General Motors has settled a dispute over the legal bills that a suburban Austin, Texas, dealership incurred to defend a suit alleging negligent performance of a product recall repair.
Terms of the settlement are confidential, say both Keith Ward of Austin, who represents Covert Chevrolet-Oldsmobile Inc. in Bastrop, and GM spokesman Jay Cooney.
The two sides negotiated the agreement after a Texas appeals panel ruled that state product liability law entitles the dealership to reimbursement. Covert had sold and repaired a 1995 Pontiac Grand Prix that was involved in a fatal crash.
The underlying lawsuit alleged a factory defect in the driver's airbag and negligent repair of radio wires and related components in the steering wheel. Three months after the work on the Grand Prix was done, driver Jennifer Riley died in a crash.
Her estate alleged that both GM and Covert were liable. The defendants denied liability, and Ward said reports by an expert witness showed that the airbag didn't deploy improperly and that repairs were properly done.
The claims were dismissed without trial.
GM refused to reimburse Covert's legal expenses, arguing it had no such duty under the sales and service agreement or Texas law.
Said Cooney: "We didn't indemnify because the sole claim against the dealer (in the estate's suit) was for negligent repair. Under the sales and service agreement, there's no obligation to indemnify for claims arising from a dealer's alleged independent negligence."
The Court of Appeals unanimously disagreed with GM, saying a manufacturer must indemnify a retailer in a product liability case unless the retailer's "independent conduct was a cause of the plaintiff's injury." There was no finding that Covert had been negligent, the court said.
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