Lawyers: GM seeks bankruptcy shield from lawsuit
- Article by: TOM KRISHER
- Associated Press
- June 11, 2014 - 9:25 PM
DETROIT — Lawyers for a Georgia family that is trying to reopen a wrongful death lawsuit against General Motors say the company is trying to move the case to federal court so it can use bankruptcy as a shield from the claim.
The lawyers, Lance Cooper and Jere Beasley, said Wednesday in a statement that GM's court filings run counter to a promise made by GM CEO Mary Barra to fairly compensate families of people killed or those injured in crashes caused by defective ignition switches.
GM spokesman Greg Martin called the company's filings procedural.
A federal bankruptcy judge in New York ruled in 2009 that the new GM is shielded from claims stemming from cars made before the company emerged from bankruptcy protection. Instead, the claims go against the old GM, which has limited assets. The judge now is being asked to decide if he will allow claims against the new company.
Cooper and Beasley say moving the case to federal court would allow the company to use the bankruptcy to send claims to the old GM.
Ken and Beth Melton sued GM three years ago in Cobb County, Georgia, in the death of their daughter, Brooke Melton, in 2010. The 29-year-old nurse died when her 2005 Chevrolet Cobalt skidded on a county road, hit another car and ended up in a creek.
The lawsuit alleged that Brooke Melton, a pediatric nurse, was killed after the Cobalt lost power due to a faulty ignition switch, causing her to lose control of the car. The Meltons settled the case last September, but Cooper and Beasley filed a lawsuit in May seeking to set aside the settlement and reopen the case, alleging that GM fraudulently concealed evidence.
Research by Cooper's firm and depositions in the original lawsuit exposed a GM engineer's move to fix the defective switches and conceal his actions.
GM ended up recalling 2.6 million older small cars starting in February to fix the switches, which the company says have caused 54 crashes and at least 13 deaths. GM acknowledged that it waited more than 10 years to recall the cars. A report from an outside attorney hired by GM blamed the delay on a dysfunctional corporate structure and misconduct or poor decisions by some employees. The attorney's report also indicates that the Meltons' case was settled for $5 million.
The case has brought investigations from Congress and the Justice Department. Also, GM has agreed to pay a $35 million fine to the government's road safety agency. The automaker has hired attorney Kenneth Feinberg to come up with a method of compensating victims.
Feinberg said last week that a compensation plan is weeks away. So far, GM has announced or taken charges of $1.7 billion to cover the cost of the ignition switch and dozens of other recalls.
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