Click here for a WPTV Channel 5 video and transcript on Chinese drywall featuring Allison Grant, Esq. |
* Can I still maintain a claim if I sell my home? It will likely depend on your agreement with the lender if it is a short sale. However, the nature and/or amount of your damages may differ. If there is a settlement and it entails the remediation of your home, obviously that cannot be accomplished once the house is sold. Please discuss this with your attorney. It is also important to consult an attorney before you sign a contract to sell your home as you may want to have an addendum to the purchase contract to address the following: (1) the seller's ability to preserve evidence prior to the sale; (2) the seller's retention of the rights to any settlement proceeds; and (3) the buyer's release of all parties in the distribution chain pertaining to the presence of Chinese drywall in your home. Even if your lender agrees to a short sale (or a deed in lieu of foreclosure), the lender may have the right to pursue the deficiency (the remainder of the mortgage, plus attorney's fees and costs) against you unless waived. Click here for article. In other words, the lender must agree to release the lien and the promissory note otherwise you could short sell the house and still be liable for the balance of the unpaid promissory note. Please talk to your accountant about the potential tax consequences. * Am I required to pay my mortgage if I cannot live in my home? Many homeowners are faced with the decision whether to pay their mortgage because they cannot afford to pay the mortgage on a home that is uninhabitable and pay rent for alternate housing. Some lenders have agreed to suspend foreclosure proceedings if you have Chinese drywall. For those who are not yet in foreclosure, some lenders will provide homeowners with a forbearance agreement or moratorium which, simply stated, is a temporary freeze on your mortgage. However, a forbearance may not be advisable for everyone. Ask your lender what will happen at the end of the forbearance. A forbearance could negatively affect your credit so please check with your lender and get any agreement in writing. Additionally, some lenders are requiring homeowners to affirm the balance of the loan (even if incorrect) or to waive certain defenses to protect the lender in the event of a foreclosure. Homeowners are encouraged to contact an attorney to discuss their options. To contact Fannie Mae, call (800) 732-6643 and select option 3. Ask to speak to someone about Fannie Mae’s “unusual hardships policy for homeowners with problem drywall.” Click here to review the agency's new national policy. Click here for Circular for Veteran's Benefit Administration. Note, mortgages are frequently sold. Click here to find out if you have a Fannie Mae or Freddie Mac * Can I still maintain a claim if my home is being foreclosed? You can still maintain a claim, although again the nature and/or amount of your damages may differ. Please consult your attorney and discuss preservation of evidence. * Can I walk away from my house without any further liability? