The auto industry’s bailout may have been put in reverse after a judge ruled that 75 terminated Chrysler dealers have the right to sue the United States Treasury for violating their Fifth Amendment rights.

The dealers, all represented by Leonard Bellavia of Bay Shore-based Bellavia Gentile & Associates, had their property seized as part of a $12.5 billion federal bailout between 2008 and 2009. The government ordered Chrysler to terminate 789 franchises as part of the government-led bankruptcy.

Bellavia said since the government ordered the taking, it should be classified as an eminent domain issue and the dealers should be compensated accordingly. The 75 dealers are seeking more than $200 million in restitution.

“Simply because the government arranged to have this seizure of private property carried out by a third party – Chrysler – it is no less a ‘taking’ under long standing principles of constitutional law,” Bellavia said.

Judge Robert Hodges Jr. ruled Monday that the Chrysler dealers could bring a lawsuit against the U.S. Treasury. As a result, Bellavia and other involved attorneys may now seek the depositions of Timothy Geithner, Steven Rattner, and other high-ranking officials of the U.S. Treasury and the Obama administration.

“We fully intend to prove at trial that President Obama’s Automotive Task Force conditioned the bailout of Chrysler on a requirement that it close 25 percent of its dealerships nationwide,” Bellavia said. “The president and his task force believed that a Chrysler liquidation would destroy the U.S. economy and terminated these dealers on the belief that this had to be done for the public good. My clients, however, lost their entire life’s work without just compensation.”

Now that the judge has ruled against the government, Bellavia said he expects more of the 789 terminated Chrysler dealerships to join the lawsuit.

Dealers terminated during Chrysler’s 2009 bankruptcy will be allowed to proceed with a lawsuit against the US Treasury Department, alleging the government violated the Constitution in taking their store franchises.

A ruling handed down Monday by the US Court of Federal Claims denied the government’s motion to dismiss the case. The lawsuit, filed in February 2011, contends that the Obama administration violated the Fifth Amendment, which says private property shall not “be taken” for public use “without just compensation.”

The suit also alleges the terminations violated state legal rights by taking the franchises without adequate compensation.

“We received a very important decision today,” the dealers’ attorney, Leonard Bellavia of Mineola, N.Y., said Monday. He added: “After this decision, I expect those dealers sitting on the sidelines to join the case.”

So far, 75 eliminated dealers have signed on to the suit, which seeks at least $200 million.

A Treasury department spokesman referred questions to the US Department of Justice. A DOJ spokesman declined comment. Chrysler isn’t named in the lawsuit.

The Treasury’s auto task force, which was then headed by financier Steven Rattner, asked Chrysler and General Motors to make deeper cuts than the companies had originally planned.

As part of Chrysler’s restructuring, 789 US dealers were terminated, representing about one-quarter of the automaker’s US dealer body.

The decision clears the way for the case to move to discovery, Bellavia said. He added that he’ll be seeking depositions from Treasury’s auto task force.

On November 18th, Leonard Bellavia and John Gentile held a seminar for NYSADA members in the Albany area. The seminar addressed: Factory Demands for Facility Upgrades and the Dealers Best Strategy’s, GM’s EBE Program – How to Deal with Objections, and Warranty Parts Reimbursement. The dealer members present peppered the attorneys with a mix of specific scenarios affecting their dealerships. Several of the dealer attendees commented that this seminar was extremely informative and left them in a better position to respond to factory pressures.

A regularly quoted source of comment for Automotive News, Mr. Bellavia is also a regular speaker for national automotive and marine related trade organizations. He serves as Chair of the Automotive Franchise Law Section of the Franchise Law Committee of the New York State Bar Association and has been named Chairperson of the Litigation Section of the National Association of Dealer Counsel (“NADC”) and a member of its Board of Directors. Since joining with Leonard Bellavia in 1991, Mr. Gentile has personally handled hundreds of buy/sell transactions over his years in practice and is considered an expert in automotive warranty parts reimbursement.

The administrator handling Saab Cars North America’s finances told creditors last week that the company will be liquidated.

