In a lawsuit filed in U.S. District Court in Chicago, UP alleges that the Chicago Terminal Railroad Co. is responsible for nearly $15 million worth of failed maintenance on the trackage in the industrial park next to Chicago’s O’Hare International Airport.
Chicago Terminal Railroad, owned by Iowa Pacific Holdings, provides switching for a variety of industries on three sites in Chicago and suburbs, according to its website. The railroad connects to UP at the Elk Grove site and at an industrial area on the north side of Chicago; and to Canadian Pacific in Bensenville, Ill.
UP is asking the court to declare Chicago Terminal in breach of its duty under a lease initiated in 2007. The lease has been extended several times since then, most recently until May 1.
UP is demanding reimbursement for costs and fees, which will be “determined at trial but that in any event exceeds $75,000,” the lawsuit said.
At the request of both railroads, a federal judge on Feb. 20 agreed to stay the litigation until May pending a settlement between the two sides.
Neither side in the dispute responded to requests for comment Monday.
UP contends that Chicago Terminal was obliged to vacate the property as of Jan. 8, but that Chicago Terminal refused to do so. CP is seeking annual rent of $5.9 million after that date.
According to the lawsuit, Chicago Terminal has failed to maintain the tracks to FRA Class 1 standards as required by the lease since at least July 13, 2016. Class 1 track means, broadly, that the track is capable of supporting a freight train at speeds up to 10 mph.
Specifically, UP said a 2016 inspection found defects in joint ties, tie clusters and surface conditions. Inspectors also found out-of-service track due to a derailment and other “substandard track conditions.”
The lawsuit said an inspection found that Chicago Terminal’s failed maintenance would require UP to invest nearly $15 million for capital renewal over the next five years.
UP said it agreed to extend the lease several times in order to give Chicago Terminal time to complete the work.
On Nov. 25, 2017, according to the suit, Chicago Terminal claimed that it had “cured all agreed-upon defects.” But UP conducted another inspection on Dec. 11, and found “continued defects” in four tracks.
