Thread: Insurers dropping Chinese drywall policies

Insurers dropping Chinese drywall policies
Brian Skoloff, Associated Press Writer Thu Oct 15, 2:10 pm ET

WEST PALM BEACH, Fla. – James and Maria Ivory's dreams of a relaxing retirement on Florida's Gulf Coast were put on hold when they discovered their new home had been built with Chinese drywall that emits sulfuric fumes and corrodes pipes. It got worse when they asked their insurer for help — and not only was their claim denied, but they've been told their entire policy won't be renewed.

Thousands of homeowners nationwide who bought new houses constructed from the defective building materials are finding their hopes dashed, their lives in limbo. And experts warn that cases like the Ivorys', in which insurers drop policies or send notices of non-renewal based on the presence of Chinese drywall, will become rampant as insurance companies process the hundreds of claims currently in the pipeline.

At least three insurers have already canceled or refused to renew policies after homeowners sought their help replacing the bad wallboard. Because mortgage companies require homeowners to insure their properties, they are then at risk of foreclosure, yet no law prevents the cancellations.

"This is like the small wave that's out on the horizon that's going to continue to grow and grow until it becomes a tsunami," said Florida attorney David Durkee, who represents hundreds of homeowners who are suing builders, suppliers and manufacturers over the drywall.

During the height of the U.S. housing boom, with building materials in short supply, American construction companies turned to Chinese-made drywall because it was abundant and cheap. An Associated Press analysis of shipping records found that more than 500 million pounds of Chinese gypsum board was imported between 2004 and 2008 — enough to have built tens of thousands of homes. They are heavily concentrated in the Southeast, especially Florida and areas of Louisiana and Mississippi hit hard by Hurricane Katrina.

The defective materials have been found by state and federal agencies to emit "volatile sulfur compounds," and contain traces of strontium sulfide, which can produce a rotten-egg odor, along with organic compounds not found in American-made drywall. Homeowners complain the fumes are corroding copper pipes, destroying TVs and air conditioners, and blackening jewelry and silverware. Some believe the wallboard is also making them ill.

The federal government is studying the problem and considering some sort of relief for homeowners.

Meanwhile, the AP interviewed several homeowners who, like the Ivorys, were unlucky enough to purchase properties built with Chinese drywall, and are now being hit with a second and third wave of bad news: Their insurers are declining to fill their claims, then canceling the policy or issuing notices that policies won't be renewed until the problem is fixed. The homeowners have little recourse since neither the Chinese manufacturers nor the Chinese government are likely to respond to any lawsuits or reimburse them for the defective drywall.

In each instance, the insurer learned of the drywall through a claim filed by the homeowner seeking financial help with its removal.

The Ivorys have sued their builder, but it could take months for their case and hundreds like it to work their way through the courts. In the meantime, they have moved back to Colorado because their three-bedroom ranch home two miles from the Gulf of Mexico is unlivable and soon will be uninsured.

"It's been an emotional roller-coaster," said James Ivory, who is still making mortgage payments on the house. "It was all in our heads, nice weather down there, calm life, beaches. Now I don't know what to do."

John Kuczwanski, a spokesman for the Ivorys' insurer, Citizens Property Insurance Corp., said their claim was denied because the drywall is considered a builder defect, which is not covered under the policy. It also considers the drywall a pre-existing condition that could lead to future damage, which is why the company won't renew the policy unless the problem is fixed.

"If someone were to have bought a new car and there was a defective part, would that person go to their auto insurance to get that fixed or would they go back to the manufacturer?" Kuczwanski said. "We provide insurance, not warranty service."

Citizens, a last-resort insurer backed by the state of Florida for people who can't find affordable coverage elsewhere, has received 23 claims about Chinese drywall, and has so far denied five. Citizens could not immediately say how many policies had been canceled or not renewed because of the drywall.

Robert Hartwig, president of the Insurance Information Institute, agreed that homeowners policies were never meant to cover "faulty, inadequate or defective" workmanship, construction or materials.