“We notified creditors that it is our opinion that there is no way to salvage the company,” said Jim McTevia, of McTevia & Associates, the administrator appointed to operate the U.S. distribution arm.

Parent company Saab Automobile filed for liquidation Dec. 19 in a Swedish bankruptcy court. Saab Cars North America suspended operations that day.

Saab Cars North America “laid off probably 80 percent of the employees” on Jan. 13, said McTevia.

He said he is seeking a buyer for the U.S. parts distribution business, which he described as the only meaningful asset.

Tim Colbeck, president of Saab Cars North America, expects a buyer for the parts business will be found by the end of February. “There still will be a market for parts,” Colbeck said. The question is whether there will be a U.S. distributor for parts.”

McTevia said he told creditors: “There is no money to keep the company going until someone figures out what to do.”

He added: “They have some parts inventory, which we started distributing. There are no new parts coming in.”

Leonard Bellavia, the lawyer representing 161 of Saab’s 188 dealerships, said he expects dealers to decide this week or next whether to file for a Chapter 7 involuntary bankruptcy or wait for the administrator to liquidate the company. The dealers’ decision will be based on which option potentially gives them a greater portion of the proceeds.

McTevia said the U.S. entity is “probably going to go on for a while because there is all kinds of litigation. There are assets to be liquidated.” The company’s headquarters in Royal Oak, Mich., near Detroit, will be closed by the end of February.

Bellavia estimates the liquidated assets have a value of between $75 million and $125 million, including $25 million owed by General Motors for warranty work. He estimates liabilities at $10.5 million.

Saab resumed parts distribution to dealers on Thursday, Jan. 19. The operation was suspended Dec. 19.

Over 140 of the 188 Saab dealers nationwide have retained the law firm of Bellavia Gentile & Associates, LLP, to represent the dealers in their claims against Saab Cars, N.A., a subsidiary of the Swedish car manufacturer, Saab Automobiles. Saab Automobiles filed for Bankruptcy in Sweden on December 19, 2011.

“Saab dealers are owed substantial amounts from Saab Cars N.A. for warranty repairs and incentive payments. Right now we are identifying and marshaling the assets which should be made available to pay our dealer clients and enable them to provide parts and
warranty repairs for their customers”, said Leonard A. Bellavia, Senior partner at the firm. Bellavia continued; “Our firm has gone up against all of the major automobile manufacturers to protect the rights of dealers. The manufacturers know and respect us, so we believe that we can cut through a lot of the acrimony which typically exists and reach a resolution that will benefit the dealers”.

Ultimately, it is Mr. Bellavia’s hope that all Saab dealers join the group. “There is strength in numbers” said Bellavia, “which provides dealers with the ability to level the playing field with the manufacturers”.

After numerous attempts to sell the assets of Saab Automobiles to investors with the hope of keeping U.S. Saab dealers viable, General Motors, which owns certain critical technologies licensed to Saab, effectively blocked any potential sale. The result has left U.S. Saab dealers in turmoil as they question the ability to sell remaining vehicle inventories the value of which may be compromised due to the manufacturer’s inability to honor vehicle warranties.

Faced with these issues, Saab dealers, through their National Dealer Council have retain ed the nationally acclaimed dealership law firm of Bellavia Gentile & Associates, LLP to negotiate with Saab Cars N.A. and to determine what additional action may be necessary in order to protect the dealers.

About Bellavia Gentile & Associates LLP

Bellavia Gentile & Associates, LLP is a Mineola, New York based law firm with additional offices in Manhattan, Albany and New Jersey. The firm served as Co – Lead counsel for terminated dealers in the recent Chrysler bankruptcy proceedings and represents over 1,000 automobile dealers nationwide. Mr. Bellavia serves as Chair of the Litigation Section of the National Association of Dealer Counsel, an organization of over 500 attorneys nationally who concentrate in the representation of automobile dealers.

For more information about this story and to speak with Mr. Bellavia and one of the New York Saab dealers, call Cecilia Alers.

