The Seattle-based arm of the Spanish train company filed the claim in November because it asserts Gov. Scott Walker acted in bad faith when he decided to abandon a high-speed rail line connecting Milwaukee and Madison.
Susan Crawford, a Madison-based attorney working for Talgo, said the decision was expected and now that the claim has been rejected, Talgo will take its case to court. State law requires submission of a claim before a lawsuit seeking damages against the state can be brought.
The claims board restated the positions of Talgo and the state Department of Transportation, but did not discuss the merits of the complaint in its decision.
"The Board concludes this claim would be best resolved in a court of law," the claims board said. "Therefore, this claim is denied."
Brian Hagedorn, Walker's chief legal counsel, is one of five members of the claims board. He did not participate in consideration of the Talgo case.
Even if the board had agreed to pay the claim, Walker and the Legislature would have to sign off, something that was unlikely to happen. Walker and Republicans who control the Legislature have repeatedly said terminating the deal with Talgo was handled properly.
The state signed a deal in 2009 under then-Gov. Jim Doyle, a Democrat, to purchase at least two train sets from Talgo, which were initially to be used on Amtrak's existing line between Milwaukee and Chicago before being used on the new line that had yet to be built.
The state also entered into a separate 20-year maintenance agreement to service the trains, a deal to provide a maintenance facility, along with an option to purchase two additional train sets.
Walker made his opposition to the high-speed rail line, and the $810 million in federal stimulus money to pay for it, a major part of his campaign for governor in 2010. Upon winning election, Walker rejected the federal funding, killing the project.
Even so, Talgo continued working on building the train sets the state purchased at a facility in Milwaukee throughout 2011. In January 2012, Talgo notified the state the train sets were ready for delivery, but the Wisconsin Department of Transportation refused to accept them. In November 2012, Talgo canceled its purchase contract with the state.
The claim alleges the state failed to live up to its purchase agreement and that Walker repeatedly acted in bad faith to frustrate the deal.
The DOT argues that Talgo never satisfied terms of the deal and "has acted in bad faith since the start of the project in 2OO9, engaging in a pattern of omission, deception and denial," according to a summary of its argument by the claims board.
The state argued that Talgo never completed manufacturing and testing of the train cars and never delivered them, despite being paid $40 million.