In a Feb. 10 binding decision, arbitrator William Parker awarded Roland “Skip” Lichter $200,000 for his out-of-pocket expenses in restoring Saginaw Timber No. 2 at the Mid-Continent Railway Museum in North Freedom, Wis. Parker also awarded interest on those expenses, legal fees, and relocation of the 1912 Baldwin 2-8-2 at the museum’s expense to any destination of Lichter’s choosing in the continental U.S.
There was no immediate estimate of the total cost to Mid-Continent although the figure could approach or exceed $300,000.
The roots of the dispute date to the early 1990s when Lichter leased the operating locomotive to the museum. Lichter sued, alleging the museum was neither maintaining the engine nor reimbursing him for maintenance expenses.
That led to a new 15-year lease under a 2003 court-approved agreement known as a stipulation between Lichter and the museum. Lichter, who has owned No. 2 for more than 40 years, sought no rental fees during the first 15-year lease but asked for $100 per run be set aside for maintenance under the second lease.
“The stipulation and lease were very favorable to Mid-Continent,” Parker writes in his decision. “Clearly Lichter was not trying to obtain a financial advantage.”
While Parker says he is aware the judgment may be a financial burden for the museum, he also notes Mid-Continent “made no significant attempt to raise funds” while the restoration progressed.
Lichter’s attorney Martin Hansen tells Trains News Wire, “He only wanted to see it running again near his home.” Lichter lives only a few miles from the museum’s property.
The museum’s attorney tells Trains News Wire she can’t comment on Parker’s decision until she meets with the board of directors, and board President Jeffery Bloohm replied to Trains News Wire saying, “Sorry, no comment at this time.”
The new lease was to begin when the restoration was completed, and the Federal Railroad Administration certified the locomotive for operations last year. In December, however, the museum board voted not to run No. 2 claiming the engine came without any warranties as to workmanship but with potentially large expenses for any repairs, according to a statement posted on the museum website.
The statement also says the museum board is committed to running only its own steam engines.
Parker rejects the board’s action as a one-sided attempt to break the lease in violation of the 2003 court agreement. In his decision, he says all payments cited in his decision are due to Lichter immediately.
“Mid-Continent had an obligation arising out of the stipulation to work with Lichter to overhaul the engine,” he writes. “Essentially [Mid-Continent] failed to fulfill this commitment and eventually repudiated the stipulation.
“[The museum’s] attempt to void the lease, let alone some of the spurious reasons put forward to justify it, could almost certainly have been avoided.”
Hansen refers to the museum board’s action as “an ill-conceived plan poorly executed.” Lichter is actively looking for a new home for the No. 2, he adds.
The locomotive spent most of its working life with a succession of timber haulers in the rain forests of Washington’s Olympic Peninsula.
As Trains News Wire previously reported in covering the dispute, Mid-Continent is restoring its own locomotive, Chicago & North Western No. 1385, a 4-6-0 that last ran in 1998. A purchase order for a new boiler was issued last year with delivery anticipated in March.
The museum has not operated regular steam trains since No. 2 was pulled from service in 2000.
Certainly a sad situation. Unfortunate that Mid-Continent members allowed President Jeffery Bloohm to carry on this way instead of kicking his sorry ass out. Sadly, it would seem Lichter hasn’t a hope in Hell of ever collecting what is owed to him.
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Union has 1630 and a shay they are finishing up not a whole lot of room there.
Mr. Forbes is incorrect. MCRM as an organization did NOTHING regarding work on the 2. Skip Lichter along with assistance from consultant Gary Bensman, did all the evaluation, rebuild and Form 4. Milwaukee Boiler did the actual boiler work. All this was at Lichter’s expense and effort. For the last two years, a small number of MCRM members voluntarily worked to reassemble the locomotive, conduct steam tests and perform a limited number of test runs. All satisfied the FRA inspector, with the Form 4 filed in August 2016 with no comments from the FRA to date as to any deficient items. While MCRM permitted use of the enginehouse, some tools and track time, MCRM contributed nothing and even threatened to charge for electricity, water, oil that has been sitting idle in a tank car for 15+ years and threatened to charge “rent” for track and shop space. MCRM is responsible for the first $200,000 of the rebuild cost. Lichter was asking for no rental fee, just funds deposited in a future rebuild fund based on usage. The president has led the effort to avoid paying anything despite a court-mandated settlement as outlined in the Newswire article. The president’s own personal vendetta against Lichter has caused him to mislead the board of directors on several items over the last few years and has put his own dislikes ahead of what is good for the museum. The arbiter, in two letters, has clearly stated the museum acted in bad faith in meeting the terms of the Stipulation. Instead of working toward an agreement acceptable to all parties, where a return of steam could help declining ridership and revenue while spreading the timeline for payment of the amount owed over a number of years, the museum is now faced with an immediate financial hurdle that will be difficult to overcome.
He might want to try the Illinois Railway or Monticello Railway Museums in IL both of them would love to have a Fully restored and running Steam Engine on grounds at all times.
Good response Ken. You nailed it. I would like to add that many MCRM members donated hundreds of hours at Milwaukee Boiler assisting with the boiler work. Most of it in the winter in a building with no heat. I am so happy that Skip prevailed. Thanks Mr. Parker.
As I read the story MCRM did the rebuild and now doesn’t want to run the locomotive because the workmanship isn’t warrantied. What does that say about their own efforts?
Mid Continent Railroad Museum should stop selling merchandise with the images or any likenesses of the # 2 for there own profit in the gift store.
Mr. Parker was picked by the museum to represent them an when the opportunity to run the # 2 for increase of ridership, they don’t like the out come…..best thing that could happen at this point is for the State of Wisconsin to take it over an run it as a Historical Preservation Park of railroading. The museum seems to forget ( Board & it’s President) that it was private ownership started this organization to run steam an it needs to continue with both private ownership an museum in order to work together. Separately neither of them will work out an the ridership will continue to fall. The only thing keeping them a float above water is the museum’s First Class and Dinning service’s which continue to sellout an there’s a waiting list for more.
As a clarification to the posting, a recent communication from Mid-Continent states the new boiler will not be completed until sometime in 2018, not this year.
@Sam Prest
There’s no ego involved here, there was a court ordered lease agreement arranged in 2003, it stipulated no charges for the first 15 years and then $100 per run the next 15 years, MCRM is reneging on the second 15 years at $100 per run…that’s breach of contract.
MCRM is about to have the cost of EGO’ rammed through their books…. I hope they survive..Darn, Shame that another Railfan Group is “hoist by their own petard’.
How very sad that what could have been a very cordial and mutually beneficial relationship came completely unraveled due to short-sightedness.
Sure hope No. 2 finds a place to run where she and her owner are respected and appreciated.