In Texas, 85 rejected Chrysler and General Motors dealers are suing the federal government, charging they lost their businesses without adequate compensation when the U.S. Treasury Dept. maneuvered the two auto makers into downsizing their dealer networks in 2009.

In a New York-based group action earlier this year, 75 terminated Chrysler dealers sued the U.S. government for the alleged unconstitutional taking of their dealerships without just compensation.

At least 10 dealer names have been added since then. Even more are expected to join, predicts Leonard Bellavia, lead attorney for the plaintiffs. Counter motions are going back and forth between the dealers and the government, like chess moves in a tense match. In October, lawyers filed new motions in the U.S. Court of Federal Claims, which hears cases against the federal government.

As government lawyers seek to dismiss the case, Bellavia looks to add plaintiffs.

“The lure of this case is that it goes to the heart of what every entrepreneur in this country pursues, the American dream,” he tells WardsAuto. “Yet, 789 Chrysler dealers, all symbols of American entrepreneurship, had their businesses taken away” as part of the auto maker’s post-bankruptcy reorganization.

Numerous high-profile dealers have joined the two largest suits against the government. For example, rejected dealers Jack Fitzgerald, co-leader of Committee to Restore Dealer Rights in Maryland, and Patrick Painter, a state representative in Utah, are part of the New York suit.

As more dealers sign on, the amount of damages sought increases. It is at $200 million now, up from $120 million earlier.

More is at stake in the Texas class-action case. “We are seeking the full value of the terminated dealerships and the lost profits and damages for those dealers that were reinstated,” says lead plaintiff attorney Richard Faulkner, estimating claims will run as high as $4 billion. “The numbers continue to change as we are still adding dealers.”

That federal suit was initiated by the former owners of the defunct Colonial Motors, a GM store in Branchburg, MS, and Finnin Motors, a Chrysler-Jeep dealership in Dubuque, IA.

The class action says unnecessary government economic regulation propelled the dealer franchise terminations.

“This case is important because it’s the only way the terminated dealers can recover the value of their terminated dealerships,” Faulkner says. “If the dealers don’t compel the government to pay for taking their property, they will never obtain anything.”

The case could end up at the highest court in the land, he tells WardsAuto. “The unique nature of what the government did to take dealers’ businesses almost ensures that this case will go to the Supreme Court.

“The government has never behaved this way before,” Faulkner says. “The auto task force decided that it would cost too much to eliminate dealers and pay them for their property, so it manipulated the loans and bankruptcy process. The dealers were accordingly terminated – and with extreme prejudice.”

The federal task force headed by Steven Rattner insisted the massive dealership cuts were necessary to save Chrysler and GM.

Rattner has told WardsAuto the task force tried to make sure all parties involved made sacrifices. But the panel regarded dealers collectively as a single constituency.

A subsequent report from an independent investigator for the government’s Troubled Asset Relief Program said the task force overstated the importance of the wholesale dealership terminations in the effort to save the two troubled auto makers.

Potential damages awarded each dealership would be separately calculated, says Harry Zanville, a lawyer in the Texas case.

Aggrieved dealers include those who won in arbitration hearings last year but were “product-starved” and had to close or suffered damages, as well as dealers who won arbitration but didn’t reestablish relations with the auto makers because of conditions and costs imposed, he says.

Chrysler terminated dealers immediately, GM gradually over the course of several months.
Bellavia and his legal team chose not to sue GM because its “wind-down” approach was less rash, he says. “Still, what happened to these business owners is one of the greatest atrocities in American history.”

Bellavia is a dealer’s son who worked at his father’s business to cover his law-school education. “As a product of an auto-dealership family, this case means a great deal to me,” he says.

Attorney Leonard A. Bellavia has dedicated his career to fighting for the rights of US automobile dealers and franchise owners.  Now, he wants to take that fight to the US Treasury Department – who Bellavia believes participated in legal misconduct by ordering the closing of 789 Chrysler Dealerships as part of the Chrysler Bankruptcy in 2009.  The 27 GM dealers who did not sign wind-down agreements are also eligible to participate in this lawsuit.

