"New" GM not honoring "old" GM's warranty claims

[Bad Bowtie]

http://www.reuters.com/article/2011/08/19/gm-impala-lawsuit-idUSN1E77I0Z820110819

* New GM said not responsible to fix Impala made by old GM

* Suspension problem said to cause excessive tire wear

By Jonathan Stempel

NEW YORK, Aug 19 (Reuters) - General Motors Co (GM.N) is seeking to dismiss a lawsuit over a suspension problem on more than 400,000 Chevrolet Impalas from the 2007 and 2008 model years, saying it should not be responsible for repairs because the flaw predated its bankruptcy.

The lawsuit, filed on June 29 by Donna Trusky of Blakely, Pennsylvania, contended that her Impala suffered from faulty rear spindle rods, causing her rear tires to wear out after just 6,000 miles. [ID:nN1E7650CT]

Seeking class-action status and alleging breach of warranty, the lawsuit demands that GM fix the rods, saying that it had done so on Impala police vehicles.

But in a recent filing with the U.S. District Court in Detroit, GM noted that the cars were made by its predecessor General Motors Corp, now called Motors Liquidation Co or "Old GM," before its 2009 bankruptcy and federal bailout.

The current company, called "New GM," said it did not assume responsibility under the reorganization to fix the Impala problem, but only to make repairs "subject to conditions and limitations" in express written warranties. In essence, the automaker said, Trusky sued the wrong entity.

"New GM's warranty obligations for vehicles sold by Old GM are limited to the express terms and conditions in the Old GM written warranties on a going-forward basis," wrote Benjamin Jeffers, a lawyer for GM. "New GM did not assume responsibility for Old GM's design choices, conduct, or alleged breaches of liability under the warranty."

David Fink, Trusky's lawyer, declined to comment.

John Penn, a former president of the American Bankruptcy Institute who is not involved in the case, said the question of "successor liability" is common for manufacturing companies that go through bankruptcy.

"The fact it comes up now is not a surprise, as this type of issue was widely discussed during GM's bankruptcy," said Penn, now a partner at Haynes and Boone in Fort Worth, Texas. "The court will need to evaluate the claims to see if they fit within any cubbyhole of liability that New GM assumed."

GM said an argument similar to Trusky's failed this year in a case involving its OnStar security and navigation product.

"There are no specific factual allegations that New GM -- as opposed to Old GM -- did anything at all in relation to her vehicle," Jeffers wrote. "Plaintiff here is trying to saddle new GM with the alleged liability and conduct of old GM."

In late afternoon trading, GM shares were down $1.62 at $21.98 on the New York Stock Exchange.

The case is Trusky v. General Motors Co, U.S. District Court, Eastern District of Michigan, No. 11-12815.

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As an avid GM guy, I can honestly say this sickens me to the core...but I guess they are "technically" seperate entities under law (at least that's how I understand it, correct me if I'm wrong), which is how and why they think they'll get away with this.

 

[Spectre]

As an avid GM guy, I can honestly say this sickens me to the core...but I guess they are "technically" seperate entities under law (at least that's how I understand it, correct me if I'm wrong), which is how and why they think they'll get away with this.

But... but... but... OBAMA PROMISED!!!!

President Obama announced his plans for General Motors and Chrysler on Monday.

In a bid to boost flagging auto sales, the federal government will pay for any warranty repairs on a General Motors or Chrysler vehicle if either company can't because of financial problems or a bankruptcy filing, President Barack Obama said on Monday.

"Let me say this as plainly as I can. If you buy a car from Chrysler or General Motors, you will be able to get your car serviced and repaired just like always," Obama said in a speech. "Your warranty will be safe. In fact, it will be safer than it has ever been. Because starting today, the United States will stand behind your warranty."

GM and Chrysler are at a high risk of bankruptcy as they face some of the lowest U.S. sales rates in 27 years, analysts have said. The government on Monday took several actions to help shore up the two automakers after forcing the resignation of GM CEO Rick Wagoner.

"Given where the industry is, these highly unprecedented actions are consistent with the unprecedented times we're in," Standard & Poor's analyst Robert Schulz told Reuters today.

Both companies have said that bankruptcy would snuff out sales because consumers wouldn't buy a car from a company that might not be around to honor the warranty and provide service and spare parts.

Any funds for the warranty program will come from the $700 billion Troubled Asset Relief Program (TARP) provided by Congress, according to White House fact sheet on warrantees that was distributed last night.

Support for scrapping incentive

Obama also on Monday said he will work with Congress to try to fund credits for consumers who turn in old cars and buy cleaner, more fuel-efficient automobiles.

