Kokomo Tribune; Kokomo, Indiana

January 9, 2013

Getrag sued for construction work

Walbridge seeking payment for Tipton work

By Ken de la Bastide
Tribune enterprise editor

Tipton — A breach of contract lawsuit against German transmission manufacturing company Getrag has been filed in Tipton Circuit Court by the construction manager for the failed plant in Tipton County seeking millions of dollars for work done.

Walbridge Aldinger Co. filed the lawsuit Tuesday against Getrag KG, Getrag International and Getrag Transmission LLC involving the planned joint manufacturing plant with Chrysler at the intersection of U.S. 31 and Ind. 28.

The proposed $580 million plant was never completed and was recently purchased by Chrysler Group LLC last year from W.W. Reynolds, which purchased the property from a trust formed by a bankruptcy court in Michigan.

In the lawsuit attorneys for Walbridge indicate a substantial portion of the damages being sought will be distributed to compensate subcontractors employed by Getrag and have not been paid. The subcontractors are located in Indiana, Ohio and Michigan.

Walbridge has lost “tens of millions” of dollars, much of the money would have gone to pay subcontractors, the lawsuit states.

“On numerous occasions, by express statements (both written and verbal) and by its conduct, Getrag KG guaranteed Getrag Transmission LLC’s obligations,” the lawsuit claims. “Getrag Transmission LLC has failed to pay for work performed by Walbridge.”

Getrag KG has refused to pay Walbridge maintaining that Getrag Transmission LLC was responsible for the payments.

Included in the lawsuit is six specific purchase orders submitted by Walbridge to Getrag for payment from April 2007, through October, 2008 in the amount of $118.5 million. Michigan attorney Thomas Wienner representing Walbridge declined comment Thursday when asked if all, part or none of the purchase orders has been paid.

The lawsuit states in 2007 Getrag KG formed Getrag Transmission LLC which they describe as a “shell” limited liability company that relied on Getrag KG for funding to conduct business.

In 2006, Getrag KG asked Walbridge to provide construction management services for the Tipton plant which included obtaining bids, hiring and paying subcontractors.

“Getrag KG represented that it was financially sound and fully capable of paying for construction management services,” the lawsuit states.

According to the lawsuit Getrag KG paid the submitted invoices from Walbridge for a period of time.

Because of a funding disagreement between Chrysler and Getrag, a temporary work stoppage was issued on the project Dec. 1, 2007.

“On the same day as the work-stop directive, unknown to Walbridge, Getrag KG removed the vast majority of cash from Getrag LLC’s bank account, approximately $28 million,” the lawsuit states.

In Aug. 2008 another dispute developed between Chrysler Group and Getrag KG in which Chrysler indicated it was unable or unwilling to expend additional resources to complete the project. With that knowledge Getrag and Getrag Transmission directed Walbridge to continue work.

Another $16 million was removed from the Getrag LLC bank account on Sept. 2, 2008 which left Getrag LLC without adequate capital to carry on its business purposes, the suit states.

Walbridge was informed on Oct. 9, 2008 by Getrag KG and Getrag Transmission to continue the project and promised to pay the invoices. A stop work directive was issued Oct. 18, and in November Getrag Transmission LLC filed for bankruptcy.

“In response to demands for payment, Getrag KG advised Walbridge that the purchase orders were issued by Getrag LLC, not Getrag KG, and that Getrag KG had no obligation to pay Walbridge.