Ex-Piston Sura files first Saturn lawsuit

A Saturn dealership co-owned by former Detroit Piston Bob Sura has launched the first of an expected flood of lawsuits against General Motors Corp., arguing the automaker's plan to eliminate the brand rendered his franchise "worthless."

The lawsuit, filed Friday in U.S. District Court in Florida, accuses GM of violating state franchise laws and stripping Saturn of any value by announcing the brand will be sold or eliminated later this year. The lawsuit came the same day GM sent letters to 1,100 dealers nationwide stating their franchise agreements would not be renewed next year. The move is part of GM's plan to cut its U.S. dealership ranks by about 40 percent from 5,969 to 3,600 by next year.

Sura's company wants GM and Saturn to pay compensatory damages and to recoup all money invested in the franchise.

"I think the significance is that finally a dealer has said 'I'm fed up and not going to wait to see if there is a buyer,' " said Sura's lawyer Richard Sox said. "We're talking to other dealers who are seriously considering filing suit and following suit."

GM declined to comment on the lawsuit.

GM, which is subsisting on $15.4 billion in federal loans, is shedding brands as it restructures.GM faces a June 1 restructuring deadline to reach concessions with the United Auto Workers and bondholders or could face bankruptcy, which president and Chief Executive Officer Fritz Henderson has said is probable.

Sura, 36, who played with the Pistons in 2003-04 season, is co-owner of Saturn of Tallahassee and acquired the dealership in November 2007. If GM files bankruptcy, it could move to terminate franchise agreements with dealers across the country because state franchise laws do not apply in federal court. Last week, Chrysler LLC released a list of 789 dealerships it will eliminate as the automaker undergoes a court-ordered restructuring.

"You can fight it all you want, but ultimately GM is going to prevail and it's going to reduce its dealer network," said Mike Boudreau, a director at O'Keefe & Associates, a Bloomfield Hills-based financial consulting firm and turnaround adviser.

GM and Saturn violated the Florida Automobile Dealers Act by announcing the brand will be eliminated or sold, which ensured the dealer's franchise agreement would not be renewed even though the retailer was in full compliance with the agreement, the lawsuit said.

GM's announcement that it would eliminate the Saturn brand rendered the dealership and franchise "worthless overnight," according to the lawsuit.

Saturn has sold 27,210 vehicles through April, down 58.3 percent, but Saturn of Tallahassee sales have plunged even more -- 72 percent -- compared with a year earlier, the lawsuit claims.

"Customer traffic virtually ceased," Sox said in an interview.

Saturn dealers signed franchise agreements with the understanding the brand would have unique vehicle platforms and that Saturn would be an independent car company with separate engineering, marketing, assembly and labor agreements.

"But General Motors stepped in and did away with that concept unilaterally," Sox said. "Saturn for the last several years has shared vehicle platforms with other GM brands and that has diminished the brand value substantially."

There are about 380 Saturn dealerships in the U.S., about 40 fewer than the end of last year.

A GM adviser is handling talks that could result in a sale of the brand and dealer network later this year.

Saturn has narrowed the list of possible suitors from about 12 to "two or three," according to a source. The list includes Detroiter Roger Penske and Telesto Ventures, a group that includes Oklahoma City-based private equity firm Black Oak Partners LLC and several Saturn dealers.

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