Date: 09-25-2009

Case Style: Family and Estate of Richard Mraz v. Chrysler Corporation

Case Number:

Judge: Arthur J. Gonzalez

Court: United States Bankruptcy Court for the Southern District of New York (New York County)

Plaintiff's Attorney: Charles Naylor of the Law Offices of Charles D. Naylor, San Pedro, California and Robert J. Nelson and Scott P. Nealey of Lieff Cabraser Heimann & Bernstein, LLP, San Francisco, California

Defendant's Attorney:

Description: Plaintiffs won a %55.4 million jury verdict against Chrysler Corporation in the Superior Court of Los Angeles County on a products liability theory. Chrysler appealed and posted an $81 million appeal bond provided by Safeco Insurance Company. While the appeal was pending Chrysler filed for reorganization under Chapter 11 in the Southern District Bankruptcy Court in New York.

In 2007 a Los Angeles Superior Court jury awarded $55.4 million, including $50 million in punitive damages, to the family of 38-year-old Mraz, who died after being hit and run over by a Dodge Dakota while working in the Port of Los Angeles in 2004. Attorneys for Mraz – Naylor, Nelson and Nealey – successfully argued that a “park-to-reverse� defect in the truck’s automatic transmission caused Mraz's death. The jury found that the automaker acted with malice by failing to warn consumers of the defect it had known about for years and by conducting a “phony� recall that did not adequately fix the vehicle. Mraz left behind his wife and three children.

This summer, the U.S. Bankruptcy Court lifted the stay and allowed direct negotiations to occur with appeal bond issuer, Safeco Insurance Company. At the center of the settlement negotiations was the issue of how compensation to the Mraz family would impact Chrysler's creditors due to the structure of the appeal bond. Safeco posted an $81 million bond to guarantee payment of the judgment and post-judgment interest

Outcome: Plaintiffs' verdict for $55.4 million settled for $24 million.

Plaintiff's Experts:

Defendant's Experts:

Comments: Editor's Note: Without the appeal bond, the plaintiffs would have simply been unsecured creditors of Chrysler and would have received nothing or very little on their judgment.