Tom Zutell, spokesman for the Florida Office of Insurance Regulation, said the cancellations are troubling, but legal. No law prevents insurance companies from canceling policies because of Chinese drywall.

"We are staying out of the fray at the moment," he said.

Even if a homeowner does not file a claim over the drywall and remains covered, they could later be denied a claim for a fire or another calamity if insurance investigators determine the home contained undisclosed Chinese drywall.

"If you think that by not telling your insurance company about the drywall that you're protected, you're sadly mistaken," Durkee said.

A newly married couple in Hallandale Beach, Fla., saved up for five years to buy their first home only to later discover it had Chinese drywall. They filed a claim with their insurer, Universal Insurance Co. of North America, and were denied.

Universal then sent the couple a letter, stating their policy was being dropped because "the dwelling was built with Chinese drywall."

The couple then signed on with Citizens, but didn't divulge the drywall issue, and hasn't filed another claim. The 31-year-old man requested anonymity because he's afraid of losing his insurance policy, and thus his home.

"I honestly don't know what I'd do if that happened," he said. "All this has basically taken us back five years. We saved money to buy this home."

Universal did not respond to requests for comment.

Louisiana lawyer Daniel Becnel Jr., who represents more than 200 owners of homes containing Chinese drywall, is advising his clients to avoid filing claims with their insurers or they could lose their houses.

"I really believe everybody should have an insurance claim with this," Becnel said. "But it's hard to tell somebody to go make a claim, then they lose their policy ... This is a nightmare for people."

"I tell people flat out if you file, you may lose your insurance," agreed Mississippi attorney Steve Mullins, who has about 100 clients with Chinese drywall in their homes.

Chris Whitfield, a 29-year-old tire repairman, bought a house in Picayune, Miss., after his home in Louisiana's St. Bernard Parish was destroyed by Katrina. He soon discovered it was built with Chinese drywall, and moved out because it was making his family sick.

His claim was denied by his insurer, Nationwide, which followed up with notice that he would be dropped because his policy didn't cover unoccupied dwellings.

Nationwide spokeswoman Liz Christopher declined to comment on Whitfield's case and could not say how many drywall claims had been submitted or how many policies had been canceled or not renewed.

Whitfield offered to move back into the house, but he said he was told he'd first have to replace the drywall. "I don't know what I'm going to do," he said.

http://news.yahoo.com/s/ap/20091015/...hinese_drywall

See also : http://www.bigbigforums.com/news-inf...your-home.html


Judge awards families $2.6M over Chinese drywall
Cain Burdeau And Michael Kunzelman, Associated Press Writers – 1 hr 47 mins ago

NEW ORLEANS – A New Orleans federal judge on Thursday awarded seven Virginia families $2.6 million in damages for homes ruined by sulfur-emitting drywall made in China, a decision that could affect how lawsuits by thousands of other homeowners are settled.

It remains to be seen how the plaintiffs can collect from Chinese companies that do not have to respond to U.S courts, although some have talked about getting orders to seize U.S.-bound ships and cargoes from the drywall companies.

Thousands of homeowners, mostly in Florida, Virginia, Mississippi, Alabama and Louisiana, have reported problems with the drywall, which was imported in large quantities during the housing boom and after a string of Gulf Coast hurricanes.

The drywall has been linked to corrosion of wiring, air conditioning units, computers, doorknobs and jewelry, along with possible health effects.

U.S. District Judge Eldon Fallon ruled Thursday that the drywall needs to be removed and the plaintiffs' homes need to gutted because of the ruinous effects of corrosion. He said all electrical wiring, the heating and air conditioning system, appliances, carpet, cabinetry, trim work and flooring damaged by corrosion would have to be removed.

Fallon's decision was the first in a series of federal lawsuits brought against manufacturers, distributors, suppliers and homebuilders by thousands of homeowners, all of them claims that Fallon is presiding over. Separately, thousands of plaintiffs are pursuing claims in state courts.

