Judge: GM trust acted in bad faith, but switch deal not enforceable

By Caroline Salls

Pittsburgh, Jan. 18 – Motors Liquidation Co. GUC Trust and General Motors LLC (New GM) potential economic loss, personal injury and/or death lawsuit plaintiffs’ request for enforcement of a settlement was denied Thursday by the U.S. Bankruptcy Court for the Southern District of New York.

Specifically, judge Martin Glenn said he was tasked with deciding whether late claims based on ignition switch defects should be permitted “so many years after the bar date expired in Old GM’s bankruptcy.”

“The issues are difficult, but as often happens, the parties directly involved in the dispute (attorneys for the potential claimants and for the GUC Trust)...spent months negotiating a settlement,” Glenn said.

The judge said Thursday’s opinion specifically involves the efforts by pre-sale personal injury, wrongful death, property damage and economic loss claimants to enforce an unexecuted settlement agreement negotiated with the GUC Trust, which would have allowed late claims to be filed, and would have established procedures for the court to estimate the claims.

“After months of negotiation, 21 drafts of the settlement agreement and supporting documentation, ‘signed off’ by representatives of the signatory plaintiffs and Wilmington Trust, and after a two-hour meeting with counsel to New GM, the GUC Trust reversed course and refused to execute the written settlement agreement, which all parties acknowledged was ‘final,’ at least as to form,” the opinion said.

Although Glenn said “the evidence at trial unmistakably establishes that the GUC Trust and its counsel acted in bad faith in reversing course and backing out of the settlement agreement,” he added “regrettably, the court is unaware of any contract principle that would nevertheless enable the court to enforce an unsigned written agreement absent a finding that the parties intended to be bound orally.”

“Thus, despite the GUC Trust’s flouting of the spirit of the law to promote good faith negotiations and settling of disputes, the court concludes that under applicable law, it cannot enforce the unexecuted written settlement agreement because it contains an unambiguous provision that the settlement agreement would not become enforceable until executed,” the opinion said.

Glenn said whether the plaintiffs have any other remedies arising from these circumstances “is not currently before the court.”

The parties were ordered to meet and draft a proposed schedule for completing discovery, briefing and hearings related to late claims motions, with a schedule to be filed by Feb. 9.

A scheduling conference will be held on Feb. 21.

Motors Liquidation, formerly General Motors, is a Detroit-based automaker that filed for bankruptcy on June 1, 2009. The new General Motors Corp. emerged from Chapter 11 on July 10, 2009. Motors Liquidation’s Chapter 11 case number is 09-50026.

© 2015 Prospect News.
All content on this website is protected by copyright law in the U.S. and elsewhere. For the use of the person downloading only.
Redistribution and copying are prohibited by law without written permission in advance from Prospect News.
Redistribution or copying includes e-mailing, printing multiple copies or any other form of reproduction.