Analyzing Choices Before All Parties Related to Chinese Drywall Claims

Wolfe Law Group’s general construction law blog, the Construction Law Monitor, published three articles over the past two weeks that analyzed the choices faced by builders, homeowners and construction attorneys involved with Chinese Drywall claims.

The three-part series of articles provides these parties with a useful discussion of the decisions that must be confronted as each deal with damages sustained by the installation and supply of tainted drywall.

The article series can be found under the Chinese Drywall Tag on the blog.   Or by clicking on one of the following links, whereby each article is briefly discussed.

Builders
This article discusses issues related to making insurance claims, remedying the drywall problem within homes, the duty to mitigate damages and options available to the builder in litigation.

Construction Attorneys
This article discusses the role of class action suits in the imported drywall crisis, warranties and the role of builders in the suits, and how the duty to mitigate damages affects all parties.

Homeowners
This article discusses the choices facing homeowners who have tainted drywall in their homes.   It examines the pros and cons of class action suits, individual litigation, and making insurance claims….as well as the ultimate unfortunate job that homeowner might be forced to take:  fixing the drywall out of their own pocket (at least for now).

This post originally appeared on Wolfe Law Group’s topic-specific Chinese Drywall Blog.

Louisana Has 2nd Most Chinese Drywall, But Washington on the Map

This blog is published by Wolfe Law Group, a construction law practice with offices in Seattle, WA and New Orleans, LA.

Thus far, the blog has focused a great deal on Louisiana news and law related to Chinese Drywall – and the reason is simple:  The amount of imported Chinese Drywall in Louisiana is second only to Florida.

Further, Chinese Drywall was by and large imported into Gulf Coast states like Florida, Louisiana, Mississippi, Georgia and Texas.

While the state of Washington is clearly worlds apart from the Gulf Coast region…it’s not out of the woods insofar as Chinese Drywall in concerned.  In fact, its among the 12 U.S. states who have imported at least 1 million pounds of tainted drywall from China since January 1, 2006.

A helpful graphic based on data published by the Herald Tribune shows that Washington has imported 2,437,491 pounds of Chinese Drywall since January 1 2006, which is enough to build approximately 270 homes.

As lawsuits gather stem in Florida and Louisiana, and across the Gulf Coast, Washington contractors and suppliers ought to remain viligent and cautious of Chinese Drywall claims.

Have questions about what to do if you installed or supplied tainted drywall?  We wrote an Avvo Legal Guide on the topic here…and you can always contact Wolfe Law Group.

This post originally appeared on Wolfe Law Group’s topic-specific Chinese Drywall Blog.

Factors to Consider When Faced With Chinese Drywall Claim

We authored a legal guide on Avvo.com about what Builders & Suppliers should do If They Have Installed or Supplied Chinese Drywall.

The folks at Coastal Contractor magazine highlighted another such “guide” from attorneys at Wood Smith Hening & Berman, LLP.    The useful guide is titled “Chinese Drywall Personal Injury Claims: Lessons from Prior Mass Torts.”

While our discussion focused on practical choices facing builders and suppliers who should move quickly to mitigate their damages, involve insurance and retain counsel….this guide focuses on the mass tort aspect of the Chinese Drywall claims.

A tort – for the non-lawyer readers – a body of law that addresses, and provides remedies for, civil wrongs not arising out of contractual obligations.  Usually, they are commonly referred to as “personal injury” damages.

As the authors in the Mass Torts guide discuss, the Chinese Drywall claims are interesting in that they present construction defect claims & tort claims.    The authors suggest that builders, suppliers and other effected parties should learn from prior mass tort cases in preparing their defenses.

The thesis is good, and useful for both construction attorneys and construction industry participants faced with these claims.  It ties in to previous discussions here at the Chinese Drywall Blog about whether Class Actions are a right fit for drywall claims and about builder exposure in the claims.

Chinese Drywall Crisis Presents Builders, Construction Lawyers and Homeowners with Difficult Choices (Homeowners)

Previously, we examined difficult choices and considerations facing builders and construction attorneys who have installed or supplied Chinese Drywall.

