Leonard Bellavia Bankruptcy Photos

On Yahoo!: Leonard Bellavia, left, attorney for one of the Chrysler dealerships, enters US Bankruptcy Court, Friday, May 29, 2009, in New York. (AP Photo/ Louis Lanzano).

On Zimbio.com: Chrysler Dealers Protest The Closing Of Almost 800 Dealerships. Leonard Bellavia (R), legal counsel for a group of Chrysler dealers slated to lose their businesses, and James Anderer, owner of Island Jeep in Lindenhurst, N.Y which is scheduled to be closed, look on at a press conference protesting the Chrysler bankruptcy plan May 26, 2009 in New York City. Chrysler faced a court hearing today about its fast-track bankruptcy plan. (Photo by Mario Tama/Getty Images) *** Local Caption *** James Anderer; Leonard Bellavia.

In The Wall Street Jounal – WSJ.com: NEW YORK – MAY 26: Leonard Bellavia (R), legal counsel for a group of Chrysler dealers slated to lose their businesses, and James Anderer, owner of Island Jeep in Lindenhurst, N.Y which is scheduled to be closed, look on at a press conference protesting the Chrysler bankruptcy plan May 26, 2009 in New York City. Chrysler faced a court hearing today about its fast-track bankruptcy plan.

On Breitbart.com: Attorney representing over 20 Chrysler dealerships Leonard Bellavia enters US Bankruptcy Court, Thursday, June 4, 2009, in New York. (AP Photo/ Louis Lanzano) 

Plan to ax dealers not Chrysler’s decision

NEW YORK, May 26 (Reuters) – A lawyer for Chrysler dealers facing closure as part of the automaker’s bankruptcy reorganization said on Tuesday he believes Chrysler executives do not support a plan to eliminate a quarter of its retail outlets. Lawyer Leonard Bellavia, of Bellavia Gentile & Associates, who represents some of the terminated dealers, said he deposed Chrysler President Jim Press on Tuesday and came away with the impression that Press did not support the plan.
“It became clear to us that Chrysler does not see the wisdom of terminating 25 percent of its dealers,” Bellavia said. “It really wasn’t Chrysler’s decision. They are under enormous pressure from the President’s automotive task force.”

He added the government task force, which he criticized for having no members with retail experience was, in effect, attacking U.S. entrepreneurs.

“What is the next task force? Shoe stores? Pizzerias?” Bellavia said at an event in Manhattan to publicize the dealers’ concerns ahead of a bankruptcy court hearing.

Chrysler [CBS.UL] notified its dealers this month it plans to eliminate 25 percent of its retail showrooms and is seeking permission from a U.S. bankruptcy judge to terminate franchise agreements with 789 of 3,181 dealers as of June 9. [ID:nN25534875]

A spokeswoman for Chrysler said the decision to cut a quarter of the dealers was “not coming from the task force.”

“Our position is that the market can’t support the number of dealers that are out there,” said spokeswoman Carrie McElwee. “This has been our plan for more than 10 years to combine Chrysler, Dodge and Jeep under one roof.”

The decision about cutting dealers took into consideration factors like location, customer satisfaction, and sales potential, she said. Nearly half of the terminated dealers also carry non-Chrysler brands, and most rely on used vehicles for the bulk of their sales.

The dealers will seek to stop the sale of Chrysler assets to a new company — owned by its union, Italy’s Fiat SpA (FIA.MI), and the U.S. government — at the bankruptcy court hearing on Wednesday.

“The problem we have is the free enterprise system is not run by the government, it’s run by business entrepreneurs,” Bellavia said. “The dealers themselves will decide if it’s not productive to go forward.”

Chrysler has more than double the number of dealers of rivals Toyota, Nissan and Honda, which each have about 1,200 retail outlets, while General Motors (GM.N) has about 6,000. But it should be up to owners to decide when to exit the business if there is not enough demand, Bellavia said.

Dealers argue closing dealerships will devastate local communities, with some 50,000 direct job losses nationwide, and as many as 200,000 indirect job losses. Part of their legalargument rests on the Fifth Amendment of the U.S. Constitution, which guarantees due process before government can take away a person’s property.

“We feel there has been a denial of constitutional due-process rights,” Bellavia said.


“I think it’s unconstitutional,” said Jim Anderer, owner of Island Jeep in Lindenhurst, New York.

“The Fifth Amendment clearly states you cannot take another person’s property without due process or compensation. Even in eminent domain, there is an appraised price on the property being taken by the state.”

Anderer said he has been in business for 22 years and employs 48 workers. He intends to fight the plan.

“My business is being stolen from me under the guise of the bankruptcy laws, given to another dealer down the street,” Anderer said.

Chrysler has argued it needs a smaller dealer network to return to profitability. In 2008, it sold about 1 million new cars at some 3,300 dealers.

“They’ve given me no time to sell off (my inventory),” said Robert Engel, who runs two dealerships in Tenafly and Wyckoff, New Jersey. Both dealerships, which employ about 60 people, are profitable, he said.

Engel estimates two-thirds of his dealership revenue comes from service, and said he intends to stay open.

“Bankruptcy laws are being manipulated to carry out a marketing plan,” he said. “If they’re going to terminate dealers, it should only be severely underperforming dealers.”

Chrysler wants fewer but bigger dealers in central locations near highways that would carry Dodge, Chrysler and Jeep vehicles under one roof, Engel added, but the decision about who survives was “random” and set a precedent of government interference in free markets.

“We’re not giving up,” Engel said.