To file this lawsuit and move this fight forward, Bellavia needs a threshold number of dealers to participate. He’s almost there. But, the law firm still needs more dealers to join the fight.

Buoyed by recent headlines about a potential probe of the US Government’s role in setting criteria that resulted in the loss of franchises by GM and Chrysler dealers, Bellavia is reaching out far and wide to auto dealers.

“If the Executive Branch of the US Government exceeded its authority by mandating that dealers be closed, then the Government should be held accountable by the dealers” Bellavia said.

This is the United States of America, noted Bellavia, and people have property rights that should not be violated.  Dealers need to stand up and seek retribution for the severe economic loss the US Government may have caused them and Bellavia Gentile & Associates has developed a model that makes this feasible.

“We are trying to reach as many former Chrysler and eligible GM Dealers as possible to let them know of this opportunity.  Using the learning curve of our law firm – which represented the highest number of Chrysler dealers in arbitration hearings (according to our information) – and calling upon my personal knowledge gained by cross examining key people at Chrysler – including Bob Nardelli, Jim Press, Peter Grady and John Tangeman – these dealers have a solid chance of getting just compensation for the loss of their dealerships” said Leonard A. Bellavia, Esq.

Former Chrysler and eligible GM Dealers who want more information about joining this lawsuit can email Leonard Bellavia at LBellavia@DealerLaw.com or call the firm at 516.873.3000.

First there were widespread dealership closings by General Motors Co. and Chrysler Group LLC as part of their post-bankruptcy reorganization plans.

Then there were dealership-auto maker arbitration hearings ordered by the U.S. Congress after many dealers complained about the shutdowns.

Now come post-arbitration lawsuits by dealers in federal and state courts. They mainly target Chrysler, but one class-action suit is going after the U.S. government for allegedly spurring the dealership closings.

In rural Atoka, OK, co-owners Jack Haigh and Bob Sullins of Crossroads Superstore are suing Chrysler as part of a “mass-action” lawsuit.

Crossroads, which had sold both GM and Chrysler products, joins forces with three other dealers.

They are: Mark Calisi of Eagle Auto Mall Corp. in Riverhead, NY; Charlie Morris of Terry Chrysler-Jeep, of Burnt Hills, NY; and Jim Bickford of Westminster Dodge, Dorchester, MA.

They are among the few Chrysler dealers that won arbitration rulings against the auto maker that prevailed in 108 of 140 cases.

“It’s a hollow victory,” lead attorney Leonard Bellavia of New York says of Chrysler dealers’ arbitration wins.

Dealers who prevailed still must improve their facilities at Chrysler’s behest, win back customers or spend even more money in litigation, he notes.

After their arbitration wins, several dealerships such as Crossroads received “unreasonable and unconscionable” letters of intent (LOIs) that prevent their ability to resume business operations, according to their legal filings.

“I do not know of one dealer who won arbitration or that was offered reinstatement who is back to selling new vehicles with Chrysler,” says Crossroads’ Haigh.

But he says he does know “plenty of dealers that Chrysler gave (or gifted) franchises to who have new Chryslers on the ground and are selling and servicing without the LOI mess that we got.”

Haigh and his co-plaintiffs seek reinstatement, compensation for lost income and damages.
The Crossroads owners say they joined the East Coast suit because they wanted to leverage costs and thought a federal court in New York. The case will be heard in New York Eastern District Court in Long Island. But it might not stay there.

“Chrysler is making a motion to transfer the case to Michigan to consolidate it with the case it has brought against several Michigan dealers,” Bellavia says.

Haigh is disappointed because he thinks he might have done better with Chevrolet store negotiations, but instead opted to settle a wind-down agreement with GM.

At the time, he says Chrysler representatives were telling him it would help Crossroads’ chances if it weren’t dualed with GM.

Haigh now says settling with GM was a rash decision and the dealership could have been better off with GM, even though Chrysler truck sales typically outperform Chevrolet in his market.

“Chrysler told us it would be far better for us not to have the GM dealership in order to better serve Chrysler. So we put all our eggs in the basket with Chrysler,” says Haigh.

