GM sued in Corpus Christi over ignition flaw tied to massive recall

03/17/2014 11:57 AM

03/17/2014 11:58 AM

General Motors has been sued on behalf of vehicle owners over an ignition flaw in some small-model cars as it faces regulators’ questions about this year’s recall of 1.6 million vehicles.

Bob Hilliard, one of the lawyers who filed the complaint Friday in federal court in Corpus Christi, said he seeks to recover $6 billion to $10 billion for the lost value of cars affected by the recall. The suit is based on claims that GM concealed the defects and the “diminution in value” of the owners’ vehicles, and not deaths resulting from crashes when the engines stopped because keys came loose.

“These vehicles, all they have to do is get on the road for this defect to manifest,” Hilliard said in a phone interview. “This is a true safety defect.”

GM has said it identified 12 deaths in connection with the recall of models made in the mid-2000s, including some Chevrolet Cobalts and HHRs and other Opel, Pontiac and Saturn models. Detroit-based GM, the largest U.S. automaker, has said it’s continuing to review data and information related to the recall.

“GM is focused now on ensuring the safety and peace of mind of our customers involved in the recall,” spokesman Greg Martin said in an e-mail response to a request for comment on the lawsuit. “Our principle throughout this process has been to the put the customer first, and that will continue to guide us.”

The complaint filed by Hilliard seeks class-action status to represent all vehicle owners affected by the recall. The named plaintiffs in the case are Daryl and Maria Brandt of Nueces County, who own a 2007 Chevy Cobalt, one of the recalled vehicles.

Hilliard also represents the families of two teenagers who died in a 2006 crash of a Cobalt in Wisconsin. He said in an interview about that claim that GM’s bankruptcy reorganization shouldn’t shield it from liability for the pre-2009 crash. While bankruptcy typically protects companies from new claims that predate the reorganization, GM didn’t present the full extent of its ignition-switch liabilities, Hilliard said.

“If you are aware of potential exposure to litigation and you don’t reveal it, that’s fraud,” he said. “I’m going to go back to that bankruptcy judge and say, ‘You have to undo this, the liability of old GM, because it was the new GM’s continued cover-up after the bankruptcy that allowed people to be hurt or killed.’ ”

To persuade U.S. Bankruptcy Judge Robert Gerber in Manhattan to reconsider the terms of GM’s reorganization, Hilliard or other lawyers would need to gather evidence and prove that the old GM had knowingly deceived the judge, said Chip Bowles, a bankruptcy lawyer with Bingham Greenebaum Doll, who wasn’t involved in the GM liquidation.

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