GM Threatens Delay Tactics, Strong Arms Widow to Drop Punitive Damages Claim in Lawsuit over Tire Tread Separation-Related Crash

GM Threatens Delay Tactics, Strong Arms Widow to Drop Punitive Damages Claim in Lawsuit over Tire Tread Separation-Related Crash

A lawyer for General Motors Co. (GM) threatened case delays and a legal morass for a young widow whose attorney planned to seek punitive damages for the death of a man who perished in a collision while driving a GM-made vehicle, according to the Wall Street Journal.

The widow’s deceased husband, a 28-year-old Marine, died when he lost control of the GM-manufactured U-haul he was driving and crashed into another vehicle on an Arizona highway. Two other people were also killed in the accident.  According to the lawsuit, the accident was due to a defect in one of the U-Haul’s tires that caused the tire to break apart.  The tire manufacturer, Goodyear Tire & Rubber Co., is also a defendant in the case.

On March 3, GM sent an email to the widow’s lawyer asserting that GM could not be sued for punitive damages because of the sale of its assets to the U.S. government.  The assets sale was part of the controversial government bailout to the automaker, in which GM received $50 billion in aid during the economic crisis, sold assets to the U.S. Treasury as part of its bankruptcy plan, and reorganized its business. The “new” GM has since been very profitable, making a record $7.6 billion in 2011 alone.

Now GM is attempting to claim that by selling its older assets to the U.S. Treasury, it is immune from punitive damages claims for defects in products it made and sold prior to the sale. The UHaul that the young Marine was driving at the time of his death was manufactured before the date of the asset sale.

GM claims that the assets sale document spells out the company’s immunity from liability for punitive damages.  However, legal experts who have reviewed the document state that it says nothing of the kind. On the contrary, the document says that GM retains all liabilities to third parties, and does not except punitive damages from its terms, according to the experts.

Nevertheless, GM’s threat worked:  the widow’s attorney abandoned plans to seek punitive damages from GM after the company’s attorney threatened legal headaches for the attorney and his client. The threats included seeking dismissal of the lawsuit in Arizona as well as intervention from a federal bankruptcy court to delay the lawsuit in order to allow GM to push its contention that the punitive damages claim violates the terms of the sale document.  GM’s threatened maneuvers could have delayed the widow’s case indefinitely and resulted in additional and complex litigation in the bankruptcy court–regardless of their merit.

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