Crossroads’ owners won in arbitration and got the disputed Chrysler LOI. Like a number of dealers, they didn’t sign it, claiming some requirements – including giving Chrysler complete withdrawal rights if a nearby store protests – are unfair and different from stores that weren’t
closed.

By September, about nine dealers nationally sued Chrysler in state and federal courts. Chrysler won’t confirm the number of lawsuits.

One attorney estimates Chrysler could be spending at least $1 million a month in legal fees.
“It would be inappropriate to discuss matters now in litigation,” Chrysler spokesman Mike Palese says in a statement.

He reiterates Chrysler’s ongoing claim that dealers selected for termination were carefully considered, taking into account its Genesis plan of consolidating brands at a single sales point.

“Placing all four brands under one roof in modern facilities has already resulted in enhanced profitability for the Genesis dealerships,” he says.

“It is well documented that due to Chrysler’s optimized network, existing dealers are already enjoying increased profitability and are making significant investments in their dealerships,” Palese says.

The dealers’ federal lawsuit is to get their dealerships back, Sullins says. “We’re trying to get reinstated with the same agreement everyone had before.”

The federal suit in New York could take more than a year, Bellavia estimates. Chrysler will be represented by WilmerHale, a Boston firm.

Gilbert Dannehower, owner of Deland Dodge in central Florida, was the first dealer to win in arbitration against Chrysler. Still, he’s pressing his case forward and suing to get Chrysler to comply with the arbitrator’s award.

He couldn’t accept the steep investment in facilities required by the LOI, says his attorney, Mark Ornstein.

The lawyer says it is unreasonable to expect a dealer, financially strapped after being shut down for a year, to come up with $1 million for facility improvements.

Dannehower also refused to sign the Chrysler LOI after winning in arbitration because he was put off by the language allowing Chrysler to deny him merely if other Chrysler dealers object to what he considers his arbitrated right to sell vehicles.

Yanking Daannehower’s franchise was unfounded in the first place, Ornstein says. “He was the No.1 auto retailer in DeLand at the time of termination. He was an acknowledged stellar performer.”

The arbitrator, a retired judge, went out of her way to mention it in her award, he notes.

“The dealer terminations were 20,000-ft. decisions made in the heat of bankruptcy,” Ornstein says. “Congress, when giving the dealers a right to arbitrate, allowed dealers to tell their individual stories.

“My clients are anxious and willing to let bygones be bygones and get back in the business of selling vehicles.”

Why isn’t GM facing the same LOI legal challenges as Chrysler?

“GM is not imposing unreasonable requirements on dealers,” Bellavia says. “They have not required that new facilities be built and certain rights be waived if another nearby dealer complains. They restored many of their dealers without arbitration.”

Dealers battling to get their dealerships back “are the fighters that Chrysler needs to better its retail network,” Haigh says.

Meanwhile, several dealers filed a federal class-action suit against the U.S., claiming the federal government forced Chrysler and GM to terminate the franchises of thousands of auto dealers, lawyers for the dealers say.

Colonial Motors, a former GM dealer in Mississippi, and Finnin Motors, a former Chrysler dealer in Iowa, filed suit on behalf of a nationwide class of more than a 1,000 dealers, saying unnecessary government economic regulation caused the dealer-franchise terminations.

They are seeking to be fully paid for property damages, says Dallas attorney Richard Faulkner.

“Without need and, on a theory, the federal government demanded that GM and Chrysler immediately terminate a huge number of car dealers or be denied obtaining billions of dollars of TARP (Troubled Asset Relief Program) money,” Faulkner says.

A subsequent government report by the Special Inspector General for the Troubled Asset Relief Program indicated the widespread dealership closings were not vital to the two auto makers’ survival and unnecessarily resulted in thousands of nationwide job losses in the depth of the recession.

Chrysler Group LLC won a large majority of cases appearing before arbitrators in American Arbitration Assn. hearings.

But in a number of dealer wins, arbitrators looked beyond Chrysler and General Motors Co.’s post-bankruptcy business cases for restructuring their dealer networks.