Today, we are going to comment on the most injured party to the imported drywall crisis:  the Homeowner.

Homeowners with Chinese Drywall in their homes are faced with a terrible situation.  Is it safe to live in the home?  How pronounced is the problem?  Who is going to pay to fix it?  When?

While attorneys and construction industry professionals have debated how these disputes should be handled and litigated…the homeowner’s life and property is left in the balance.  Here are a few important and difficult choices facing homeowners with Chinese Drywall installed.

Finding A Remedy:  Class Action v. Insurance v. Builder

In one corner, weighing in as a monster, is the class action lawsuit.   There are already television commercials, internet keyword ads and news reports suggesting that if your home has Chinese Drywall installed…you should contact an attorney and join the filed class action suits.

In the other corner is a lawsuit directly against your builder, a contractor who is quite possibly a victim in itself…and who may not have the pockets or wherewithal to handle the scope of imported drywall claims.

And finally, we have insurance.  Insurance of the builder, of the supplier and even homeowners insurance.   They have all been implicated in imported drywall claims already…and the consensus is that the pollution exclusion will provide room for insurance companies to deny claims.

What is the homeowner to do?

Unfortunately, the answer here is not easy.

As debated across the blogosphere, there are pros and cons to each remedy.  Class action suits can take years, and may not result in a real remedy for claims unrelated to personal injury.   Suits against the builder may have practical collection problems.  Insurance companies are denying coverage based on pollution exclusions…

The best answer for homeowners is to get educated about Chinese Drywall, and to consider all of the available remedies.   It isn’t prudent to contact a class action attorney, provide them with your name and number, and flip off your mental switch about taking legal action related to tainted drywall.

Homeowners should explore all available remedies, and seek counsel about how to best proceed against responsible parties for damages caused by Chinese Drywall.

The Long Road of Litigation:  Fixing Yourself

Let’s just talk about a homeowner’s practical problem:  getting the drywall out of their property.

Assuming they have contacted a class action attorney and are hoping to be a member of the class…what does a homeowner do to get the drywall out of their quarters while they wait years for the litigation to resolve itself?

Well, unfortunately, homeowners may be forced to do the work themselves, and not just because they want the drywall removed…but also because they have a duty to mitigate their damages.

Clearly, this is one of the most prominent critiques of Chinese Drywall class action suits.

Conclusion

Perhaps more so than builders, suppliers, construction attorneys and other involved parties…homeowners are faced with difficult and consequential decisions about how to proceed with Chinese Drywall claims.

There is already much debate as to how they should proceed…and only time will tell which remedies will be successful in this complicated search for liability.

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Arbitration May Apply to Non-Signatories

The Supreme Court issued a ruling on May 5, 2009, which may further support Washington precedent holding non-signatories to binding arbitration. The ruling was first reported on Davis Wright Tremaine’s Washington Construction Law Blog on May 6, 2009.

In Arthur Anderson LLP v. Carlisle, the Supreme Court found that clients of Arthur Anderson had set up small limited liability companies (LLC) as tax shelters for investments. Those LLCs entered into arbitration agreements with the brokerage as a resolution process for any disputes between the parties. But the individuals, themselves, had not personally executed these arbitration agreements.

The Supreme Court, acting under prior precedent, upheld enforcement of the provisions claiming that the agreement was intended to benefit and both the individual and the brokerage against the individual. Therefore, the court would mandate arbitration of the matter.

Washington Construction Law Blog’s author, John Parnass, cites Davis Wright Tremaine’s own case, McClure v. Davis Wright Tremaine, 77 Wn. App. 312 (1995), whereby the Supreme Court rendered a similar finding, permitting a non-signatory to take advantage of a binding arbitration clause.

The case’s result should provide interesting options to lawyers and contractors wishing to push a less time consuming method of dispute resolution, perhaps even in the arena of lien litigation, which often involves third parties.

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