GM Says Bankruptcy Shields It Against Impala Lawsuits

By Jonathan Stempel | August 22, 2011

General Motors Co. 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.”

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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Latest Comments

  • August 22, 2011 at 3:44 pm
    a mom says:
    Swell. I just bought a 2008 Chevrolet. At least the issue is tire wear, and not some major loss of life event.
  • August 22, 2011 at 3:14 pm
    Mr. Solvent says:
    Since the government made the representation that they would stand behind the GM products, perhaps the lawsuits need to be against the US and Canadian governments as well as t... read more
  • August 22, 2011 at 2:34 pm
    Raider Fan says:
    Occurance or claims made is the question. Tail or no tail is the answer. Self insured should have bonds in place. No wonder the forign market controls the auto industry. How s... read more
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