LI Attorney Objects to Chrysler Bankruptcy

A Long Island attorney is furiously working on filing an objection to the U.S. government-backed bankruptcy and sale of Chrysler to Fiat.

Leonard Bellavia, of Mineola’s Bellavia Gentile and Associates, said Wednesday that he is finishing up his brief, due by 4 p.m. Thursday, on behalf of 25 dealerships on the east coast, including four on Long Island, to send to Judge Arthur J. Gonzalez, a U.S. bankruptcy judge for the Southern District of New York.

The dealerships Bellavia represents were among the 789 Chrysler announced it was closing.

“We feel all this is happening at lightning speed by design,” Bellavia said. “It is happening before the public becomes aware of the implications. We feel this is more political than legal.”

In his brief, Bellavia said he will argue that the sale to Fiat is not in the best interest of Chrysler and violates bankruptcy law. He said the sale should not be approved because it is being disguised as a company reorganization.

In addition, he said the sale should not go through without the 789 rejected dealerships because doing so would jeopardize Chrysler’s financial success. He also argued that having more dealerships would put the company in a better position when it resurfaces from the sale and reorganization.

The dealerships are all independently operated.

“The dealerships do not represent any costs for the manufacturer,” Bellavia said. “The private dealers pay everything. They represent no expense for Chrysler.”

Bellavia said his brief will be a supplement to an objection already filed by the Committee of Chrysler Affected Dealers , which claims to represent nearly 300 dealers in 45 states. That group’s objection hopes to delay hearings that would approve the sale and the termination of the dealers’ agreements.

A hearing on the motion to terminate the dealer franchise agreements is scheduled before Gonzalez on June 3.

Bellavia said he welcomes the committee’s objection.

“The more people objecting to this the better,” he said. “We are not competing with them. Our interests are the same.”

Two rejected Chrysler dealers seek company e-mails in arbitration

WASHINGTON — Two rejected Chrysler Group dealers plan to ask a federal bankruptcy judge tomorrow to unseal internal Chrysler e-mails that were personally critical of them so they can use the messages in arbitration.

Former Chrysler dealers Jim Tarbox of North Kingstown, R.I., and Mark Calisi of Riverhead, N.Y., said in a motion that the Chrysler managers’ e-mails show that the company closed their dealerships for reasons unrelated to their performance.

They plan to ask U.S. Bankruptcy Judge Arthur Gonzalez in New York to allow them to use the e-mails, which have previously surfaced in the public domain but remain sealed by the bankruptcy court against use in other legal proceedings.

Chrysler filed an objection to the dealers’ request on Monday, citing the sanctity of the bankruptcy court’s seal order last year.

The bankruptcy court “determined that sufficient legal and factual bases existed to establish just cause for confirming the confidentiality of the documents,” the company said.

“Chrysler Group is in full compliance with the permitted discovery provision of the Federal Dealer Arbitration Statute,” Chrysler said in an e-mail to Automotive News today.

The dealers’ lawyer, Leonard Bellavia of Mineola, N.Y., said the e-mails show that the termination process “was nothing more than a backslapping brotherhood of Chrysler executives enjoying two weeks of bankruptcy code power to ‘play God’ with the livelihoods of dealers.”

His April 1 motion asked that all rejected dealers be allowed to use the e-mails in their arbitrations.

A ‘belligerant, combative dealer’

Tarbox, in testimony before a congressional committee last July, quoted from a May e-mail written about him by a Chrysler manager.

The e-mail called him “a belligerent, combative dealer who litigates and protests any new Jeep franchise in the Providence, R.I., area,” Tarbox said.

Chrysler vice president Peter Grady, who runs the company’s national dealer network, told the U.S. Bankruptcy Court last spring that Tarbox was rejected because there were strong dealers nearby. The court said it found Grady’s testimony “credible.”

Bellavia, who represented 31 rejected dealerships at Chrysler’s bankruptcy proceeding, quoted from an internal e-mail while questioning a Chrysler manager in court last May.

The May e-mail was written by Bill Doucette, a Northeastern regional dealer manager, about a conversation he had about Calisi with Grady.

The Doucette e-mail said, “Just talked with Pete, he simply said that the dealer has to go, too litigious, etc., it’s not a performance issue,” Bellavia said last May.

The Chrysler manager questioned by Bellavia, Phil Scroggin, the northeast regional business center director, replied: “All I can tell you is that the e-mail — the words are the words, and there is quite a bit of discussion that went on afterward as it did with all dealers.”

Tarbox, 43, owned Tarbox Jeep in North Kingstown, R.I., and Tarbox Chrysler-Jeep in Attleboro, Mass.

Calisi, 48, owns Eagle Auto Mall in Riverhead, N.Y., which lost its Jeep and Chrysler franchises.

Tarbox’s arbitration hearing is scheduled for June 21-23; Calisi’s is June 7-8.

Sealing documents
During Chrysler’s bankruptcy proceeding last June, the bankruptcy court sealed hundreds of thousands of pages of internal documents, including the e-mails about Tarbox and Calisi.

The court acted at the request of the former Chrysler, referred to in court documents as “the Debtors,” in response to extreme time pressures and the commercially sensitive nature of the information sought by the various parties.

In Chrysler’s objection this week, it seemed to leave the door open to the release of the e-mails to just Tarbox and Calisi.

“While the Debtors and New Chrysler do not believe that Tarbox and Eagle are entitled to these documents, at most, the Tarbox and Eagle e-mails should only be disclosed to Tarbox and Eagle,” the company said.

The e-mails should not be used in any other arbitrations because the arbitration law signed by President Barack Obama in December limits discovery to documents “specific to the covered dealership,” Chrysler said.