Arbitrator Awards $730,000 to McCreary County Heritage Foundation
End of the line as arbitration over steam locomotive is settled.
By Eugenia Jones
Arbitrator Thomas R. Yokum rendered a decision and final award to McCreary County Heritage Foundation (MCHF) in the amount of $730,284.60 as a result of court-ordered arbitration between Claimant McCreary County Heritage Foundation against Respondents Wasatch Railroad Contractors and John E. Rimmasch for breach of contract regarding the restoration of a steam locomotive.
In addition, Arbitrator Yokum denied the Foundation’s claim of negligence against Wasatch and Rimmasch as well as a counterclaim by Wasatch in the amount of $26,654.23. Both parties are ordered to pay ½ of the administrative fees of the American Arbitration Association, totaling $18,350.00 and the compensation and expenses of the arbitrator, totaling $22,775.05. As a result, Wasatch and Rimmasch are ordered to pay the McCreary County Heritage Foundation an additional amount of $3,825.00.
The sums awarded are to be paid on or before 30 days from the date of the award-September 30, 2020.
The final decision and award resolves the 2018 civil action complaint filed by MCHF against Wasatch and Rimmasch. The complaint alleged five counts, including breach of contract, and stemmed from a 2012 design/build contract entered into by MCHF and the Wyoming based railroad contractors for the restoration and completion (to operational condition) of the K & T Railway No. 14 steam locomotive, built in 1944 and owned by MCHF in Stearns. During the proceedings, MCHF submitted 6,500 pages of documents to the arbitrator.
Terms of the original contract specified Wasatch would complete restoration of the locomotive to meet Federal Railway Administration (FRA) requirements within thirty-six months with MCHF paying $695,000 for the restoration. In 2014, the Foundation and Wasatch entered into a Memorandum of Understanding which contemplated an additional $100,000 of funding for the Project, increasing the amount of the contract to $795,000. In total, MCHF paid Wasatch the amount of $752,797.40. As of today, the locomotive still does not meet operating conditions in compliance with FRA standards.
According to the arbitrator’s decision, evidence established that Wasatch breached the Contract by performing defective work, failing to remedy defective work, and failing to complete the Contract work on time.
The final decision also states Wasatch’s expert witness, Doyle McCormack, acknowledged certain deficiencies and acknowledged that substantial work remains to be performed to complete the Project and restore the locomotive to operational condition. McCormack estimated it would take five to six people, three to six months to repair any deficiencies and finish the boiler work. McCormack also acknowledged that once the boiler work is complete, other substantial work remains to be performed on the locomotive to finish the project and restore the locomotive to operational condition.
According to MCHF Chairperson Ray Moncrief, the MCHF Board of Directors expects to make a final decision regarding restoration of the steam engine by the end of the year.
“Now that an award has been made, members of the MCHF Board of Directors are analyzing and considering how the award should best be invested in the steam engine,” Moncrief stated. “I am very happy this difficult arbitration process is over. I’d like acknowledge the professionalism of Mr. Thomas R. Yokum of the American Arbitration Association who attentively heard the presentations of both sides. I would also like to thank and give credit to the late Tim Lavender for envisioning the need for the MCHF pursuing legal action against Wasatch. Additionally I would like to acknowledge the extraordinary job of preparation and presentation of attorneys Stefan Bing and Gary Crabtree as well as the analytical and presentation work of consultant and expert witness, Jason Sobcyzynski.”