GM Must Face Suit Claiming it Covered Up Ignition-switch Defect

General Motors Co has lost its bid to dismiss a lawsuit accusing the automaker of concealing critical evidence about a faulty ignition switch linked to the death of a Georgia woman in 2010.

During a hearing on Saturday, Cobb County State Court Judge Kathryn Tanksley denied GM's motion to dismiss the new lawsuit filed in May by the family of Brooke Melton, according to a statement from the company.

Melton died in March 2010 when the ignition switch on her 2005 Chevrolet Cobalt slipped into accessory mode and the car collided with another vehicle, according to the suit.

Ken and Beth Melton, her parents, had previously sued the company in 2011 and settled in September 2013 for a reported $5 million.

Information that emerged during the original lawsuit - including a design change to the switch -helped trigger the recall of 2.6 million GM vehicles, including the Cobalt, and prompted congressional, federal and other investigations into whether the company had withheld knowledge of the problem.

After the recall, the Meltons said they asked GM to withdraw the settlement, but the company refused, according to court filings. The family then filed a new lawsuit in May claiming that the company had fraudulently concealed critical evidence about the switch, and that a GM engineer who testified in the case had lied under oath about the part.

The Meltons' lawsuit said that the company had purposely misled them in order to force them to settle their case.

GM had argued that the case should be dismissed because it had already settled the Meltons' claims over Brooke Melton's death. But Tanksley said on Saturday that the case could move forward, according to GM.

The company said it was disappointed in the decision and continued to believe the lawsuit was blocked by terms of the 2013 settlement. "GM will review the court's order once it is entered and will evaluate its options," spokesman Pat Morrissey said in an email.

A lawyer for the Meltons, Lance Cooper, said the ruling would enable discovery to proceed.

"This will allow the Meltons to finally get the answers to their questions of who at GM knew about the defects in Brooke's car, why she was never told about the design change with the ignition switch and who participated in the decision to conceal evidence during their previous case."

The Meltons' lawsuit is among dozens to hit the automaker in the wake of several GM switch-related recalls this year, including claims for injuries or deaths linked to faulty ignition switches, as well as customers who say their cars lost value as a result of the recalls.

The company on August 1 began accepting claims for a program to compensate serious injuries and deaths in accidents tied to defective switches in the Cobalt, the Saturn Ion and related models.

Although the program is accepting claims from people who previously settled crash lawsuits against the company, lawyers for the Meltons have previously told Reuters that they intend to pursue their case in court.

Copyright: Thomson Reuters 2014