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Maryland dealers on Chrysler's death list were given the bad news this week by the auto giant's executives: You're terminated.

A last-minute attempt by officials from Maryland, Ohio and Illinois to persuade federal Judge Arthur Gonzalez, who is presiding over Chrysler's bankruptcy case in New York, to alter Chrysler's plan to terminate the franchise agreements of 789 dealerships nationwide failed Tuesday. Gonzalez said in his ruling that cutting dealerships was "appropriate and necessary" and showed "sound business judgment."

Dealers have spent the last few weeks questioning that judgment.

"I still haven't received a good answer to the question of how cutting dealerships that don't cost the manufacturer anything will save on costs," Peter Kitzmiller, president of the Maryland Automobile Dealers Association, said Thursday.

Without a franchise agreement, the dealers can no longer display Chrysler signs, honor maintenance warranties or offer factory incentives to sell Chrysler vehicles.

John J. "Jack" Fitzgerald Jr., founder and president of Fitzgerald Auto Malls, which saw some of its dealerships on Rockville Pike cut off by Chrysler, said those will remain open to provide service and sell other brands. "We will be open to take care of our customers," he said.

Kitzmiller said he didn't know of any dealer in Maryland who actually shut down on Tuesday.

"Most dealers have to stay open," he said. "They have to get rid of their Chrysler inventory. … A few are in difficult straits and face the possibility of bankruptcy."

Rick Shaub, owner of Montrose Dodge in Germantown and one of 15 Maryland dealerships on the targeted list, said earlier this week that he has had no help from Chrysler in selling his inventory to other dealers. But he has made some transactions himself with dealers.

"I don't know how we will be paid for everything," said Shaub, whose grandfather started the family-owned dealership in 1945.

In addition, General Motors recently filed for bankruptcy protection and notified 1,100 dealers across the nation that their contracts will end. But that automaker is giving dealers until late 2010. GM's list has not been made public.

Maryland has about 100 GM-affiliated dealerships, and Kitzmiller expects at least 15 of them to have received a termination notice.

Legislation in Congress

Dealers have some reason for hope in a bill filed in Congress this week by Maryland and New York lawmakers, Kitzmiller said. The Automobile Dealer Economic Rights Restoration Act of 2009 was inspired by Fitzgerald, who distributed a draft by Washington law firm Arent Fox to lawmakers last week.

The measure, introduced by Rep. Frank M. Kratovil Jr. (D) of Stevensville and Rep. Dan Maffei (D) of New York, is designed to allow dealers to restore the agreements they had in place before the bankruptcy proceedings and preserve the dealers' rights under state law. Co-sponsors include Rep. Christopher Van Hollen Jr. (D-Dist. 8) of Kensington and House Majority Leader Steny H. Hoyer (D-Dist. 5) of Mechanicsville.

In Maryland, state laws protect dealers from being terminated without good cause, and also provide for the repurchase of vehicles and equipment by a carmaker.

"There has to be reason to terminate based on performance, or criteria that violates the franchise agreement," Kitzmiller said. "Most dealerships closed were profitable."

Maryland law also provides that manufacturers cannot terminate a dealer's franchise unless given 90 days' written notice. Chrysler gave dealers less than a month. Shaub said he understands such a state law does not pertain to manufacturers in bankruptcy.

Another Maryland law that took effect last week allows a terminated dealer to be paid for the costs of new vehicles acquired within 18 months of the cancellation, unsold parts, signs and any improvements to the dealerships required by the manufacturer.

After the U.S. Supreme Court declined to hear an appeal by some pension funds this week, Italian automaker Fiat completed its acquisition of most of Chrysler's assets Wednesday. Justice Ruth Bader Ginsburg temporarily blocked the sale on Monday. The new company is called Chrysler Group LLC.

Fiat has agreed to honor the "Lemon Law" rights of Chrysler buyers after taking control, Maryland Attorney General Douglas F. Gansler (D) said.

The Washington Area New Auto Dealers Association met Monday in McLean, Va., with local dealers from Chrysler and General Motors to discuss their manufacturers' respective bankruptcies. Many dealers are shocked by the situation and unclear about their rights, said John O'Donnell, executive vice president of the association.

Chrysler and GM have not provided "any financial justification" for terminating dealerships, O'Donnell said.