Thursday's ruling could set the standard for what needs to be done to make a tainted home fit for living in. Fallon's guidelines went further than those put out by the Consumer Protection Safety Commission earlier this month. The CPSC called for removing the tainted drywall, electrical wiring, fire alarm systems and gas pipes.

"We got everything we asked for," said Richard Serpe, an attorney for the Virginia plaintiffs. "This becomes a roadmap for any court that is going to consider how the litigation should go from here."

Fallon's ruling covered only property damage and did not look at possible health effects. The first cases with medical claims won't be considered by the court until late 2010 or early 2011.

It was far from certain who would pay for the damages. Civil judgments in U.S. courts aren't enforced in China. Plaintiffs are suing American drywall suppliers, distributors and homebuilders, too.

Phillip A. Wittmann, a New Orleans lawyer representing homebuilders and drywall installers, said homebuilders have been proactive and gutted tainted homes they built.

"The homebuilders are really the only class of defendants doing anything for the homeowners," Wittman said.

In this case, the plaintiffs sued Chinese drywall manufacturer Taishan Gypsum Co., which hasn't responded to lawsuits and did not have a lawyer representing it at the February trial.

Plaintiffs lawyers have said they would try to seize the company's U.S.-bound vessels and shipments if the company continues to ignore the litigation.

So far, only one Chinese manufacturer — Knauf Plasterboard Tianjin Co. — has responded to U.S. suits. A separate trial was held last month against Knauf. Fallon has not ruled in that case. Also, homebuilders are suing Knauf Plasterboard and Knauf Gips KG, a German company, for damages, Wittman said.

In a statement, Knauf Plasterboard said Fallon's findings in the Virginia case were "distinct from the cases against KPT." The company said it would work with federal and state regulators and others "in evaluating the concerns about drywall manufactured in China."

Fallon said that Chinese drywall "has a significantly higher average concentration of strontium and significantly more detectable levels of elemental sulfur" than U.S.-made drywall. He added that the "level of corrosive sulfur gases emitted by Chinese drywall ... exceed the safe level established by recognized standards, peer reviewed literature."

The Taishan drywall was not tested under American engineering standards and Venture Supply Inc., the Norfolk, Va.-based buyer, "relied on a representation that Chinese testing was equivalent to the U.S. testing standards," the ruling said.

The ruling noted that Chinese tests were done by a Chinese government agency and not by an independent testing laboratory. The Chinese government agency issued "certificates of quality" based on a protocol that "predates the production of the drywall shipped to the United States by at least two years," the ruling said.

Taishan and the owners of Venture Supply Inc. could not be reached for comment. A telephone number listed on Venture's Web site was disconnected.

"The sulfur gases released by Chinese drywall cause offending odors in homes, making them hard if not impossible to live in," Fallon said.

During the February trial, the plaintiffs gave emotional testimony about how their lives had been damaged because of the defective drywall that gives off a rotten-egg smell.

William Morgan and his wife, Deborah, moved to Williamsburg, Va., after he retired from the Norfolk police department. They quickly realized something was wrong with their "dream house." Fixtures and mirrors turned black. Their lights malfunctioned. Their smoke detector system and water heater failed.

The problems drove them from their house into a rental home, leaving them in a financial mess that forced the couple to file for bankruptcy protection last year. Fallon awarded the Morgan family $481,613.

"I'm tickled to death with the decision, but as far as the mechanics of doing what needs to be done, I don't know," Morgan said by telephone Thursday.

Jerry Baldwin, 59, of Williamsburg, said he and his wife, Inez, could not afford to move out of the home they bought in 2006. The couple blamed Chinese drywall for ruining appliances, electronics and the home's air conditioning system.

Baldwin said the problem has cost him his financial security and left him worried for his family's health. Fallon awarded the Baldwins $441,699.

http://news.yahoo.com/s/ap/20100408/...RnZWF3YXJkc2Y-

Chinese Drywall? Rip It Out : http://news.yahoo.com/video/health-15749655/18964102

See also : http://www.bigbigforums.com/news-inf...your-home.html



Jury awards $2.4M in first Chinese drywall trial
By Curt Anderson, Ap Legal Affairs Writer 2 hrs 42 mins ago

MIAMI – A Florida couple who fled their dream home because of foul-smelling, ruinous Chinese drywall was awarded $2.4 million in damages Friday in the nation's first jury trial over the defective wallboard that could have legal ramifications for thousands of similar cases.

