The sale of Luzerne County’s rail line to Reading and Northern Railroad is back on track because a settlement has been reached in litigation attempting to stop the transaction, said attorney Jack Dean, of Elliot Greenleaf & Dean, who is representing county defendants.
The sale closing had been on hold awaiting a court ruling on a preliminary injunction request filed by R.J. Corman Railroad Co., which was not selected to purchase the line. Its Oct. 2 complaint made allegations about the fairness and legality of the entire process to sell the line and sought to void the sale agreement.
R.J. Corman and Reading and Northern privately reached an agreement to end the litigation late Tuesday, according to Dean.
As a result, U.S. District Court Judge Julia K. Munley issued a 30-day order Wednesday that dismisses the case and gives the parties 30 days to execute a written settlement agreement. There is now no need for the two-day hearing on the injunction motion that was set to start Thursday in federal court in Scranton.
Reading and Northern offered a $10 million package to purchase the county line — $7 million cash at closing plus $3 million for track-related rehabilitation services to be spent during the first three years — along with a commitment to upgrade the line to provide recreational passenger-train excursions from a depot in Wilkes-Barre.
Company Chairman and CEO Andy M. Muller Jr. has said he will link Wilkes-Barre to Reading and Northern’s Pittston depot, allowing trips from Wilkes-Barre to Jim Thorpe and, eventually, from other areas to Wilkes-Barre if the city has events or attractions that will draw visitors here.
The line is owned by the county Redevelopment Authority, and the authority-affiliated Rail Corp. has an agreement with R.J. Corman to operate the line through the end of this month.
The county, authority, and Rail Corp. agreed to sell the line in a separate settlement agreement tied to litigation the county filed in the County Court of Common Pleas over the $3.28 million it is owed by the authority. This agreement gave the council power over which entity acquires the line.
The council had unanimously vetoed the original authority/Rail Corp. decision to sell the line to R.J. Corman for $8.2 million, which prompted the authority’s and Rail Corp.’s second recommendation choice of Reading and Northern that was accepted by a council majority.
Before the initial recommendation of R.J. Corman, a citizen panel reviewed the proposals and recommended Reading and Northern.
R.J. Corman’s federal court filing argued the sale should be voided due to an asserted violation of state competitive bidding law.
It named the following defendants: the county; the 11 County Council members in their official capacity; members of the citizen panel in their official capacity; the Redevelopment Authority; the Rail Corp.; and Reading and Northern.
In response briefs filed Monday, several Elliott Greenleaf & Dean attorneys representing the county defendants (the county, council, and citizen’s panel) said no competitive bidding laws were violated because the request for purchase offers, known as an RFP, identified numerous factors that could be considered in assessing proposals, including anticipated job creation, rail infrastructure improvements, and service expansion.
The county defendants, the Redevelopment Authority, and Rail Corp. were not involved in the settlement negotiated between Reading and Northern and R.J. Corman, Dean said.
Dean said the settlement details might not be made public because the rail operators are private entities and the agreement does not involve public funds.
Dean emphasized the settlement has no bearing on Reading and Northern’s purchase offer, which still stands at $7 million cash and another $3 million in escrow for rail enhancements.
The county administration and authority are negotiating the final sale agreement with Reading and Northern, Dean said.
Dean said resolution of the litigation was a group effort.
“This was a significant issue for Luzerne County, and all parties worked together to get this done,” Dean said. “I think at the end of the day this is going to be a great thing for Luzerne County, and we’re moving forward.”
Munley’s order said the court was informed all parties had reached an “agreement in principle to resolve this litigation subject to the refinement of terms.”
R.J. Corman’s motion for preliminary injunction is deemed withdrawn, and the parties will have 30 days to “consummate the settlement,” it said, directing the federal court clerk to close the case.
County Manager Romilda Crocamo issued a statement Wednesday afternoon thanking Elliot Greenleaf & Dean attorneys Dean, Roger Harrington, and Robert Sebia, saying they “worked tirelessly on behalf of the county to come to this conclusion.”
The settlement will save county taxpayers thousands of dollars in litigation costs, she said.
“The sale of the line will proceed with Reading and Northern as the buyer, and it will benefit our area in many ways. This is the finality that we had hoped for. This is what taxpayers expect,” her statement said.