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Chrysler wins millions in lawsuit

Wednesday, April 15, 2009

A jury has awarded Chrysler a $47 million judgment in its breach of contract lawsuit with a supplier over faulty heating and cooling parts.

“It’s probably one of the largest verdicts in Oakland County history,” said Bloomfield Hills attorney James Feeney, who represented Chrysler. “It’s a very substantial verdict, and significant in the current situation, where automotive companies and suppliers are struggling with the current economy.”

Hutchinson FTS, which is headquartered in Troy and produces under-hood air-conditioning tube and hose assemblies, sued Chrysler for breach of contract in 2007. Hutchinson said the automaker wrongfully withheld $29 million in payments for components that Hutchinson had produced.

Chrysler withheld payments on invoices, and argued it had the right to do so under contract, because the automaker believed the supplier had a responsibility to reimburse the company for the cost of remedying problems associated with defective parts that Hutchinson manufactured for 2005 minivans with seats that fold into the floor. There was leaking and corrosion associated with the heating and cooling lines and related parts.

Chrysler discovered and corrected the problem in 2005.

In 2006, the company issued two recalls affecting about 400,000 vehicles. In states where corrosive road salt is used, vehicles’ entire underbody was replaced, while hoses and the joints that leaked were replaced on vehicles in other states.

“It was a very, very large expense. Chrysler spent a lot of money fixing the parts,” Feeney said.

Feeney said the problem was not safety-related, and the vast majority of affected vehicles have been fixed.

According to court filings, Hutchinson asserted that the parts were not defective and met Chrysler specifications.

Chrysler filed a countersuit against Hutchinson, accusing it of breach of contract and breach of warranty. Chrysler argued that Hutchinson breached its contract by supplying defective parts, and said Hutchinson was liable for damages, including the costs associated with the recalls.

“The parts are inadequate to meet the design, durability and corrosion resistance requirements for safe and foreseeable use in Chrysler vehicles, including the Dodge Grand Caravan and Chrysler Town and Country models,” the counterclaim reads.

Both parties argued their sides in a two-week trial presided over by visiting Oakland Circuit Judge Steven Andrews. A jury on Friday awarded Chrysler a verdict of more than $47.6 million.

“Obviously, the jury believed that this supplier was responsible for these costs,” Feeney said. “Chrysler is very pleased that they agreed with its position.”

William Sankbeil, a Detroit attorney who was local counsel for Hutchinson FTS, declined to comment Tuesday.

LINK:Chrysler wins millions in lawsuit - Daily Tribune: Breaking news coverage for southeastern Oakland County, Michigan
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