GM says bankruptcy excuses it from Impala repairs

NEW YORK Fri Aug 19, 2011 3:51pm EDT

A potential customer looks at a 2009 Chevrolet Impala sedan at a car dealership in Dearborn, Michigan December 29, 2008. REUTERS/Rebecca Cook

A potential customer looks at a 2009 Chevrolet Impala sedan at a car dealership in Dearborn, Michigan December 29, 2008.

Credit: Reuters/Rebecca Cook

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NEW YORK (Reuters) - General Motors Co (GM.N) is seeking to dismiss a lawsuit over a suspension problem on more than 400,000 Chevrolet Impalas from the 2007 and 2008 model years, saying it should not be responsible for repairs because the flaw predated its bankruptcy.

The lawsuit, filed on June 29 by Donna Trusky of Blakely, Pennsylvania, contended that her Impala suffered from faulty rear spindle rods, causing her rear tires to wear out after just 6,000 miles.

Seeking class-action status and alleging breach of warranty, the lawsuit demands that GM fix the rods, saying that it had done so on Impala police vehicles.

But in a recent filing with the U.S. District Court in Detroit, GM noted that the cars were made by its predecessor General Motors Corp, now called Motors Liquidation Co or "Old GM," before its 2009 bankruptcy and federal bailout.

The current company, called "New GM," said it did not assume responsibility under the reorganization to fix the Impala problem, but only to make repairs "subject to conditions and limitations" in express written warranties. In essence, the automaker said, Trusky sued the wrong entity.

"New GM's warranty obligations for vehicles sold by Old GM are limited to the express terms and conditions in the Old GM written warranties on a going-forward basis," wrote Benjamin Jeffers, a lawyer for GM. "New GM did not assume responsibility for Old GM's design choices, conduct, or alleged breaches of liability under the warranty."

David Fink, Trusky's lawyer, declined to comment.

John Penn, a former president of the American Bankruptcy Institute who is not involved in the case, said the question of "successor liability" is common for manufacturing companies that go through bankruptcy.

"The fact it comes up now is not a surprise, as this type of issue was widely discussed during GM's bankruptcy," said Penn, now a partner at Haynes and Boone in Fort Worth, Texas. "The court will need to evaluate the claims to see if they fit within any cubbyhole of liability that New GM assumed."

GM said an argument similar to Trusky's failed this year in a case involving its OnStar security and navigation product.

"There are no specific factual allegations that New GM -- as opposed to Old GM -- did anything at all in relation to her vehicle," Jeffers wrote. "Plaintiff here is trying to saddle new GM with the alleged liability and conduct of old GM."

In late afternoon trading, GM shares were down $1.62 at $21.98 on the New York Stock Exchange.

The case is Trusky v. General Motors Co, U.S. District Court, Eastern District of Michigan, No. 11-12815.

(Editing by Robert MacMillan)

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Comments (2)
mward1921 wrote:
Aaah the TFB law set up Big Corporation to walk away from liabilities making them free of responsibly, obviously the engineering wasn’t to blame most likely the supplier that only has out the door responsibility they slap their wrist and then go back and let them do it all over again.
Buy on the cheap, I remember when the phrase “quality is job one” job 2 is have a good lawyer.

Aug 21, 2011 9:34pm EDT  --  Report as abuse
RichardGC wrote:
GM bankruptcy excuses ME from buying any GM vehicle, ever.

Aug 21, 2011 11:44pm EDT  --  Report as abuse
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