Chrysler sues Daimler for withholding engines, parts

— -- Chrysler Group is asking a bankruptcy judge to force Daimler to ship Chrysler diesel engines and other key parts it has refused to deliver, threatening the launch of several Chrysler vehicles.

The Detroit automaker, in a lawsuit filed last week, also asked U.S. Bankruptcy Judge Arthur Gonzalez to decide whether Chrysler must pay Daimler a higher price for the engines if it buys fewer than Daimler expected to make. Finally, Chrysler wants the court to prohibit Daimler from suspending shipments of the engines, steering columns and torque converters in the future.

This is the second lawsuit this month involving Chrysler and its former parent. Earlier, unsecured creditors of old Chrysler charged Daimler with fraudulently diverting assets worth at least $9 billion from Chrysler just before selling 80.1% of the company to Cerberus Capital Management in August 2007.

The creditors charged that Daimler separated Chrysler Financial from Chrysler's core automaking operations. They also accused Daimler of selling Chrysler's World Headquarters and Tech Center for $325 million, or less than prevailing market prices, two years ago.

In the more recent suit, Chrysler said it reached a July 6 agreement with Daimler on the price and other terms for the engines and other components. The suit also states the companies agreed on an amended purchase order on Aug. 12, but Daimler refused to sign it.

"Daimler's bad faith conduct and contractual breaches threaten to derail (Chrysler) and send devastating ripple effects through the automotive industry," Chrysler's complaint alleges.

A Daimler spokesman did not return a reporter's phone call for comment.

A Chrysler spokesman declined to say which vehicles could be affected. A court document showed the torque converters were for the Mercedes-Benz W5A580 rear-wheel drive transmission, which has been an option previously on the Jeep Grand Cherokee and Chrysler 300.