High and dry(wall) – Judge Fallon awards $2.6 million to 7 families in Chinese Drywall case

The Times Picayune had the “breaking news” up before lunch.  I thought I would, too, but this was just “another one of those days” – and the result is more news about the case, starting with the report online at the Sun Herald, although not “breaking”.

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.

In other words, plaintiffs are left “high and dry(wall)” until someone comes up with the money.  Judge Fallon has the Findings of Fact and Conclusions of Law but he doesn’t have the check (h/t Bloomberg for the case identification needed to find the document). A story in the Palm Beach Post , however, provides additional detail about Fallon’s decision for those who want fast facts: Continue reading “High and dry(wall) – Judge Fallon awards $2.6 million to 7 families in Chinese Drywall case”

Rotten eggs in the bunny-basket of news – Allstate, River Birch, Chinese Drywall plus a sniff of Congress…

Better check the eggs carefully this year! If the news thus far this weekend is any indication, a sniff test is needed.

Allstate tossed a rotten egg at Commissioner Chaney.

Allstate is again asking for an increase in homeowners’ insurance rates. “They’re not going to get a 44 percent increase unless the court gives it to them,” State Insurance Commissioner Mike Chaney said of the insurers’ latest submission.

Without discounts, Chaney said the latest increase could amount to a 48 percent increase for some customers with Allstate Property and Casualty Insurance Co. In January, Allstate withdrew an increase after Chaney’s rejection. Submitted as a 59 percent increase, Chaney said it would have amounted to a 65 percent increase for some customers.

“I’m never pleased with huge rate increases, and I review them extremely carefully,” Chaney said…If the commissioner doesn’t respond to the rate hike, it would go in effect in 30 days. Chaney, however, said he won’t let that happen. He plans to ask the insurer for more information.

If Chaney follows his usual practice, he won’t surprise the Clarion Ledger reader that commented:

Watch this one. They have filed for a 44% increase ,which will be refused and then they will file for an increase of over 15% and it will be approved. Just watch it and you will see what will happen.

The bunny at the Times Picayune hid a special egg for Congress in the Opinion section and tried to put a new color on River Birch egg – but there’s not enough dye to cover the truth hidden between the lines in the graphic: Continue reading “Rotten eggs in the bunny-basket of news – Allstate, River Birch, Chinese Drywall plus a sniff of Congress…”

A Slabbed Sandwich: Homeless First by Katrina and then by Chinese Drywall. State Farm plays the bad taste in the middle.

Does anyone else remember Jim Brown’s last column? We may need to print it out and distribute it. Once again State Farm hoses an elderly lady who also has the misfortune of being a policyholder. Rebecca Mowbray has the story for the Times Picayune which is chock full of hidden ironies (h/t Editilla):

After Hurricane Katrina dropped three trees on the roof of her home in Folsom, Lucille Bourdon built a new home in Covington and moved in December 2006.

Since then, her air conditioning has failed several times, her hot water tank split, her water faucets have developed strange pockmarks, her mirrors and silverware have turned black, and she constantly feels fatigued. In August, Bourdon figured out that her new home is filled with Chinese drywall.

Like most Chinese drywall victims, Bourdon filed a claim on her homeowners insurance without success. Her insurer, State Farm Fire & Casualty Co., sent an inspector to thoroughly document the damage, then denied the claim.

“My insurance won’t take care of it,” said Bourdon, 79, who is now living in a trailer on her property until she figures out how to fix her home. “They say they don’t cover pollution. We can’t get any help from anybody.” Continue reading “A Slabbed Sandwich: Homeless First by Katrina and then by Chinese Drywall. State Farm plays the bad taste in the middle.”

Jim Brown on Chinese Drywall, the Pollution Exclusion and Corban

Thursday, October 15, 2009
Baton Rouge, Louisiana


There should be plenty of good news on the property insurance front, both in Louisiana and throughout the gulf south. Hurricane season is over, the third year in a row without the threat of a major storm. One would think this would be both good news and the beginning of price drops. But that’s not the case. There are bad financial storm clouds arising that bode ill for Louisiana policy holders in the coming year. Look for higher rates and less coverage. Here are some of the problem areas.

The new troubling insurance buzzword for homeowners? Chinese drywall. Thousands of Louisiana homes have been infested with defective drywall from China that was imported during the construction boom following Katrina to meet heavy demand. For reasons yet unknown, the drywall was contaminated with various sulfur compounds. This reaction causes quick metal corrosion allowing plumbing and appliances to fail. The foul odor that follows makes these homes unlivable and expensive to repair, and the defective sheetrock has to be torn out.

So you call you insurance company – right? Unfortunately, in most cases, insurance companies have been rejecting drywall claims, and even going so far as to not renew the homeowner’s policy. Property insurance companies, particularly in Louisiana, argue that drywall damage was not a “sudden event” like wind damage or flooding. Since 1984, insurance companies have been adding “pollution exclusion” to all their homeowner policies, stating that no coverage exists when a pollutant cases damage. Drywall problems, according to the insurance industry, cause damage over a period of time, and therefore the homeowner should have taken action for damage control.

This is not supposed to be the case in Louisiana. The Louisiana Insurance Department, back in the late 1990s, specifically defined the scope of such exclusion more narrowly than most states and allowed it to be applied “only to those injuries or damage caused by environmental pollution.” Simply put, nothing like drywall damage should be excluded, said the Insurance Commissioner at that time (obviously, a pretty bright guy). The Louisiana Supreme Court followed the Insurance department’s reasoning in the landmark case of Doerr v. Mobil Oil Corp. in 2000. Continue reading “Jim Brown on Chinese Drywall, the Pollution Exclusion and Corban”