2014//

Canadian Pacific taking high-speed rail claim to state (UPDATE)

By: Dan Shaw, [email protected]//December 8, 2014//

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Half a year after the rejection of a train company’s claim related to Gov. Scott Walker’s scotching of a high-speed railway to be built between Milwaukee and Madison, a railway is seeking compensation related to the same project.

Canadian Pacific Railway, of Calgary, Alberta, is seeking $500,715.13 even though it never had a written contract with the state for work the company claims it did in 2009 and 2010 to help the Wisconsin Department of Transportation obtain an $810 million grant for the line. The grant was rescinded Dec. 9, 2010, after then-governor-elect Scott Walker, who had been elected that November, took steps to make good on his campaign promise to kill the project, which he said would be a boondoggle.

According to a claim submitted to the state, Canadian Pacific worked without a contract because it was put under pressure from powerful officials, including former Gov. Jim Doyle and former U.S. Secretary of Transportation Ray LaHood. WisDOT employees, according to the claim, had pushed the company to help complete work on preliminary designs and related agreements by the 2010 election.

Doyle had announced earlier that year that he would not seek re-election to the governor’s office and Walker, the eventual winner in the general election, had made his opposition to the high-speed line part of his campaign. Canadian Pacific, in its claim, argues that Doyle was eager to have the project far enough along that Walker would have a hard time stopping it should he win the election.

Doyle, now a lawyer in Madison, could not be immediately reached for comment Monday afternoon.

“CP was willing to take this risk not because it was in CP’s best interest to do so, but because the leaders of the state of Wisconsin insisted CP do so,” according to the claim. “The highest level of WisDOT, the governor of the state of Wisconsin and the United States Secretary of Transportation insisted with great urgency that CP proceed with the corridor project.”

If recent history is any sign, Canadian Pacific’s prospects before state officials are grim. The State of Wisconsin Claims Board, which acts as an arbiter in money disputes with the state, is scheduled to take up the dispute at 9 a.m. Tuesday in Room 328 Northwest of the state Capitol.

The board — made up of representatives of the governor’s office, the Legislature, and the departments of administration and justice — has rejected at least two other claims stemming from the canceled high-speed rail. In May, members turned down a nearly $65.9 million request filed by Talgo Inc., the Seattle arm of a Spanish train company.

Talgo officials alleged the state had failed to abide by a contract that required the purchase of two train sets that were to run on the high-speed line. In rejecting the request, the members of the Claims Board argued the dispute should be resolved in court.

In May 2013, the board turned down another claim related to the rail project, this one for $160,371.86 and submitted by Wisconsin & Southern Railroad Co., Milwaukee. The company had sought money it said was owed for work performed before it entered into a contract with the state, in December 2010.

Canadian Pacific’s case largely will come down to questions about whether the state is obliged to pay for work performed in absence of a contract. WisDOT, in an official summary of the arguments to be presented to the board Tuesday, concedes that it may be subject to a legal principle known as promissory estoppel and thus be required to offer some compensation.

Still, according to the summary, “as a matter of law, these principles may well not be applicable to the state.” Attempts to get a comment from WisDOT officials were unsuccessful Monday afternoon.

Maxwell Livingston, a lawyer in Brookfield with experience in contract law, said promissory estoppel applies to cases in which one party makes a non-written promise to another and then fails to follow through. For plaintiffs to recover, they must prove they had a reasonable reliance on the promise being fulfilled and that they were injured in some way by its being broken.

Livingston said promissory estoppel claims can be difficult to support.

“From an evidentiary standpoint,” he said, “how do you prove a promise was made?”

Canadian Pacific’s claim does appear to be resting on some paperwork. According to a reply WisDOT submitted in response to Canadian Pacific’s initial filing, the company turned in a single invoice related to the work for the high-speed rail.

For further support of its claim, according to WisDOT, the company has submitted a variety of other documents, including meeting minutes and schematics. Still, according to the reply, “none of the documents constitute a contract that obligates or allows WisDOT or the state of Wisconsin to pay any of the expenses claimed by CP.”

WisDOT also stated that after the project was canceled, the federal government provided nearly $14.8 million worth of reimbursements to some of the companies that had worked on the rail line. Canadian Pacific’s claim to compensation never was taken up, though, because it did not have a contract with the state, according to WisDOT.

“The record reveals that WisDOT and CP… never had a meeting of the minds relating to the payment for the activities claimed,” according to WisDOT’s reply to the claim. “Therefore, there can be no express or implied contract. At the most, the parties had an agreement to agree which does not create a binding contract.”

According to the claim, Canadian Pacific helped apply for the railway grant in part because the company owns the right of way to existing lines and stations that were to be improved as part of the project. Canadian Pacific, mainly a freight carrier, also was asked to draw up plans governing how its trains would share the new lines with high-speed passenger trains.

The company assigned an engineer to work full-time on the project from the end of 2009 through most of 2010. Other employees also pitched in, reviewing documents and taking part in weekly conference calls with WisDOT, according to the claim. A representative of Canadian Pacific could not be immediately reached Monday afternoon.

The company, in its claim, argues the proposed high-speed line would have brought it only moderate benefits, most of which would have been offset by the need to make accommodations for the passenger lines.

“CP,” according to the claim, “would not have undertaken the Corridor Project on its own behalf.”

The Associated Press also contributed to this report.


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