GM Will Recall 7 Million Vehicles for Air Bag Issue Worldwide

General Motors Co. will recall 7 million vehicles worldwide with potentially dangerous Takata air bag inflators. The recall is expected to cost the Detroit automaker $1.2 billion. The National Highway Traffic Safety Administration (NHTSA) said GM must recall 5.9 million 2007-2014 model year trucks and SUVs because the inflators “are at risk of the same type of explosion after long-term exposure to high heat and humidity as other recalled Takata inflators.” GM has estimated it would cost $1.2 billion if it were required to replace air bag inflators it had sought to avoid fixing. GM said that it will recall 7 million vehicles worldwide, including 544,000 in Canada. The company had argued the recalls were unnecessary because they did not pose a safety risk. GM said yesterday that it still believed “a recall of these vehicles is not warranted based on the factual and scientific record.” The company said it “will abide by NHTSA’s decision and begin taking the necessary steps.” The defect, which leads in rare instances to air bag inflators rupturing and sending potentially deadly metal fragments flying — especially after long-term exposure to high humidity — prompted the largest automotive recall in U.S. history of more than 63 million inflators. Worldwide, about 100 million inflators by 19 major automakers have been recalled.Being sued? Contact our office at 816-524-4949 or you can visit our website at hoorfarlaw.com to schedule an appointment.

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Guitar Center Files for Bankruptcy

Guitar Center Inc filed for chapter 11 bankruptcy, as music lovers moved their shopping online during the coronavirus pandemic. The retailer has negotiated to have a total of $375 million in debtor-in-possession financing from its existing lenders and intends to raise $335 million in new senior secured notes. Earlier this month the company reached a restructuring agreement with key stakeholders that includes debt reduction by nearly $800 million and new equity investments of up to $165 million to recapitalize the company. The company said it has between $1 billion and $10 billion of both assets and liabilities. Guitar Center, which owns nearly 300 stores across the country, said business operations will continue without any interruption.

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Hundreds of Companies That Got Stimulus Aid Have Failed

About 300 companies that received as much as half a billion dollars in pandemic-related government loans have filed for bankruptcy. Many of the companies, which employ a total of about 23,400 workers, say that the funds from the Paycheck Protection Program weren’t enough to keep them going as the coronavirus and lack of additional stimulus payments weighed on their businesses. The total number of companies that failed despite getting PPP loans is likely far higher. Many small businesses simply liquidate when they run out of cash rather than file for bankruptcy. The government awarded a total $525 billion in PPP loans to 5.2 million companies since April, according to the Small Business Administration. The SBA has only released data on the largest borrowers. The total amount lent to companies that went bankrupt is between $228 million and $509 million Dozens of recipients, which come from nearly every state, cited the pandemic as a primary reason for entering bankruptcy.

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No Mandamus Against Referral to Arbitration

When a contract has an arbitration agreement, all disputed matters under the contract are presumptively subject to determination in arbitration, except a dispute as to whether a matter is subject to arbitration, which is presumptively subject to determination in circuit court. To show that a dispute as to whether a matter is subject to arbitration is presumptively subject to determination in arbitration requires clear and unmistakable evidence. Clear and unmistakable evidence appeared in a contract’s arbitration agreement, which incorporated by reference the rules of a professional association, which expressly provided that an arbiter shall determine the scope of the arbitrator’s own authority, including the “arbitrability of any claim [.]” An order granting arbitration is subject to review by writ of mandamus, not direct appeal. A challenge specific to that incorporation is necessary, in addition to any challenge against the contract as a whole or the arbitration agreement in particular, for relief from that provision.
STATE OF MISSOURI EX REL. SETH SCHERMERHORN, Relator v. THE HONORABLE MICHAEL CORDONNIER, Respondent
Missouri Court of Appeals, Southern District – SD36747

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Action on Invoices Too Late

Statute of limitations for contract actions is five years, with exceptions that include any action for payment upon a written contract, which is ten years. Ten-year limitation could apply to an invoice stating that buyer’s signature constituted a promise to pay. But the ten-year limitation did not apply to seller’s invoices, on which buyer’s only writing was a signature, the significance of which the invoice does not describe. “[T]he promise to pay money must arise from the writing’s explicit language; extrinsic evidence cannot supply the promise.” Five-year limitation applied to the parties’ contract seller’s action to enforce that contract was too late, so circuit court should have dismissed that action, and the Supreme Court reverses the circuit court’s judgment.  
Di Gregorio Food Products, Inc., Respondent, vs. John Racanelli, d/b/a Racanelli’s Cucina Pizza Express, Racanelli’s Cucina, Racanelli’s Delmar, Racanelli’s Kirkwood, Racanelli’s Fenton, and Racanelli’s New York Pizzaria, Appellant.
(Overview Summary)
Supreme Court of Missouri – SC98443