Programs of this kind "have been successful in boosting auto sales in a number of European countries," Obama said the news conference. The auto scrapping program is part of a larger administration effort to increase car sales and modernize manufacturers' fleets.

Obama said he also will try to speed up programs to support immediate demand for auto sales. The administration will try to accelerate federal purchases of government cars and increase the flow of credit to consumers and dealers.

Also on Monday, the Internal Revenue Service will start a campaign to alert consumers of a new tax benefit for car purchases made between Feb. 16 and the end of the year, Obama said.

Partisan reactions

Lawmakers responded to Obama's initiatives along partisan lines.

U.S. Sen. Bob Corker, R-Tenn., a member of the Senate Banking Committee, said the administration used the Wagoner firing as a "sideshow to distract us from the fact that the administration has no progress to announce today.

"The administration is pursuing much of what we pushed for in December, but the delay of several months has increased the severity and sent billions of taxpayer dollars down the drain. Now any investment is likely unrecoverable and we are putting more and more jobs at the OEMs (original equipment manufacturers) and the supply chain at risk in a politically charged environment."

Senate Majority Leader Harry Reid expressed support for Obama's plans.

"We will not give these companies a blank check," the Nevada Democrat said in a statement. "If these companies do not develop strong plans to remain viable in the long term, they will lose our support."

Surprise! Obama lied, your GM warranty died.

The key part here (and one which got Ford burned in a not-dissimilar case not very long ago) is that GM fixed the problem for government vehicles.

Seeking class-action status and alleging breach of warranty, the lawsuit demands that GM fix the rods, saying that it had done so on Impala police vehicles.

In Ford's case, it made a twisted sort of sense - don't want to annoy the fleet buyers, but at the same time don't want to admit to a real fault and face the cost of a recall (this was all pre-Mulally). In GM's case, it has all sorts of other unpleasant potential connotations after the bailout - such as "fixing the problems for the people that give us free money, but let's screw the consumer/taxpayer that saved us instead."

How the hell anyone can trust GM (or the Liar-in-Chief) now, I don't know.

 

[Eunos_Cosmo]

Yummy.

 

[Mr. Nice]

This doesn't look like something GM will get away with for this simple reason.

And for Spectre: Enough is enough, stop going over the top with your political dramas. It's like you're some kind of little girl who didn't get her way. We have a two party system in this country, sometimes the Republicans are in charge, sometimes the Democrats are in charge. Your Texan president increased the national debt by 5.07 trillion dollars and expanded government more than any other president in history. There's a good set of "conservative" values for you.

Texas makes me feel like John Tyler made a horrific mistake.

 

[MattD1zzl3]

Seriously, texans simply arent allowed to make serious political commentary until they provide evidance of a continuous democratic voting record beginning no later than 1979.

 

[Spectre]

This doesn't look like something GM will get away with for this simple reason.

And for Spectre: Enough is enough, stop going over the top with your political dramas. It's like you're some kind of little girl who didn't get her way. We have a two party system in this country, sometimes the Republicans are in charge, sometimes the Democrats are in charge. Your Texan president increased the national debt by 5.07 trillion dollars and expanded government more than any other president in history.

Except for the guy that followed him, who has increased the debt by more than all his predecessors combined, etc., etc., etc.

Nope, I had to put up with a bunch of you guys shouting "Bush's fault" for years, turnabout is fair play. Get the Senate to start considering supporting impeachment and I might stop.

I would also point out that there many people who actually believed that the warranties would be honored, etc.,etc., and that the bailout was a good thing. So much for that - the warranties aren't being honored and the jobs are going to China instead. Brilliant!

So, about those warranties being honored? Yeah... so much for that. Didn't a former head of GM get fired for less?

Seriously, texans simply arent allowed to make serious political commentary until they provide evidance of a continuous democratic voting record beginning no later than 1979.

Heh - you realize I did vote for Clinton the first time, right? (But not the second.)

If you want to go there, how about we ban Floridian commentary on anything until they can prove they're not going to support their cars on cinderblocks while thinking that's a good idea?

 

[Mr. Nice]

Except for the guy that followed him, who has increased the debt by more than all his predecessors combined, etc., etc., etc.)

Nope, I had to put up with a bunch of you guys shouting "Bush's fault" for years, turnabout is fair play. I would also point out that there many people who actually believed that the warranties would be honored, etc.,etc., and that the bailout was a good thing.

So, about those warranties being honored? Yeah... so much for that. Didn't a former head of GM get fired for less?

Obama has not increased the "debt" by more than any other president in history. He has increased the "deficit spending" to 1.3 trillion a year, which is more than any other president in history. That said, as far as the national debt is concerned, he still has a long way to go to beat Bush.

I don't see how GM will be able to successfully defend themselves when they are still producing the car in question. It might be a different story if they had discontinued production, but they're still making it. It would be an outright travesty for such a case to be dismissed.

 

[Spectre]

Obama has not increased the "debt" by more than any other president in history. He has increased the "deficit spending" to 1.3 trillion a year, which is more than any other president in history. That said, as far as the national debt is concerned, he still has a long way to go to beat Bush.

No, actually, he doesn't - he doesn't have very far to go at all. He's about to pass Bush's absolute number, and he's far surpassed any predecessor's rate of debt increase. Even the Washington Post and CBS has been compelled to admit this.

The latest posting by the Treasury Department shows the national debt has now increased $4 trillion on President Obama's watch.

The debt was $10.626 trillion on the day Mr. Obama took office. The latest calculation from Treasury shows the debt has now hit $14.639 trillion.

It's the most rapid increase in the debt under any U.S. president.

The national debt increased $4.9 trillion during the eight-year presidency of George W. Bush. The debt now is rising at a pace to surpass that amount during Mr. Obama's four-year term.

I do type partially corrected, he hasn't yet increased it more than all of his predecessors. He's just increased it faster than all of his predecessors. That, according to current projections, will occur a little later this year - I'm estimating around October or November. By the end of his four year term, presuming we're not dumb enough to re-elect him, he will have well exceeded Bush's entire two-term debt increase. Keep in mind that next year is when much of the back-loaded spending for a number of his programs starts kicking in, so that will be skyrocketing the debt. Assuming we can find anyone still dumb enough to buy US Treasury bonds, as the last Treasury auction was absolutely dismal.

Also keep in mind that I was screaming at my congresscritters to f*cking stop spending like drunken sailors and do their actual jobs from about 05 onwards, so I wasn't very pleased with the government at that time, either. Their successors have been far, far worse.

I don't see how GM will be able to successfully defend themselves when they are still producing the car in question. It might be a different story if they had discontinued production, but they're still making it. It would be an outright travesty for such a case to be dismissed.

As someone pointed out upthread, they will probably use the legal fiction that they're a separate company, etc., etc.

 

[Eunos_Cosmo]

While in some cases, I might feel Spectre is being overly dramatic, this is not one of those times. This is the fault of the government.

 

[Bad Bowtie]

While in some cases, I might feel Spectre is being overly dramatic, this is not one of those times. This is the fault of the government.

As many times as Spectre and I have butted heads, I agree with you and him. Obama has been a disaster from the start, just like his jump shot. :lol: I still place loads of blame on GM though, even if "legally" their hands are clean. That is exactly what is wrong with this country.

If we are offering songs up...

 

[_HighVoltage_]

I agree as well. In particular, the bailout programs sounded bad from the very beginning.

 

[Mr. Nice]

Some facts on my above statements:

Texas has a real problem when it comes to education: http://www.texaslsg.org/texasonthebrink/texasonthebrink.pdf

Obama?s and Bush?s effects on the deficit in one graph

How the Deficit Got This Big

Republican Leaders Voted for Debt Drivers They Blame on Obama

With that all out of the way, most people on both sides of the aisle are displeased with Obama. There are 11 million jobless Americans, and Obama has taken a center or right-wing stance on many issues on which he either caved or knowingly went against his party on. And, of course, people on the right are displeased with Obama because he's Obama.



As to the subject, I'm still really confused as to how GM will be able to get away with this. The only hope they have is that they can find a way to get the lawsuit dismissed. They still use the same brands, the same logos, the same factories, in many cases the same employees and, in the case of the Impala, many of the same parts.

 

[prizrak]

With that all out of the way, most people on both sides of the aisle are displeased with Obama. There are 11 million jobless Americans, and Obama has taken a center or right-wing stance on many issues on which he either caved or knowingly went against his party on. And, of course, people on the right are displeased with Obama because he's Obama.

His a gigantic pussy at a time when we need someone with balls, he has no leadership skills whatsoever and doesn't know how to get things done. The republican opposition is not helping but a better leader would have been able to convince them of necessity of certain things.

P.S. I'm an anarchist fuck the gov't!

As to the subject, I'm still really confused as to how GM will be able to get away with this. The only hope they have is that they can find a way to get the lawsuit dismissed. They still use the same brands, the same logos, the same factories, in many cases the same employees and, in the case of the Impala, many of the same parts.

