Suit in fatal Cobalt crash to test GM liability shield – USA TODAY

Posted: Saturday, March 22, 2014

The families of two Wisconsin teenagers who died in a 2006 accident while passengers in a 2005 Chevrolet Cobalt have sued General Motors in a Minnesota court, setting the stage for what could be a test case in challenging the automaker’s legal shield against pre-bankruptcy liabilities.

The crash — which killed 18-year-old Natasha Weigel and 15-year-old Amy Rademaker, and left 17-year-old driver Megan Ungar-Kerns with brain damage — occurred after the Cobalt’s ignition switch abruptly turned off, a defect that is now the subject of a recall involving 1.6 million GM vehicles.

When the ignition switch turned off, the Cobalt lost power steering, braking and airbags before slamming into a telephone pole box and two trees, according to the lawsuit.

The lawsuit, filed in a Minnesota District Court, targets GM and the Minneapolis dealership that sold the vehicle, Rosedale Chevrolet, seeking damages of more than $50,000.

It comes as the U.S. Justice Department, a Congressional subcommittee and the National Highway Traffic Safety Administration have launched investigations into GM’s handling of the crisis.

The suit alleges GM committed fraud by failing to disclose the ignition switch defects before February 2014, when it first publicly acknowledged an issue.

The defects were “knowingly, intentionally and fraudulently ignored and intentionally kept secret from the public,” according to the lawsuit.

GM CEO Mary Barra, who took the job in January, has ordered an “unvarnished” internal report on what happened, apologized for the accidents and plans to testify before Congress on April 1. The automaker has not signaled whether it would seek to settle lawsuits or fight them.

Some bankruptcy experts say the families have no legal recourse because their accident occurred before GM’s Chapter 11 bankruptcy in 2009, which provided legal protection from pre-bankruptcy liabilities.

Still, legal experts say GM may be obligated to compensate victims from pre-bankruptcy crashes if the victims can prove GM did not disclose its knowledge of the defects while it was navigating bankruptcy.

Tbe lawsuit alleges that GM, which was aggressively cutting costs in an attempt to avoid insolvency in the years leading up to its bankruptcy, “elected to preserve its cash rather than preserve the lives of its vehicle owners.”

The lawsuit was filed on behalf of Jayne Rimer and Doug Weigel as co-trustees for Natasha Weigel, Margie Beskau as trustee for the heirs of Amy Rademaker, and Megan Phillips.

The suit was filed by a group of attorneys that includes Hilliard Munoz Gonzales, the Corpus Christi, Tex., law firm which is representing family members who lost 10 loved ones. Four of those cases occurred before GM filed for bankruptcy in May 2009.

Attorney Robert Hilliard said on Wednesday that he believes GM still may consider settling pre-bankruptcy cases to avoid negative publicity.

“There are certain cases where liabilities prior to bankruptcy are – I don’t know the right word – they’re with the previous company,” Barra told reporters earlier this week. “But I would say right now, our focus 100 percent is on the customers, on fixing their vehicles – getting the parts, fixing their vehicles and supporting them through that process.”


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