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Wendy’s, Pizza Hut Franchisee NPC Looks to Sell Itself to Operator of Panera Stores

NPC International Inc., the nation’s largest franchisee of Wendy’s and Pizza Hut restaurants, has a deal to sell itself out of bankruptcy to Flynn Restaurant Group LLC. Flynn, the largest restaurant franchise operator in the U.S., is offering $816 million to buy the more than 1,300 restaurants operated by NPC. NPC filed chapter 11 bankruptcy in July and has been marketing assets. The stalking-horse offer could be subject to higher and better offers and requires bankruptcy court approval. It is likely to face competition from other interested buyers, including possibly Wendy’s Co. itself. Wendy’s said on Nov. 2 that it was considering making an offer for nearly 400 Wendy’s restaurants operated by NPC as part of a consortium with other Wendy’s franchises. Both Wendy’s and Pizza Hut LLC have expressed concerns about NPC’s quick timeline for a sale, and have pushed for greater involvement in vetting who will be the new owner of NPC’s restaurants. Wendy’s has signaled it would oppose a sale to Flynn, which operates Arby’s and Panera Bread restaurants that also sell sandwiches. Wendy’s has traditionally preferred franchisees that only own its restaurants, and Arby’s could be viewed as a direct competitor in the burger business. In addition to the Wendy’s restaurants, NPC operates roughly 900 Pizza Huts.

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CFPB and New York Attorney General Take Action Against Debit-Collection Operation and Its Owners and Managers

The Consumer Financial Protection Bureau (CFPB), in partnership with the New York Attorney General (NYAG), have filed suit against a network of five different companies based outside of Buffalo, New York, two of their owners, and two of their managers, for their participation in a debt-collection operation using illegal methods to collect debts. The company defendants are: JPL Recovery Solutions, LLC; Regency One Capital LLC; ROC Asset Solutions LLC, which does business as API Recovery Solutions; Check Security Associates LLC, which does business as Warner Location Services and Orchard Payment Processing Systems; and Keystone Recovery Group. The individual defendants are Christopher Di Re and Scott Croce, who have held ownership interests in some or all of the defendant companies, and Brian Koziel and Marc Gracie, who are members of Keystone Recovery Group, and have acted as managers of some or all of the defendant companies. The complaint alleges that the defendants have participated in a debt-collection operation that has used deceptive, harassing, and improper methods to induce consumers to make payments to them in violation of the Fair Debt Collection Practices Act and the Consumer Financial Protection Act (CFPA). 

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Las Vegas Monorail Files for Bankruptcy Again as Coronavirus Shuts Service

Las Vegas Monorail Co., a transit system financed with municipal debt that serves some of the city’s marquee hotels, filed for bankruptcy for the second time in just over a decade after the coronavirus pandemic shut down service. The nonprofit transit system is proposing a quick bankruptcy sale to the Las Vegas Convention and Visitors Authority for about $24 million. The bulk of the purchase price is held entirely by municipal-bond investor Preston Hollow Capital LLC.

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Damages Reduced Under MMPA

On remand, circuit judge need not make the same rulings as before remand. Plaintiff’s testimony, that plaintiff could not title her car because of defective title, did not constitute hearsay because it included only plaintiff’s first-hand experience and no out-of-court statement. Statutes provide that selling a motor vehicle without a valid title is fraud, so that conduct constitutes a violation of the Missouri Merchandising Practices Act, and supports plaintiff’s judgment. Actual damages included incidental damages, but loss of a business expectancy was beyond incidental damages. Statutes allow an award of punitive damages, which had support in evidence that motor vehicle dealer defendant sold plaintiff a motor vehicle with a manifestly defective title and, “when [plaintiff] attempted to work with the [defendant] to try to get a proper title and later attempted to rescind the purchase, the [defendant’s] employees laughed at her and taunted her to ‘take them to court.’” Statutes also allow an award of attorney fees, which Court of Appeals presumes is correct. Affirmed, with actual damage award reduced, and remanded again to determine the amount of attorney fees due on appeal.

Tequea Fisher vs. H & H Motor Group, LLC
(Overview Summary)
Missouri Court of Appeals, Western District – WD83318

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CFPB Settles with SMART Payment Plan, LLC for Deceptive Sales Practices

The Consumer Financial Protection Bureau issued a consent order against SMART Payment Plan, LLC, finding that the company’s disclosures of its loan payment program contained misleading statements in violation of the Consumer Financial Protection Act of 2010’s prohibition against deceptive acts or practices. SMART operates a loan payment program for auto loans called the SMART Plan that deducts payments from consumers’ bank accounts every two weeks and then forwards these payments every month to the consumers’ lenders. The consent order imposes a judgment against SMART requiring it to pay $7,500,000 in consumer redress and requirements to prevent future violations.  

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