Considerations of the public interest weighed heavily when an arbitrator in Eagle Auto Mall’s termination appeal against Chrysler Group found for the dealer, Mark Calisi.

He won back his Chrysler Jeep dealership in Riverhead, NY, after losing it last year as part of Chrysler’s sweeping dealership restructuring plan.

Calisi also operates Chevrolet, Kia, Mazda and Volvo new-car dealerships in Long Island.

A victorious Calisi tells Ward’s the arbitrator believed “it was in the best interest of the public to have a Chrysler store right on the main strip of Long Island’s” eastern end where there was no Chrysler presence.

Arbitrator Larry Biblo said in his decision, “The best thing for Chrysler and the public is to get Chrysler back to financial stability as soon as possible. This urgency, in the end, was the deciding factor in this case.”

GM has had fewer arbitration cases after agreeing to reinstate more than 660 dealers.

But in a major GM arbitration matter, an arbitrator found for Lou LaRiche Chevrolet, a 40-year store that is the only Chevrolet dealership in Plymouth, MI.

Scott LaRiche, executive manager, believes LaRiche was the first dealership in the U.S. to win against GM.

“At first we thought it was a mistake,” he says of receiving the “wind-down” notice indicating the dealership’s days were numbered. “We were well above the criteria set for wind-down dealers.”

In 2008, as other dealers reeled from the worsening economy, the dealership was 97 in sales out of 4,600 Chevrolet dealers nationwide.

Arbitrator Peter Kupelian ruled LaRiche had the resources and past track record to succeed in the upscale to middle-class market it serves.

The arbitrator took into account the dealership’s profitability, especially between 2007 and 2009, when the economic crisis was deepening.

Last year, Chrysler closed 789 dealerships, effective immediately, reducing its dealer count to about 2,400, or 25{f15fad3b04d89020a05738ee85256797e9759bd19fdd229b29bad9398df16913}.

GM announced it was reducing its 6,000-dealer network by about 2,400 dealerships in what it called a “wind down” intended to give affected dealers time to close their stores.

Reacting to the massive dealership closings, the U.S. Congress passed legislation allowing dealers to opt for arbitration hearings.

A recent government report on the termination process says some dealers lost their franchises even though they ran financially healthy businesses.

The report also indicated there was no evidence that massive dealership cuts, prodded by a federal government automotive task force, were vital to the survival of GM and Chrysler.

Further, the report says the dealership closings resulted in thousands of job losses during a recession.

Even in 2009, in wind-down status, the LaRiche Chevy store was 179th in sales among Chevrolet dealers nationwide, LaRiche says.

The store stayed open by getting new products from other dealers. “We were very tenacious,” LaRiche says. “We never gave up hope.”

Motivating him to fight was seeing everything his father, Lou, had worked for in 40 years taken away from him.

Leonard Bellavia, Calisi’s attorney in the Chrysler case, says, “The arbitrator saw that it’s not about personalities, but about selling cars and trucks. He (Calisi) is a good dealer and needs to recover fast. It’s in the best interest of the public and Chrysler to get them selling Chryslers again.”

Bellavia had successfully asked a U.S. Bankruptcy judge to unseal internal Chrysler e-mails for use in arbitration cases involving Calisi and another Chrysler dealer, Jim Tarbox of North Kingstown, RI.

Bellavia said the e-mails between Chrysler field representatives and executives criticized the dealers personally, implying the stores were closed for reasons other than performance.

In the 2009 e-mails, the two dealers were called “litigious,” “combative” and “belligerent.”

“It wasn’t a performance issue,” Calisi says.

The stinging emails were introduced as evidence in his and Tarbox’s arbitrations. “The defense in these cases is grounded in common sense,” Bellavia says.

“Why did we win?” says Calisi. “Great performance and we were well capitalized.”

He is glad to be back in business as a Chrysler dealer. Now, he says, “Chrysler needs to hit the ground running and start selling cars.”

Tarbox took a Chrysler buyout. Without naming the amount of the settlement, Bellavia says it was “substantial enough” to allow Tarbox to start a new business, possibly a new dealership representing another auto maker.