The six-person jury ruled that Armin and Lisa Seifart should receive more than just the costs of gutting and renovating their home: they were also awarded damages for loss of enjoyment of the $1.6 million house and for the drywall stigma that might reduce its resale value.

The defendant, drywall distributor Banner Supply Co., is named in thousands of other lawsuits. Attorneys in those cases, as well as many others pending nationwide against other companies, will look to the Seifart damage award as a guide for what kinds of damages they seek.

Defective, sulfur-emitting Chinese drywall has been linked to possible health problems along with a noxious odor, corrosion of wiring, plumbing, computers, plumbing and jewelry. Most of the problems have arisen in Florida, Virginia, Mississippi, Alabama and Louisiana in homes built during the housing boom and some damaged during the busy 2005 hurricane season.

The Seifarts, who have two young sons, left their five-bedroom home in Miami's Coconut Grove neighborhood last year so it could be gutted and renovated. Their attorney, Ervin Gonzalez, said the couple was not told of problems with the Chinese drywall in March 2008 when they moved in.

"Their dream home turned into a nightmare," Gonzalez said.

The Seifarts accused Banner of concealing knowledge it had as early as 2006 that Chinese drywall was defective, including recommendations from manufacturer Knauf Plasterboard Tianjian that the wallboards should not be used. Many of those details emerged in this trial after a confidential agreement between Banner and Knauf was unsealed.

"It was important to send a message to companies that they should do the right thing when the health of the public is at stake," said Armin Seifart after the verdict.

"I feel that justice was done," added Lisa Seifart.

Banner attorney Todd Ehrenreich said an appeal would be considered.

"We're very disappointed in the verdict," he said.

During the trial, Banner acknowledged bearing some responsibility but fought against paying the Seifarts more than their direct expenses. Company attorneys said the drywall problem in 2006 was limited to a handful of homes in Florida out of some 2,700 built and that it took time for the extent of the damage to become clear.

"That defect was hidden, latent and undetectable," said Ehrenreich in closing arguments. "It doesn't rear its ugly head until sometimes years later."

The jury found that Banner was 55 percent liable for the Seifarts' problems and that Knauf and two related entities bore the rest of the responsibility. That could reduce the Seifarts' ultimate payout because Knauf was not a defendant in their case, but Gonzalez said he will push to have Banner pay the full $2.4 million.

The Miami case follows a Louisiana federal judge's decision in April to award $2.6 million in damages to seven families in Virginia for bad Chinese drywall. In that case, the Chinese entities who were sued never responded in U.S. court, leaving in limbo how the damages might be collected.

The Consumer Product Safety Commission has recommended removing any tainted drywall and affected wiring, fire alarm systems and gas pipes.

http://news.yahoo.com/s/ap/20100618/...NsawNwcmludA--


comments


omg drywall is $5 a sheet from a box store in chicago so that means about $1.50 to produce? thats already cheap. would like to know th cost per sheet from knauf plasterboard 20 thousand sheet min Im shure

Following the 05 storm season, drywall was $25 a sheet along the Gulf Coast, when you could get it at all.... the drywall is also not marked "made in China" and when used by contrators - painted over before the consumers was ever aware of the product - JR
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This is the result of free-market/free-trade ideology. It's a byproduct of eliminating tariffs on imported goods that make goods cheaper from overseas. Goods manufactured domestically, or at least distributed by domestic companies, have the advantage of being held accountable for defects through US law. Over the last few decades we stopped producing domestically, preferring cheap imported goods that have gone down in quality, even when they are not defective or poisonous. Don't believe me? Just compare a simple screw from home depot today compared to one built in the 60s.