Lawsuit against Obama Administration Doubles in Size as Former Chrysler Dealers Defeat Government's Key Motion

John Mitty Tuesday, July 24, 2012

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July 24, 2012

Lawsuit against Obama Administration Doubles in Size as Former Chrysler Dealers Defeat Government’s Key Motion

Law Firm Defeats Government’s Motion to Dismiss, Alleging Business Owners’ Constitutional Rights Were Violated

Largely due to the success in defeating the government’s dismissal motion, the number of former Chrysler dealers who seek to recover damages for the wrongful “Taking” of their dealerships during the historic Chrysler bankruptcy of 2009 increased from 75 original dealers to 150 dealers. As a result, the law firm Bellavia Gentile & Associates, LLP has announced that it has filed an amended complaint, which will double the number of dealers involved in the litigation. The lawsuit alleges that the dealers’ constitutional protections against the “Taking” of private property for the public good were violated when GM and Chrysler were forced to terminate dealerships in order to receive money from the federal government’s Troubled Asset Relief Program (TARP).

In the lawsuit, Bellavia Gentile & Associates argue that the Obama administration required Chrysler to close down 789 dealerships in order to be eligible for TARP funding. Chrysler received $1.5 billion from the federal government between 2008 and 2009 as part of the TARP program.

Originally, 75 rejected Chrysler dealers joined the litigation commenced in February 2011. The lawsuit alleges that the federal government violated the Fifth Amendment rights of the rejected dealers when it compelled both GM and Chrysler to shut down nearly 25 percent of their dealerships nationwide as a condition of receiving the TARP funds and saving the U.S. economy from devastation if these auto manufacturers liquidated. Specifically, the original lawsuit alleges that the government was in violation of the “Takings” clause of the Fifth Amendment which can be invoked if the government seizes the private property of its citizens for the public good — in this case, saving the U.S. economy.

After the government brought a Motion to Dismiss the complaint before the Federal Court of Claims, on February 27, 2012, Judge Robert H. Hodges, Jr. denied the government’s Motion to Dismiss and ruled in favor of the plaintiffs. In his ruling, Judge Hodges stated that the plaintiffs had, in fact, stated a viable cause of action against the government and further ordered that the case proceed with discovery which may include massive document production, as well as depositions of former Chrysler employees and members of the Obama administration involved with the TARP program.

After the decision of Judge Hodges, a groundswell of interest by other rejected dealers not originally in the lawsuit resulted in the need to file the amended complaint. “After Judge Hodges found that we had stated a valid cause of action, it was our goal to add additional Chrysler dealers to our lawsuit. The decision by Judge Hodges gave our case significant credibility,” said Leonard A. Bellavia, Senior Partner of Bellavia Gentile & Associates, LLP. “This is a case of great significance as it will determine whether the Federal Government can violate the basic constitutional rights of small business owners who, in most instances, have worked decades to build their business, only to have it taken away by the Federal Government without any compensation whatsoever.”

For more information, call (516) 873-3000 or visit www.dealerlaw.com.

jmitty@longislandyellowpages.com

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