Newly-elected governor, Mr Scott Walker, rejected $US 810m in funding the state had received from the federal government's stimulus plan to enhance the service between Milwaukee and Chicago in December 2010, and subsequently abandoned plans to purchase trains manufactured by Talgo at a site in Wisconsin.
"Talgo has substantially completed the trains under its contract, but the state has arbitrarily decided not to put the trains in service and has refused to pay Talgo the millions of dollars that it still owes," Madison, Wisconsin-based, Cullen Weston Pines & Bach LLP, which is representing Talgo, said in a statement. "Talgo has filed a lawsuit in Dane County against governor Mr Scott Walker and secretary of transportation Mr Mark Gottlieb, asking the court to review the State's course of conduct, determine that the State defaulted on the contract, and rule that Talgo properly terminated it."
The lawyers note the legal move was not without warning pointing out that Talgo gave the State of Wisconsin ample opportunity to avoid this catastrophic loss of taxpayer funds.
In July, Talgo formally notified the State that it was in default of the purchase contract. The State was given 30 days to address its default, but it did not do so. After Talgo provided another 70 days to cure and engaged in a day-long mediation, the state still made no effort to resolve the dispute, despite knowing the consequences of its failure to do so.
Talgo America CEO Mr Antonio Perez says the state's behaviour made any negotiated resolution impossible, adding that filing a lawsuit is an unprecedented and a reluctant action for the company.
"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 honour contracts that it signed," Perez says.