GM asks U.S. judge to bar lawsuits for pre-bankruptcy recall claims

UPDATED: 4/16/14 12:17 pm ET - adds details

DETROIT -- General Motors said in a court filing that it will ask a U.S. bankruptcy judge to bar lawsuits in Texas and California related to its recall for faulty ignition switches, citing the terms of its 2009 bankruptcy.

A deal reached as part of GM’s emergence from bankruptcy in July 2009 made the automaker immune to any liability for incidents that occurred before that date. GM agreed to assume liability for claims that happened after bankruptcy, even if they involve vehicles built before bankruptcy.

GM on Friday asked a federal judge in San Francisco to delay any decisions in a case seeking class-action status until after an April 25 hearing in New York bankruptcy court. In the filing, a lawyer for GM said the company is asking for a ruling on “whether Plaintiffs’ claims violate the Bankruptcy Court’s July 5, 2009 Sale Order and, as a result, Plaintiffs should be enjoined from proceeding.”

The filing said GM also is awaiting a decision, possibly as early as May 29, on whether at least 19 cases should be consolidated and granted class-action status. It said at least 37 cases related to the recall of 2.6 million vehicles have been filed in 17 different federal courts across the country so far.

Limited liability

The filing said GM, in emerging from bankruptcy protection, was responsible for the “written ‘Glove Box’ warranty for vehicles manufactured by Old GM,” but that otherwise, “New GM did not assume the liabilities of Old GM.” It said the company will “shortly” file a motion in bankruptcy court asking for Judge Jeffrey White to order plaintiffs in all of the ignition-switch cases “to cease and desist from prosecuting against New GM, or otherwise pursuing against New GM.”

GM’s plans to file the motion in bankruptcy court were reported Tuesday by the Detroit Free Press.

GM has declined to publicly comment on lawsuits related to the ignition-switch recall and whether it planned to use the legal shield it gained through bankruptcy, given that documents show GM engineers knew the switches were flawed at least 10 years ago.

CEO Mary Barra has said the company would do what is right in handling claims by people who were injured or killed in defective vehicles. The company has hired Kenneth Feinberg, who oversaw compensation to victims of the September 11 attacks and the BP oil spill in the Gulf of Mexico, to advise it on damage claims.

GM has linked the defect to 36 crashes leading to 13 deaths. Of 12 fatalities identified by Automotive News, only two occurred after GM’s bankruptcy. Company documents released last week by a U.S. House of Representatives committee investigating GM’s handling of the recall show that non-fatal injuries linked to the faulty switches include paralysis, brain injuries, broken bones and lost teeth.

GM says the ignition switches can slip out of the “run” position and into “accessory” mode, through either the jostling of items attached to the key or contact with the driver’s knee, disabling airbags in a crash. The movement of the ignition switch also cuts off the engine, power steering and antilock brakes, though GM engineers who looked into numerous complaints about cars stalling said they believed the cars could still be controlled under such conditions.

The recall, first announced Feb. 13 and later expanded twice, covers the Chevrolet Cobalt, Saturn Ion and related vehicles from the 2003-11 model years. GM last week said dealerships also would replace the ignition lock cylinders, in addition to the ignition switch, in response to hundreds of complaints about keys coming out of the ignition while the car was on.

Dealers were slated to learn more about how to handle the recall work during a Web conference today.

Texas, California cases

Meanwhile, U.S District Judge Nelva Gonzales Ramos in Corpus Christi, Texas, is 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.

Lance Cooper, a Marietta, Ga.-based attorney helping represent the Maciel plaintiffs, said: “They’re trying to hide behind bankruptcy to keep from fixing the cars the way they should be fixing them.”

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.

Bloomberg contributed to this report

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