Legally they are considered a different company with the right to use old companies trademarks/name. Legally speaking they are still liable for CERTAIN things from old GM but not all of them. Basically the court has to decide whether that issue is something that would be covered under the liabilities that NEW GM took on from OLD GM. Basically it boils down to whether this would be a warranty repair (in which case it would be covered) or a "design choice" by the company. Since this is not a safety issue it would not be a subject to mandatory recall and would likely be considered just a characteristic of the vehicle, something like the SW20 having snap oversteer wasn't anything being "broken" but rather the characteristic of weight bias towards the rear (and suspension geometry).

 

[SchumacherM]

This is now a murricah politics thread.

I'm outta here.

 

[AiR]

Altough probably legally correct (the point of going through bankruptcy is after all to shed liabilities) that is a dickish move publicity wise.

 

[YF19pilot]

Beyond the politics coming in here, if GM was smart, they'd do the fix. Seriously, we can contrast this to how Ford is currently handling fuel tanks falling off trucks at least 8 years old. GM can't be bothered to fix cars that are less than half that age because of some ill logic about how they're "not the same company", even though their CEO in Chief, Pres. Obama, guaranteed they would cover it.

GM already has an bad rap against it for being "government motors" and here comes the perfect oppertunity to make some awesome PR. What do they do? Let it go to court and hope the judge is an Obama sycophant. Stuff like this is why people like my Grandfather (who has been a loyal GM customer for most of his life) are now looking at Fords.

As for the politics though, I'd really like to know, outside of extending the Bush tax rates, what sort of conservative policies Obama has agreed to or went along to. Unless doing something you disagree with is automatically "right-wing".

 

[Bad Bowtie]

if GM was smart

Might as well stop right there, because I cannot make the "if" any bigger.

GM already has an bad rap against it for being "government motors" and here comes the perfect oppertunity to make some awesome PR.

It wouldn't make awesome PR, because in the eyes of the public, it is something that should just be done. It won't be seen as some amazingly nice gesture if they did it, they'd be "doing their jobs."

 

[prizrak]

It wouldn't make awesome PR, because in the eyes of the public, it is something that should just be done. It won't be seen as some amazingly nice gesture if they did it, they'd be "doing their jobs."

While I 100% agree with you, if GM were to issue a voluntary recall to fix that issue it would give them some good press as a company that stands behind their products. Now they look like the same douchebag GM they always were AND they got bailed out.

As for the politics though, I'd really like to know, outside of extending the Bush tax rates, what sort of conservative policies Obama has agreed to or went along to. Unless doing something you disagree with is automatically "right-wing".

See the entire debt ceiling debacle.

 

[Spectre]

While I 100% agree with you, if GM were to issue a voluntary recall to fix that issue it would give them some good press as a company that stands behind their products. Now they look like the same douchebag GM they always were AND they got bailed out.

Yup; meet the new boss, same as the old boss. Despite promises otherwise.

See the entire debt ceiling debacle.

He didn't "agree" to much. In the end, he got pretty much what he said in public he wanted, a clean debt ceiling increase. The rest of it is window dressing, really. And according to the Washington Post and others (no time for a cite, but can provide if needed), he actually demanded a lot more than that and just didn't get it. At one point they were close to a compromise and he just threw out a demand for more spending at one point and derailed the negotiations for a while.

I don't think the problem is his ability to lead (after all, he's a 'community organizer') so much as where he's trying to lead people to. Keynesianism limited to government projects and crony capitalism doesn't work, never has, and lots of people in the Administration and Senate still haven't figured this out.

The most GM should have gotten (and I don't even like this part) is a normal Chapter 11 bankruptcy backed by the government's funding if it was thought crucial to keep GM afloat to preserve jobs. If they'd done this, we wouldn't be having this conversation and it wouldn't be an issue. Instead, they got some weird combination of free taxpayer money, a bizarre pseudo-Chapter 7 liquidation performed direct to a new holding company without the possibility of outside bidders, a locked-in gold-plated union contract for some workers and the ability to tell their prior buyers to screw off. All orchestrated by the government, at the government's behest, in direct contravention to more than a century of established law and practice. And so we are here, now, where a lot of people thought we would be but were ridiculed for saying so.

 

[YF19pilot]

See the entire debt ceiling debacle.

I'd argue that's more "calling something you disagree with 'x'" as that whole debacle pissed everyone off. The debt ceiling was raised and there were no real cuts made, just the promise to do so via some (constitutionally questionable) super committee. At the same time Obama helped turn the whole thing into a circus.