Newly filed court documents indicate the MBTA agreed to pare back a warranty on concrete railroad ties it purchased in 1994 and now could be left holding the bag for the $90 million cost of replacing them despite manufacturing defects.
Rocla Concrete Ties of Denver is seeking the dismissal of a lawsuit filed by the T on the grounds that an amended contract for the concrete ties indicates the manufacturer’s liability was limited after three years, not the 15 years claimed by the T. The amended contract is part of nearly 600 pages of documents filed in federal district court late last week.
In the original request for bids for concrete ties for the Old Colony commuter rail line in 1994, the MBTA specified the ties should carry a 15-year warranty. But after winning the bid and preparing to sign the contract, Rocla officials sent back changes that they said were negotiated with T officials to reduce the company’s liability.
“The period of this warranty will be for three (3) years from the date the New Old Colony Line is placed in revenue service,” the amended wording in the 1995 contract reads. “After the three (3) year period referred to above expires, RCTI [Rocla] shall not be liable for the costs of removal, return/disposal, reinstallation, loss of profits, and transportation and freight replacement service.”
The train service began in 1997 but the T did not discover problems with the ties until 2007, when routine inspections discovered a number of cracked and broken ties. In its lawsuit, the MBTA alleges Rocla sold it 147,000 defective ties for the two Old Colony lines from Middleboro and Kingston. The T has begun ripping up all of the ties and replacing them with wooden ones.
The amended contract is the latest twist in what is turning out to be a nightmare for the T’s commuter rail service. CommonWealth magazine first wrote about the concrete tie problems in 2009. T officials at the time downplayed the issue, saying the defective ties were limited to several thousand at most. But the documents filed by Rocla show that in 2008 Rocla President Peter Urquhart informed T officials that all 147,000 ties that had been made at the company’s Delaware plant were faulty and would need replacement.
According to the original contract, Rocla would have been liable for all costs in replacing the defective ties, which had been marketed to last 50 years, twice the lifespan of wooden ties. But under the revision, Rocla’s liability after three years was limited to the original cost of the ties or an equal credit, about $61 each, for a total of $9 million, one-tenth of what the T is seeking from the company.
In a written response to questions from Rocla attorneys, T officials said they have no recollection or files that show the original 15-year warranty had been substituted with the three-year limited liability.
“The MBTA’s files do contain a letter. . . that includes the [15-year] warranty language set forth. . . and a separate letter of the same date containing different warranty language,” the T’s lawyers state in their response. “The MBTA is not able to ascertain from its files whether any warranty language contained in either of the referenced letters, or other warranty language, was agreed to or accepted by the MBTA.”
Among the documents filed in court along with the amended contract were correspondences with several T officials who are no longer with the agency but, according to Rocla notes, were present at the meeting where the revised warranty was negotiated. In a letter to William Boodry, one of five T officials who were identified as being in the meeting, Robert Andrews, Rocla’s representative in the deal, thanked Boodry for “the spirit of cooperation” and sent him copies of the contract that had been signed and sent to the T’s legal office.
“You will note this revision includes the warranty language agreed to at the meeting in your office,” Andrew writes.
Boodry, who now works for Liberty Mutual, said today he has no recollection of any of the discussions or exchanges from so long ago. T spokesman Joe Pesaturo said the agency cannot comment on ongoing litigation and Rocla officials did not return a call for comment.
The documents also include correspondence between T officials and Rocla between 1991 and 1993 that show the transit authority was vehemently opposed to using concrete ties for the Old Colony lines because of prior experience with faulty ties that cracked and broke long before their time. The T had to sue the manufacturers and one of the parties in that lawsuit was Rocla, which had subcontracted the manufacturing and written the tie specifications.
“The Authority is continuing to sustain substantial damages as a result of the premature deterioration of the Lone Star concrete railroad ties,” Albert Good, the then-assistant counsel for the T, wrote to Urquhart. “Consequently, as long as this situation continues, the Authority has elected not to do business with Rocla.”
But Rocla officials persisted and even submitted a bid to sell concrete ties when the T issued its first request for bids for wooden ties on the rail lines. James Rooney, then assistant manager for the T, wrote to Rocla in 1993 that the agency was holding fast to its decision to steer clear of concrete ties but said they would monitor Rocla ties on other lines and revisit the decision in several years.
However, just months later, the T withdrew its request for bids for wooden ties and substituted a request for concrete ties, using many of the same specifications that were in the Rocla bid. When Rocla submitted its new bid, it was 20 percent higher than the first one. The T, nonetheless, accepted the bid and awarded the contract to Rocla.
Soon after the contract was awarded, a representative for one of the other companies bidding to supply the T with wooden ties sent a letter to then-Attorney General Scott Harshbarger seeking an investigation into the T’s change of mind.
Harshbarger, now in private practice, said yesterday he doesn’t recall the letter or whether his office launched an investigation. The letter surfaced in documents the T requested from Rocla during discovery. When asked at his deposition how his company came to be in possession of a letter from a competitor seeking an investigation into Rocla’s winning bid, Urquhart said he did not know.