Some 38 dealers are using a wrinkle in New York law in an attempt to claim a multimillion-dollar shortfall in warranty parts claims.
The New York dealers have filed three separate federal suits against DaimlerChrysler, Ford Motor Co. and General Motors alleging the factories violated state warranty law by reimbursing dealers for warranty parts at prices 30 percent less than what dealers typically charge at retail. New York requires manufacturers to pay dealers the prevailing retail prices for warranty parts.
Representatives for each company said the companies had not seen the lawsuits and could not comment. But each company said it believed its policies complied with the law.
Every New York dealer with a Big 3 franchise has been invited to join the suits. Lawyers representing the suing dealers estimate the average damages per dealer could reach $700,000 for several years of underpayments.
'We think dealers can go back four years. The factories say the statute of limitations is three years,' said Leonard Bellavia, of Mineola, N.Y., one of several attorneys representing the dealers. 'You could be looking at five or six years of damages by the time this gets to trial.'
Lawsuits against GM and DaimlerChrysler were filed in the U.S. District Court for the Southern District of New York in New York City. The suit against Ford was filed in the U.S. District Court for the Eastern District of New York in Brooklyn.
The lawsuits hinge on a recent decision in another New York case involving Ralph Oldsmobile Inc., of Smithtown, Bellavia said. The dealership's owner, Gene Alden, entered a termination agreement with GM in 1997 but three years later claimed the factory shorted him on warranty parts reimbursements.
The U.S. District Court for the Southern District of New York denied GM's request to dismiss the case, placing the burden on the factory to prove that it paid the dealership retail prices for warranty parts over the years. The Ralph ruling said GM should perform surveys to ensure that it is paying dealers the prevailing retail prices for warranty parts.
GM attorney Larry Buonomo said the Ralph Oldsmobile case is far from over and the decision is not final.
'The decision says that a dealer can be entitled to warranty reimbursement claims on requests he (did not make) in the past, and the manufacturer is required to pay him,' Buonomo said. 'It is different from every prior ruling on this subject. We don't believe it's correct.'
The latest suits against the Big 3 also say the factories are responsible for tracking retail parts prices and paying dealers the same amount on warranty parts.
'The factories have been turning their backs on the law,' said Mark Schienberg, president of the Greater New York Automobile Dealers Association, who is encouraging members to join the suits. 'The only way dealers can get what they deserve is to join a lawsuit.'