Another Bellavia client, Westminster Dodge in Boston, won its arbitration case in a July 19 decision.

With Westminster, a mainstay area dealership since the 1930s, Chrysler claimed the dealership was in a bad location.

“It was about 50 feet from a showplace Toyota dealership,” Bellavia says. “How in good faith can you argue that’s a bad location?”

The dealership had a “symbolic presence” to people in the area. “We were the only Chrysler representative in the city of Boston. There’s been no one representing Chrysler since we were dismissed,” says Bob Bickford, co-owner of the family store that sold used vehicles after Chrysler yanked its new-car franchise.

The mood at Westminster was jubilant after the arbitrator’s ruling, but the family has had a long time on the sidelines.

“We’ve had about 15 months to sit and absorb it,” Bob Bickford says of the initial closure. “But our customer base has been in our corner and very positive.”

Co-dealer Jim Bickford says “We knew we had a strong case with our location and history.”

Despite a high win ratio on its side, Chrysler has expressed disappointment in many of the cases won by dealers.

In the Calisi case, Chrysler says: “This decision undermines the federal Bankruptcy Court Order that affirmed the rationalization process used to reject the dealership agreements.”

Chrysler says “decisions to select dealers for the company’s ‘right-sized’ dealer network were carefully considered.”

GM is not commenting on the Lou LaRiche case or others in arbitration, citing dealer confidentiality.

GM sent letters to 661 dealers of the roughly 1,100 dealers who filed arbitration claims, indicating they will be reinstated.

Both Chrysler and GM say they expect the final arbitration proceedings to wrap up by the end of July. Decisions sometimes take several weeks to come down.

Dealers winning in arbitration say their next big hurdle is winning back customers who may have strayed.

“We’re excited to be part of the new GM,” Scott LaRiche says. “But I still feel horrible for those dealers who lost and never should have.”

Dealers claim they received ‘unreasonable’ letters of intent

WASHINGTON — Chrysler Group was sued today by four rejected dealerships, which claim that they received “unreasonable and unconscionable” letters of intent after prevailing in arbitration.

The lawsuit raises to nine the number of plaintiffs making such a claim against the automaker.

The joint suit filed in U.S. District Court in Long Island, N.Y., objects to several Chrysler conditions for reinstatement, including one that would let the company withdraw its letter of intent if a nearby dealer protests the reinstatement within 30 days.

The suit seeks reinstatement, compensation for lost income and punitive damages for Chrysler’s “bad faith and/or reckless indifference” for the dealers’ legal rights.

Chrysler said today its letters of intent are legal.

“The company has complied fully with the letter and intent of the federal dealer arbitration statute,” Chrysler spokesman Michael Palese said. The company has not been served with the latest suit, he said.

The four dealerships that filed today’s suit are Eagle Auto Mall Corp., of Riverhead, N.Y., owned by Mark Calisi; Terry Chrysler-Jeep, of Burnt Hills, N.Y., owned by Charlie Morris; Crossroads Superstore, of Atoka, Okla., owned by Robert Sullins; and Westminster Dodge, of Dorchester, Mass., owned by Jim Bickford.

All were shut down by Chrysler last year as part of its bankruptcy restructuring, then won their arbitrations with the company this spring.

The lawyer for the dealerships, Leonard Bellavia, of Mineola, N.Y., said several other dealerships may join the suit in the next week or two.

The federal law setting up the arbitration process required that Chrysler issue a “customary and usual” letter of intent to any dealer who prevailed in arbitration.

At least 83 Chrysler dealerships have received letters of intent from the company during the arbitration process, but only 29 have signed them, Palese has said.

The five other dealerships that previously sued Chrysler over their letters of intent are:

Livonia Chrysler Jeep Inc., of Farmington Hills, Mich.; Star Chrysler-Jeep, of Glendale, Calif.; Causeway Jeep, of Manahawkin, N.J.; Deland Dodge, of Deland, Fla.; and Century Motor Corp., of Wentzville, Mo.