Insurance Dispute Lawyer Blog

In what appears to be a promising development for those who have found themselves the victim of Chinese drywall installed in their home, the government has taken steps to insure that insurers will back their policy holders. As the faulty imported wallboard has been a serious problem for many, insurance companies have begun dropping those with policies to limit their coverage requirements in the event of a suit or claim. Doing so has left many concerned on what will develop if the providers are left to their own interests.

By dropping those who may have Chinese drywall in their homes, insurance companies limit their liability in a way that mirrors their approach to storm damage and the like. In the wake of Hurricane Katrina, many insurance companies claimed that, instead of wind damage, the damage incurred by homes was the result of flood damage. The problem with this was that far too many homeowners possessed wind coverage but not flood coverage and thus were facing little to no payment from their insurance company. This is the same plight faced by those whose polices have been threatened by their providers in the wake of this drywall matter.

The Associated Press reports

The enormous need to rebuild houses after Hurricane Katrina and the end of the housing boom caused American homebuilders and companies to search for cheaper alternative materials to build houses with. The simplest and cheapest solution to this problem for these homeowners was to purchase imported drywall from China. That plan seemed great at the time, until homeowners complained about headaches and respiratory problems along with corroded electrical wiring, appliance outages, rotting walls and damage to personal belongings. An estimated 4,000 to 7,000 Louisiana households have been affected by this problem; however, only 800 Louisiana residents have reported these problems to the Louisiana Recovery Authority. Overall, 3,700 individuals across the nation have reported problems to the CPSC. Many residents are facing large medical and rebuilding fees and are not sure what to do.

Chinese drywall contains significantly higher levels of strontium and sulfur compared to most drywall manufactured in America. It was commonly used as a cheap substitute to American drywall for builders looking to cut costs and expenses. The corrosive problems that have been associated with Chinese drywall are fairly new. American researchers have been conducting several scientific studies for the past year to try and isolate the problem, and finally released the results of that study on April 2nd for Congressional officials and for civil litigation purposes. However, the problems for homeowners who have Chinese drywall in their house go much deeper than that. Those that have filed insurance claims have almost all been denied based on policy exclusions for latent defects or pollution in materials. Other homeowners who have chosen to go the legal route have been told that the 1996 tort reform legislation will likely prevent them from making a full financial recovery because the manufacturers of the defective goods are overseas.

Before 1996, a consumer in Louisiana could pursue a claim against a company and receive full compensation of damage from that company, even if the company was only liable for a small portion of the consumer’s injuries. Applying the old Louisiana law to the situation here, a homeowner who was affected by the Chinese drywall situation would sue the party that installed their drywall. That party, in turn, would then sue companies up the chain until the biggest pockets were reached.

The first bellwether case for Chinese drywall litigation began yesterday. The case is important because of the potential precedent for culpability it will establish for Chinese manufacturers and importers over the faulty wallboard brought into the country in the wake of a variety of hurricanes and home development. While more than 2,000 families have claims pending on this issue, the effects may even be more far-reaching.

News Inferno reports

The first bellwether trial names Knauf Gips and Knauf Plasterboard Tianjin Co. as lead defendants. The lawsuit was filed on behalf of Tatum and Charlene Hernandez of Mandeville, Louisiana. The case is being heard by Judge Fallon without a jury.

After roughly 35 Floridians protested outside of a campaign fundraiser, state Governor Charlie Crist attempted to ease the concerns of residents facing the struggle of Chinese Drywall. The News-Press reports

Gov. Charlie Crist walked over to a group of about 35 protesters who have defective drywall at about 7 p.m. today and told them what they wanted to hear: That he would look into making an emergency declaration on the drywall.

This response came, however, after a series of comments that make some question just how aware of the situation the Florida governor is. When he first began discussing the issue with the protestors, Crist urged them to seek help from the Charlotte County Housing Authority and the funding it holds for Housing and Urban Development. The group quickly rebuked him, clarifying the funds were earmarked and demonstrating the knowledge and wherewithal that comes from dealing with such a chaotic situation as Chinese Drywall, and the pursuit of assistance, has been.

In what may come as good news to some and bad to others, the first Chinese Drywall case may be ruled upon soon. For the unfortunate homeowners stuck in limbo while the pre-trial hearings and litigation was handled, any sort of forward progress is welcome news. However, for the various manufacturers and distributors of the faulty wallboard, a harsh ruling may spell disaster for the industry.

The Fort Myers News-Press reports

The first bellwether trial in the more than 3,000 lawsuits filed across the country regarding the tainted product ended Monday; another starts March 15 in New Orleans.