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08. October 2008

USA - FreightCar America sued by supplier for contract breach

FreightCar America could be on the hook for hundreds of thousands of dollars under a breach of contract lawsuit filed by a supplier.

Bral Corp. of Warren, Ohio, is suing FreightCar under its former name, Johnstown America, in U.S. District Court in Johnstown.

Bral claims FreightCar violated an exclusive contract under which Bral supplied castings installed on aluminum hopper cars.

FreightCar did not return a phone call seeking its response to the lawsuit.

The coal cars are equipped with an “innovative discharge door system” that allows for quick off-loading of cargo, the suit says, and the castings are part of that system.

Bral says a contract was entered into on May 1, 2004, giving Bral the right to be the exclusive provider of the units. Bral would supply the parts for the factories in Johnstown, Danville, Ill., and Roanoke, Va.

In exchange for the exclusivity deal, Bral said it knocked down the price of the castings.

In the summer of 2005, according to the suit, FreightCar suddenly reduced its ordering.

“This severe and uncharacteristic reduction totaled 560 railcars, resulting in a shortfall of more than $1.5 million in orders,” the suit claims.

Bral discovered the supposed breach of contract the following June. FreightCar had returned defective castings to Bral – that supposedly had been manufactured by rival supplier CMN Components Inc.

Bral is seeking $1,000 per car damages for each car with a violating part, punitive damages and legal costs.

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