Rail yard BSNF train with problem projects label

Contractor Diffco, LLC filed a lawsuit in Texas’ Harris County on April 16, 2021, seeking monetary relief in the amount of $374,882.45 alleging non-payment connected to B.L. Spille, Inc. and BNSF Railway Company.

This is now the fourth legal action taken in a dispute over what is now $1,435,647.30 claimed by subcontractors — continuing a difficult period for Houston’s BNSF Milby Yard project, and for BNSF as a whole amidst a number of recent financial and operational setbacks.

According to the lawsuit’s claims, Diffco was subcontracted by Spille to perform earthwork, concrete, and demolition activities at a BNSF project, which was worked on from July to October 2019. Diffco has claimed that, while this agreed-upon work is completed, Spille has refused to pay, asserting that Spille cannot do so until otherwise paid by BNSF. 

In turn, Spille contends that it is not being paid by BNSF due to “some dispute.” Spille has noted that, despite the present conflict with Diffco, the real concern is over BNSF’s failure to pay Spille — a dispute that, it contends, does not involve Diffco’s work.

Often, such disputes are the result of a contract’s “pay-when-paid” or “pay-if-paid” clause. In these cases, a project’s general contractor informs the subcontractor that they will be paid only when or if the general contractor is paid by the client, sometimes leading to a subcontractor failing to be paid for work completed properly.

As the project’s general contractor, Spille informed Diffco that, despite the issue of non-payment, its work is not defective or otherwise unacceptable, leading to Diffco filing a mechanics and materialmans lien on BNSF’s property on November 15, 2019. 

Despite the November 2019 lien, Diffco claims it has yet to receive payment. Though Diffco’s priority is to enforce its claim on the project’s payment bond following continued non-payment since the lien’s filing, the lawsuit alternatively sues BNSF to foreclose its mechanics and materialmans lien in the case that the payment bond is unsound.

Additionally, the suit includes Spille for breach of contract, and further involves US Casualty and Surety Insurance Company in order to seek payment under the terms of the payment bond.

Diffco’s lawsuit is just the latest in a string of issues surrounding BNSF and Spille’s friction over the Milby Yard project. 

On November 15, 2019 — the same day of Diffco’s lien filing — subcontractor Eagle Fabricators, Inc. submitted a mechanics and materialmans lien against the project in the amount of $408,510.58, claiming that Spille and BNSF continue to refuse to pay for Eagle Fabricators’ labor and materials following work performed from July to November 2019.

Though Spile paid Eagle Fabricators a retainage check totalling $44,752.50 on March 12, 2020, a lawsuit was filed on March 24, 2020 — against the same three defendants as listed in Diffco’s lawsuit — seeking to foreclose on Eagle Fabricators’ mechanics and materialmans lien in order to receive the unpaid $363,758.08.

In this same period, he Milby Yard project faced two additional liens: one by Oates Industries, Inc. on February 18, 2020 for $149,175.33 stemming from work done from November 2018 to August 2019, and one by Hass Horizontal, LLC on January 16, 2020 for $547,831.44 for work done from April to December 2019.

Lien claims add to BNSF Railway’s expanding recent concerns

Diffco’s most recent legal action only adds to the difficulty that BNSF has faced over the past month. A fire broke out in BNSF’s Alliance, Nebraska railway terminal on April 11, 2021. While there were no injuries reported, the fire caused an estimated $3 million in total damage — $2 million of which is thought to be connected to the building’s electronics.

Just prior to this on April 5, 2021 BNSF agreed to pay the Environmental Protection Agency (EPA) $140,000 for alleged violations of the Clean Water Act stemming from a February 4, 2019 derailment near Guernsey, Wyoming. 

The EPA alleged that, due to the derailment of three locomotives and five rail cars, 5,900 gallons of fuel and 800 gallons of lubricating oil was spilled into Wyoming’s North Platte River, which was cleaned up through the work of BNSF, EPA, and the State of Wyoming.

Emergency response coordinator for the Wyoming Department of Environmental Quality Joe Hunter noted at the time how damaging this could be for the local environment: “That’s a worst-case scenario. I don’t have a good idea of how much [fuel] went into the river, but it is a significant amount.”

“Crews are placing containment boom in the North Platte River at the leading edge of the diesel fuel that leaked from the locomotives. BNSF is consulting with state and federal agencies on best removal options,” a BNSF statement said. “BNSF crews are working to clear the site and restore the track. The incident is under investigation.”