GM, Chrysler sue Allied over hostage vehicles

By @ibtimes on

General Motors Co and Chrysler Group LLC have sued Allied Systems Holding Inc , accusing the auto hauler of holding hostage more than 2,400 new cars and trucks.

GM, in a lawsuit filed on Tuesday in U.S. District Court in Detroit, charged that Allied had breached a contract under which it provides car-hauling services for the U.S. automaker.

Defendant is holding hostage 1,704 new GM vehicles, with an estimated value of $46.6 million, according to the lawsuit. It simply has no claim to the vehicles; they are GM's property.

In a separate suit, Chrysler said Allied was holding about 700 of its vehicles.

Allied, which calls itself the largest auto transporter in North America, could not immediately be reached for comment.

GM is seeking immediate return of the vehicles, which include Chevrolet Silverado pickups and Camaro coupes, so it can fill orders. The value of the vehicles will depreciate and customer relations could be hurt if Allied continues to hold them, the lawsuit said. The automaker also is seeking unspecified damages.

Chrysler filed its lawsuit on Tuesday in Ontario Superior Court, seeking the return of about 700 vehicles, including minivans, held by Allied in Windsor, Ontario, spokeswoman Katie Hepler said. Chrysler is also seeking damages.

Chrysler said the court issued an order that the company was entitled to remove about 200 of the vehicles immediately, and it said it had recovered those vehicles.

Chrysler said the court adjourned a hearing regarding the company's remaining vehicles until next Monday or Tuesday.

Ford Motor Co and Nissan Motor Co Ltd <7201.T> said they continue to work with Allied and there has been no interruption in their deliveries.

GM said in its lawsuit that on March 10 it learned that Allied had unilaterally reduced the wages of its Teamsters union employees by 20 percent, and the union had responded with a 72-hour strike notice to Allied.

On March 16, Allied demanded from GM a 15 percent price increase, rising each year by 3 percent, plus limitations on the automaker's right to terminate its contract with Allied and other revisions to the contract, according to the lawsuit.

GM said it responded by calling Allied's demands wholly unacceptable. The next day, Allied said it had reached a deal to avoid a strike but would no longer serve customers that had not agreed to new contract terms, the lawsuit said.

Chrysler said Allied stopped serving it as well.

GM sought the return of about 1,662 new cars and trucks held by Allied in Dearborn, Michigan, and another 42 in Fort Wayne, Indiana, the lawsuit said.

It said Allied has not responded to those requests or surrendered the vehicles.

GM said in the lawsuit that the resulting damages will be substantial and likely beyond Allied's ability to satisfy.

The automaker's contract with Allied to haul new vehicles from plants to dealers and other destinations was for three years beginning on February 1, 2010, according to the lawsuit.

The case is General Motors v. Allied Systems Ltd, U.S. District Court, Eastern District of Michigan, No. 11-11162.

(Additional reporting by Bernie Woodall in Detroit; editing by John Wallace)

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