GM Seeks Delay of Suits Pending Bankruptcy Court RulingLinda Sandler, Patrick G. Lee and Laurel Calkins
General Motors Co. asked federal courts in California and Texas to delay lawsuits over faulty cars until a judge rules whether such claims can be brought without violating a sale order in its 2009 bankruptcy case.
A judge’s order approving GM’s sale, which allowed the new GM to come out of bankruptcy with government aid, let the company reject the liabilities of old GM, including claims for damages and those based on design defects, the automaker said in filings in San Francisco and Corpus Christi, Texas.
U.S District Judge Nelva Gonzales Ramos in Corpus Christi is also weighing a request to order GM to tell owners to stop driving their vehicles until a defect, which can cause the ignition to accidentally switch off if bumped, is repaired. GM hasn’t asked Ramos to delay her ruling on the “Park It Now” bid, which it opposes as unnecessary.
The California lawsuit filed by a group led by Galdina Maciel doesn’t acknowledge the bankruptcy court ruling, GM said in the April 11 filing in California.
“The Maciel plaintiffs seek economic damages, premised on the allegation that the vehicles they purchased or leased were ‘prone to fail’ due to a variety of design defects associated with the ignition switch itself,” GM said.
GM is facing at least 36 related lawsuits, some from people with similar claims to Maciel. The automaker said it will soon ask the U.S. Bankruptcy Court in Manhattan to enforce the injunction in the sale order that bars anyone from suing it for claims that it rejected in bankruptcy.
“They’re trying to hide behind bankruptcy to keep from fixing the cars the way they should be fixing them,” said Lance Cooper, a Marietta, Georgia-based attorney helping represent the Maciel plaintiffs.
Bob Hilliard, one of the lawyers suing the automaker in Texas told Ramos earlier this month that customers are suing the new GM for its own post-bankruptcy conduct, not bad behavior by the predecessor company.
After recalling 2.59 million cars with ignition problems linked to 13 deaths, the automaker, founded in 1908, must tackle its biggest challenges since its 2009 bankruptcy, ranging from lawsuits to regulators’ probes on why it waited a decade or more to fix the faults.
GM took on only limited warranty obligations for old GM’s cars, which it is fulfilling by repairing recalled vehicles, it said.
The case is Maciel v. General Motors, 14-cv-01339, U.S. District Court Northern District of California (San Francisco).