Daewoo class action suit goes to trial Jan. 23 with 91 plaintiffs

By Steve Korris | Dec 1, 2005

Mark Swartz

Steve Hanley

Matthew Criswell

Kevin Nelson

Class action lawsuits typically pull in thousands of plaintiffs. But, a class action over Daewoo automobiles will go to trial in Kanawha County with no more than 91 plaintiffs.

Circuit Judge Paul Zakaib certified a class of that size in October for a suit against C&0 Motors of St. Albans. He has set trial Jan. 23.

Lead plaintiff Darryl K. Smith claims C&0 Motors should have told Daewoo buyers that the manufacturer's bankruptcy would reduce the value of their automobiles. C&0 Motors started selling Daewoos in February 2002, by agreement with Daewoo America, a subsidiary of the South Korean automaker.

Smith bought a Daewoo from C&0 Motors that April 29. Daewoo meanwhile had declared bankruptcy in South Korea.

A day after Smith's transaction, General Motors bought the core assets of Daewoo.

General Motors did not buy Daewoo America.

Daewoo America then filed a bankruptcy petition in California.

Attorney Harry E. Bell Jr., of Charleston, filed suit for Smith in July 2002. Bell wrote that C&0 Motors knew when it sold the vehicle that Daewoo had gone bankrupt.

But, Bell severely misjudged the popularity of Daewoos. He claimed that C&0 Motors damaged at least 1,000 Daewoo buyers by concealing the bankruptcy.

Upon receiving Bell's complaint, C&0 Motors advertised a Daewoo bankruptcy sale. Attorney Steven Hanley, defending the dealer, moved to preclude Smith from pursuing a class action. Zakaib denied the motion as premature.

Hanley waited a few months and renewed the motion. In a May 20 memorandum he told Zakaib that the class Bell proposed would have 91 members, not 1,000.

Hanley wrote that C&0 Motors received 56 vehicles from former Daewoo dealer Lester Raines, and later received 175 vehicles from Daewoo America.

C&0 Motors would not have received those vehicles, he argued, if it had any question about the solvency of Daewoo America. Hanley wrote that the decision to exclude Daewoo America from the General Motors deal came as a surprise to dealers.

He wrote that C&0 Motors would honor warranty claims.

In August 2003, Bell sent a letter to defense attorney Kevin Nelson of Charleston, pointing out that U.S. District Judge Elizabeth Hallanan had certified a class action.

Bell suggested that Nelson discuss settling with his clients. Zakaib heard Smith's class certification motion Oct. 14, 2003. Bell argued that the promise to honor warranties could not hold up because of uncertainty about the ability to provide parts to dealers.

Zakaib asked attorneys on both sides to bring him more information. He set trial May 17, 2004.

Smith moved in 2004 for summary judgment. Bell argued that C&0 Motors failed in its duty to disclose the bankruptcy.

In response, defense attorney Matthew Criswell of Charleston denied a duty to disclose.

He wrote, "Are sellers required to hand out financial statements of the manufacturer of every product purchased? Are buyers to be told of prior 'financial difficulties,' bad quarterly reports, or rumored takeovers every time paper towels, or chewing gum, or tennis shoes are bought?"

C&0 Motors also moved for summary judgment. Nelson argued that Smith did not describe any particular damage.

In response, Bell argued that he did not have to prove a specific amount of damages. He wrote that he only had to prove the product was inferior to what the buyer bargained for.

Three weeks before the scheduled trial, both sides agreed to continue it. Zakaib denied both motions for summary judgment. He set trial March 14, 2005.

Six weeks before the scheduled trial, Hanley moved Zakaib to continue it. He wrote that he could not prepare for trial without knowing if Zakaib would certify a class action.

Bell wrote that he would agree to continue the trial if Zakaib certified a class action.

At a hearing this Feb. 25, Zakaib said he would certify a class action. He did not sign an order to that effect.

In March he entered a scheduling order setting an April 29 deadline for serving notice to the class, an Oct. 31 deadline for mediation, and a trial date of Jan. 23, 2006.

C&0 Motors then switched attorneys, replacing Hanley, Nelson and Criswell with Mark Swartz of Charleston.

The attorneys did not meet the deadline for class notice. Swartz contended that there was no class because Zakaib's Feb. 25 statement did not constitute a court order. Swartz moved in May for a hearing on class certification.

In July, Bell asked Zakaib to order attorney Robert Allen to mediate the case as a class action. Bell moved for separate mediation by Allen on the amount of attorney fees. On Oct. 11, Zakaib signed a 14-page order certifying Smith as representative of a plaintiff class. He set a status conference Dec. 16.

Attorney Tim Yianne, co-counsel to Bell, notified Swartz on Oct. 26 that Allen would mediate on Nov. 3.

Swartz answered that he would not attend. He wrote that Yianne scheduled mediation without contacting him. He offered to mediate on a mutually agreeable date.

The next day, Swartz served notice that he would depose Smith and his expert witnesses.

A day later, Yianne moved for an order to stop the depositions. He wrote that former defense counsel deposed Smith and the witnesses in 2003 and 2004.

He wrote, "Defendants would be getting two bites out of the apple."
Yianne then notified Swartz that he would call up his motion for mediation at the Dec. 16 status conference.

Bell informed the court on Nov. 2 that he would mail notice of class certification to the last known address of each class member and publish notice to the class in two weekend editions of the Charleston Sunday Gazette Mail.

More News

The Record Network