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3 ex-dealers of Chrysler, GM in W.Pa. suing feds

Joe Napsha
| Wednesday, Feb. 23, 2011

Three former Chrysler and General Motors automobile dealers in Western Pennsylvania have joined about 125 others nationwide in suing the federal government on the grounds that their property — their franchises — was taken from them without compensation or due process.

Verona Motor Sales, formerly Verona Jeep, is one of five dealerships in Pennsylvania and 59 nationwide that claim they are owed $130 million in damages because the federal government did not pay them when their franchises were eliminated, according to the lawsuit filed last week in U.S. Court of Federal Claims in Washington.

The lawsuit contends that when the Treasury Department forced Chrysler Group LLC to reduce its dealership network in 2009, it was done without due process under the Constitution and protection of state dealer franchise laws.

"Our property was taken illegally. We lost untold thousands of dollars," said Bert Molitierno, owner of Verona Motor Sales, now a used-vehicle dealer with sites in Verona and Penn Hills.

The Treasury became involved in the automakers' restructuring when the government gave Chrysler and its financial arm $14 billion and General Motors Co. $50 billion in bailout money.

In March 2009, President Obama's auto task force rejected a Chrysler restructuring plan. Chrysler filed for bankruptcy in April. A revised restructuring plan pared down its network of dealers.

The plaintiffs claim the government failed to adhere to the Constitution, especially the Fifth Amendment, which concerns public taking. The closed dealerships contend that the government must reimburse a private entity in the event of a public taking.

Two Washington County dealerships — in Hickory and Bentleyville — are parties to an amended complaint filed Monday in the Court of Federal Claims that says both GM and Chrysler failed to pay any compensation for eliminating their franchises. That lawsuit claims the government was behind the dealership cuts. It seeks class-action status and more than $10,000 in damages per dealer.

"The Chrysler dealers got absolutely nothing. Chrysler offered us 20 cents on the dollar for our parts," said Bo Corwin, owner of Corwin Sales & Service Inc. in Hickory.

Molitierno's and Corwin's dealerships were among 789 dealerships that Chrysler cut in May 2009 on the grounds it had to reduce its network to meet market demand.

General Motors, which also filed for bankruptcy in 2009, cut its network from about 6,000 to 4,500 in 2010. One of those victims was B. Bodgewic Chevrolet Inc. in Bentleyville, which had been selling Chevrolets for about 50 years.

Bruno "Chip" Bodgewic declined to comment on the lawsuit against GM. Bodgewic now operates as B. Bodgewic Automotive.

Not only did Chrysler pull the plug on new-vehicle sales, but Molitierno said the inventory of thousands of parts for Chrysler vehicles became virtually useless because Chrysler shutoff the dealers' national computer system. The dealership had parts but could not tell customers whether part numbers fit their vehicles.

Chrysler gave rejected dealers a chance to regain their franchise through arbitration, but both Molitierno and Corwin said they withdrew from the process because they felt that it was not fair and would have been too costly.

"I could see the handwriting on the wall. It was just racking up lawyer's bills," Corwin said of arbitration.

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