GM to ask bankruptcy court for lawsuit protection

General Motors plans to ask a bankruptcy court to rule that it is protected from lawsuits arising from faulty ignitions tied to 13 deaths and numerous crashes that occurred over the past several years. 

GM has previously said it is protected from liability for claims related to incidents that occurred before it exited bankruptcy in 2009. But it has now taken its first steps to raise those issues with the court by filing motions to stay recall-related lawsuits while it asks that bankruptcy court to clarify the extent of that protection. 

The company's motion says more than 30 cases have been filed against it since February.

In a filing with the U.S. District Court for the Southern District of Texas on Tuesday, GM asked for a stay on litigation related to ignition claims until a judicial panel decides on a motion to consolidate the case with other lawsuits and until the bankruptcy court rules on whether the claims violate GM's 2009 bankruptcy sale order. 

The company earlier filed a similar motion with the U.S. District Court for the Northern District of California seeking a stay on pending litigation.

The plaintiffs in those cases have alleged that they bought or leased vehicles that contained an ignition switch defect. The defect has been linked to the deaths of at least 13 people and resulted in the recall of 2.6 million GM vehicles.

Since it began to recall vehicles in February, GM has been hit by dozens of lawsuits on behalf of individuals injured or killed in crashes involving recalled cars, as well as customers who said their vehicles lost value as a result of the company's actions. 

A spokesman for GM, Greg Martin, said in an email Wednesday that it was premature to comment on the litigation. He reiterated that GM had "both civic and legal obligations" in the matter, as GM Chief Executive Mary Barra told members of Congress during testimony earlier this month. 

GM emerged from bankruptcy protection in 2009 as a different legal entity than the so-called old GM. Under those terms, "new GM" shed liability for incidents predating its exit from bankruptcy, and any lawsuits related to pre-bankruptcy issues must be brought against what remains of old GM. 

That protection has outraged some safety advocates, politicians and plaintiffs' lawyers, who have called on GM to either waive bankruptcy protection or establish a fund to compensate victims whose claims might otherwise be barred. 

They have said that because GM allegedly covered up problems with the switch for more than a decade, and received support from the U.S. government during its bankruptcy, it should not fight against plaintiffs' attempts to seek payment for their injuries. 

With the motion, GM is trying to limit its legal liability in the cases while at the same time it considers compensation for families of crash victims. GM has hired Kenneth Feinberg — who handled the fund for the victims of the Sept. 11, 2001 terrorist attacks, the Boston Marathon bombing and the BP oil spill in the Gulf of Mexico — to explore ways to compensate victims. No decision has been made.

Attorney Robert Hilliard filed a Texas lawsuit on behalf of Charles and Grace Silvas that claims they are stuck with a defective 2006 Chevrolet Cobalt and seeks repairs, compensation for loss of value and alternative transportation.

Hilliard called GM's motion to send the case to the bankruptcy court a "long shot" and accused GM CEO Mary Barra of directing lawyers to hide behind the bankruptcy. He said he expects a ruling soon on the request for an order for GM to tell owners to keep the recalled cars off the road.

GM has said owners can continue safely using the cars if precautions are taken.

Wire services