StarPoint USA Prevails in Jury Trial Against Daewoo Motor Co., Ltd. in Santa Monica
SANTA MONICA, Calif., July 26 /PRNewswire/ -- On Thursday, July 8, 2010, StarPointUSA, Inc.--formerly known as Daewoo Motor America, Inc.--obtained a favorable jury verdict on all issues against Daewoo Motor Co. Ltd., the manufacturer of Daewoo vehicles, after an eight-day trial in the Santa Monica Courthouse of the Superior Court of California. Judge Cesar Sarmiento presided.
StarPoint was the wholly owned subsidiary of Daewoo Motor Co., Ltd., based in South Korea ("Daewoo Korea"). Daewoo Korea established StarPoint (formerly called Daewoo Motor America, Inc.) as its sales arm and exclusive distributor of Daewoo automobiles in the United States. The majority of the stock of Daewoo Korea is owned by Korea Development Bank ("KDB") and Korea Asset Management Corporation ("KAMCO"), both owned by the Korean government. Daewoo Korea has been involved in a Korean liquidation proceeding since 2007. As a result, StarPoint was concerned that Daewoo Korea would not defend and/or compensate StarPoint, and to answer to U.S. consumers injured due to alleged defects in the cars.
StarPoint alleges that it was forced into a Chapter 11 reorganization proceeding by Daewoo Korea after it sold its assets to General Motors. StarPoint's trustee, representing the interest of the creditors in its Chapter 11 proceeding, including Daewoo owners, dealers, and others, who allegedly lost hundreds of millions of dollars due to Daewoo Korea's decision to pull out of the U.S. market without adequate planning.
The jury verdict was a long-awaited decision arising from this seven-year-old case, one of the older cases on the Los Angeles Superior Court dockets. The case was filed in 2003 by Michelle Bandy, who was involved in a car accident, and alleged that there was a design defect with the Daewoo car. She originally sued all the companies involved in the chain of distribution of the Daewoo vehicles.
As Bandy's products liability lawsuit essentially arose from an alleged design defect, StarPoint sought defense and indemnification from Daewoo Korea, seeking to enforce a pre-existing indemnity agreement between the companies. Throughout this litigation and in other products liability matters, Daewoo Korea had denied validity of the agreement and refused to defend and indemnify StarPoint for any products liability lawsuit in the United States.
In keeping with the agreement, StarPoint sought protection from Daewoo Korea from past, present, and future products liability lawsuits over the Daewoo cars.
Daewoo vehicles are no longer produced by Daewoo Korea, but more than 180,000 Daewoo vehicles were distributed by StarPoint USA in the U.S., and a substantial portion of those vehicles are still on U.S. roads.
Daewoo Korea apparently attempted to avoid honoring its contractual obligations to StarPoint by protracted litigation by giving a range of reasons it could not honor its contract. StarPoint alleged that Daewoo Korea was trying to hide behind its foreign jurisdiction and wrongfully renege on its obligation, leaving StarPoint and its U.S. consumers, and dealers without recourse for its existing and potential damage and exposure arising out of distribution of Daewoo vehicles in the U.S.
StarPoint has continuously offered service, warranty, and Daewoo Genuine Parts including recall and other safety-related parts for the Daewoo cars still in use in the U.S. market, and sued Daewoo Korea to force the former corporate parent to address its own obligations. StarPoint USA also alleged that Daewoo Korea failed to act in good faith and was unfair in denying StarPoint's rights under the contract.
The jury decided that the companies had a valid, binding and enforceable indemnity agreement, which Daewoo Korea refused to honor and that Daewoo Korea failed to act in good faith and in a fair manner. The jury also found that the contract required Daewoo Korea to defend and indemnify StarPoint for products liability, and required Daewoo Korea to pay attorneys' fees and costs incurred by StarPoint to enforce the contract against Daewoo Korea. This finding will affect several other lawsuits pending throughout the U.S. between the parties involving the same issues, and because there may well be more products liability lawsuits involving Daewoo cars in the future.
StarPoint was represented by counsel T. Steven Har and Cyndie Chang of Duane Morris LLP, in the New York and Los Angeles offices respectively. Daewoo Motor Co. Ltd. was represented by Larry Schmadeka and Soo Hong of Lee, Hong, Degerman, Kang & Waimey in Los Angeles.
