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DATE News (chronologically)
08/20/11
automotive
GM looks to shaft its customers
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." Reuters

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