The CTA has reached a settlement with North American Bus Industries (NABI) that guarantees the transit agency $14.25 million in cash over the next five years, and up to $36.25 million.
The settlement stems from defective buses that NABI sold the CTA in 2003. The 226 NABI buses were taken out of service in February 2009 when cracks were found in body of the articulated buses.
According to the CTA, the total estimated value of the settlement package, including pending claims, is between $31.25 million and $36.25 million over the next five years, depending on parts and services CTA may purchase from NABI prospectively. The settlement includes a $9.25 million cash payment to CTA, a waiver of $17 million in pending claims and $5 to $10 million in cash or parts and service rebates. The settlement calls for no admission of fault on NABI’s part.
Here’s how the negotiations proceeded to this settlement, from a CTA statement:
Ongoing disputes between CTA, NABI and the engine manufacturer regarding vehicle performance resulted in CTA exercising its contractual rights to stop payment. NABI filed suit against CTA for its failure to pay the remaining contract amount, to which the CTA filed a countersuit against NABI and the engine manufacturer, alleging breach of warranties. NABI and the engine manufacturer disputed the claims filed against them.
The circuit court ruled against CTA in its attempt to bring the parent company into the litigation as a party.
The parties agreed to compromise the claims and avoid further expense of ongoing litigation and believe the business decision was best for all involved.