Sixty-four dealerships that were terminated during Chrysler’s 2009 bankruptcy reorganization sued the U.S. Treasury Department today, seeking at least $130 million.
The suit, filed in the U.S. Court of Federal Claims here, alleges the government violated the Constitution by taking the stores’ franchises and their state legal rights without adequate compensation.
This is the first suit filed by dealers against the federal government in connection with their termination during the back-to-back bankruptcies of Chrysler and General Motors.
A number of suits were filed against the companies following congressionally established arbitration of dealer reinstatement claims.
Spokesmen for the Treasury Department and Chrysler, which was not named as a defendant in today’s suit, declined to comment.
The 64 plaintiffs make up about 8 percent of the 789 dealerships terminated in June 2009.
The suit may test the powers of U.S. bankruptcy law. Bankruptcy Judge Arthur Gonzalez approved the store closings as Chrysler emerged from its U.S.-steered reorganization under control of Italy’s Fiat SpA.
The plaintiffs hail from 30 states, including California, Texas, New York and Florida. Among the plaintiffs are Fitzgerald Auto Mall of Frederick, Md., owned by Jack Fitzgerald; Tarbox Motors of North Kingston, R.I., owned by Jim Tarbox; and Painter Sun Country Chrysler of St. George, Utah, owned by Jim Painter.
A lawyer for the dealerships, Leonard Bellavia of Mineola, N.Y., said the number of plaintiffs could increase. He declined to disclose his fee arrangement with the dealer clients.
Treasury’s auto task force, which was then headed by financier Steven Rattner, asked Chrysler and GM to make deeper cuts in their dealership network than the companies originally planned.
The 789 Chrysler, Jeep and Dodge dealerships shuttered in June 2009 made up about a quarter of the automaker’s U.S. dealer body.