GM to Ask Court to Reject Revival of Georgia Switch Suit

General Motors Co. (GM) will ask a Georgia judge tomorrow to reject a bid to revive the lawsuit that helped trigger the recall of 2.59 million cars over faulty ignition switches.

The lawsuit, brought by the parents of Brooke Melton, 29, who died in a 2010 crash of a Chevy Cobalt, was settled last year. The Meltons filed a new complaint in May, claiming General Motors fraudulently had concealed defects in the Cobalt and withheld evidence before the accord was reached.

A revived suit would allow the Meltons to immediately seek evidence of General Motors’ knowledge of the defect before the recalls, Lance Cooper, the family’s lawyer, said in an interview. Such information-gathering is stalled in other suits combined in a federal court in Manhattan, as two judges determine the effect of GM’s bankruptcy on the litigation.

“We can begin discovery next week,” he said. “Sorting out” evidence requests in all the other cases “may take a fair amount of time.”

General Motors contends the Melton suit can’t go forward because it was settled.

“We believe the parties reached a good-faith settlement” that resolved the claim, Greg Martin, a company spokesman, said in an interview.

Lawyers for General Motors and the Melton family will argue the company’s motion to dismiss the case at a hearing in State Court tomorrow in Marietta, Georgia, before Judge Kathryn J. Tanksley.

29 Million Recalls

The ignition-switch recall began in February and expanded to about 2.59 million cars, including the Cobalt and Saturn Ion. Following the Cobalt recall, the largest U.S. automaker stepped up its review of potential safety issues and recalled almost 29 million vehicles in North America this year, a record.

GM faces more than 100 lawsuits claiming loss of vehicle value caused by the recalls. They are combined in a multidistrict litigation, or MDL, in federal court in New York before U.S. District Judge Jesse Furman. More than 30 suits have been filed in the U.S. and Canada claiming deaths and injuries connected to switch recalls. Many of these have been transferred to the MDL.

GM’s internal investigation into the Cobalt said that an engineer, Ray DeGiorgio, authorized a change to the ignition switch in the Cobalt in 2006, and approved the new part’s keeping the old part’s number. That ran counter to GM policy and confounded company investigators for years, according to an internal company investigation. DeGiorgio was one of 15 employees ousted after the three-month investigation, which was led by former U.S. Attorney Anton Valukas and released in June.

Engineer’s Testimony

DeGiorgio testified under oath last year that he didn’t know of any change to the switch’s design, the family says.

“The Meltons settled their case based on the information they had at the time,” according to the complaint in the new case. “Their settlement was based on incomplete false data.”

The Meltons are also seeking sanctions against GM for “misleading the court” while the first case was pending. No hearing on that motion has been scheduled, Cooper said. The sanctions motion will die if the lawsuit is dismissed.

The Meltons offered the money back on April 11. GM declined the offer eight days later, according to court filings. Cooper declined to disclose the amount. Valukas’s report, without using Melton’s name, described a case as having the same facts and said it was settled for $5 million.

Offering the money back didn’t reverse the settlement, General Motors said in court papers. Following the settlement, the court in the first Melton suit entered a final judgment dismissing the case, GM’s lawyers said.

“A plaintiff who is dissatisfied with a prior settlement cannot simply offer to tender back the consideration received in the settlement and then unilaterally institute a new lawsuit,” the company said.

The case is Melton v. General Motors LLC, 14A-1197-4, State Court, Cobb County, Georgia (Marietta).

To contact the reporter on this story: Margaret Cronin Fisk in Detroit at mcfisk@bloomberg.net; Steve Higgins at steve@higginswriting.com.

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net. Charles Carter, Peter Blumberg

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