P&A Providers & Administrators
MenuMENU
SearchSEARCH

Chrysler Dealers to Appeal Claims Court Loss

An attorney representing hundreds of former Chrysler franchisees in a $1 billion lawsuit against the federal government plans to file an appeal that could make its way to the U.S. Supreme Court.

Tariq Kamal
Tariq KamalFormer Associate Publisher
Read Tariq's Posts
November 12, 2019
Chrysler Dealers to Appeal Claims Court Loss

In October, the U.S. Court of Federal Claims ruled that hundreds of Chrysler dealers disenfranchised as a condition of a 2009 federal bailout of their manufacturer were not owed compensation under the Fifth Amendment’s Takings Clause.

Photo by AgnosticPreachersKid via Wikimedia Commons

2 min to read


WASHINGTON — A group of about 300 disenfranchised Chrysler dealers will appeal a U.S. Claims Court decision that absolved the federal government of responsibility for the loss of their businesses, attorney Len Bellavia of Bellavia Blatt PC announced.

The plaintiffs are among the 789 dealers whose agreements were terminated in May 2009. The group represented about 25% of Chrysler’s U.S. retail network but accounted for only 14% of sales.

Ad Loading...

But factory executives didn’t make the decision on their own. An Obama administration task force made trimming Chrysler’s roster a condition of accepting federal funds that kept the manufacturer afloat during a Chapter 11 bankruptcy brought on by plummeting new vehicle sales at the outset of the Great Recession.

Read: FCA, PSA Reach Tentative Merger Deal

Bellavia said the dealers are collectively owed about $1 billion under the Fifth Amendment’s Takings Clause, which requires the federal government to compensate citizens whose private property is seized for public use.

The court denied that claim, pointing in part to testimony from Steven Rattner, the head of the auto task force, and former Chrysler CEO Bob Nardelli. They agreed the factory accepted the terms willingly and in its “best business judgment,” according to Nardelli.

Bellavia expressed disappointment in the verdict but said the 10-year-old case was always likely to wind its way through multiple appeals, whatever the Claims Court decision.

Ad Loading...

“Both sides understood the trial court was the first step,” Bellavia told Auto Dealer Today. “Even if we won, I would have advised my clients not to take a victory lap. We all knew the appellate court will decide the unique legal issues in this case.”

“It was economic coercion. If Chrysler wanted the bailout, they had to accede to the government’s directive.”

Bellavia stressed that the decision made no note of a provision in the government-drafted loan documents that mandated the closure of a certain number of dealerships. He said this amounted to coercion on the government’s part, an uncommon claim in Takings Clause cases and one to which the court attempted to apply a literal interpretation.

“Coercion in the takings context is not a common matter of proof. ‘Coercion’ connotes this notion of almost a physical force. And that’s not what we were arguing. We weren’t saying the government twisted Chrysler’s arm to file for bankruptcy and terminate dealers,” Bellavia said. “We claimed the coercion as a condition of the bailout. It was economic coercion. If Chrysler wanted the bailout, they had to accede to the government’s directive.”

Read: Mystery Surrounds Seattle Dealership Closings

Originally posted on Auto Dealer Today

More Industry

Kia Niro SUV in gold color parked outdoors
Industryby Hannah MitchellSeptember 1, 2026

Kia Closes Out Summer With a Bang

Its U.S. subsidiary broke multiple records in August, in part due to a surge of demand for hybrids models.

Read More →
Outside of Auto Park Ford dealership
Industryby Lauren LawrenceSeptember 1, 2026

Indiana Dealership Changes Hands

A 30-year-old Ford dealership in Indiana has a new owner and will soon be undergoing renovations to meet manufacturer requirements.

Read More →
Three men standing in front of two classic cars handing off gift.
Industryby Hannah MitchellAugust 25, 2026

Texas Dealership No Longer in the Family

The Ford store, a longtime cornerstone of the Houston market, is now part of one of the fastest-growing U.S. auto groups.

Read More →
Ad Loading...
Outside of modern car dealership “Genesis of San Bruno
Industryby Lauren LawrenceAugust 25, 2026

Genesis Grows California Presence

The Cardinale Automotive Group opened its third Genesis rooftop in the Golden State, Genesis of San Bruno, a stand-alone dealership serving the San Francisco Bay Area.

Read More →
Red Honda Civic hybrid sedan on two lane road with green hills in background
Industryby Hannah MitchellAugust 21, 2026

August Auto Sales a Mixed Bag

An early forecast shows strong business despite consumer hurdles, and hybrids are a big piece of their affordability coping strategy.

Read More →
EV charger inserted into dark-colored car port
Industryby Hannah MitchellAugust 18, 2026

EV Market Humming Along

July sales show steady growth as the segment stabilizes from last year’s artificial surge following pullback of federal support.

Read More →
Ad Loading...
car in background with hand giving a thumbs up in front
Industryby Lauren LawrenceAugust 14, 2026

Auto Loan Delinquency Rates Stabilize

Auto loans are a main driver of nonmortgage consumer debt, but delinquency rates stabilized in the second quarter across all credit risk tiers.

Read More →
blue sky, yellow and orange rollercoaster with riders going up an incline
Industryby Lauren LawrenceAugust 12, 2026

EV Sales Recover in Q2

The EV sales roller coaster continues as numbers show improvement, but industry experts predict a year-over-year third-quarter decline and fourth-quarter jump.

Read More →
Photo of blue Toyota Prius parked next to body of water with city skyline in background
Industryby Hannah MitchellAugust 5, 2026

The Cheapest Hybrids to Fuel

The powertrain is increasing in popularity, in no small part due to its fuel economy. A new report lists the most efficient hybrids on the market.

Read More →
Ad Loading...
white SUV parked in front of a body of water with a gray sky background
Industryby Lauren LawrenceAugust 5, 2026

Hybrids and SUVs Gaining Ground

The most recent Kelley Blue Book Brand Watch found that only two nonluxury brands increased in shopper consideration, buoyed by their hybrid and SUV offerings.

Read More →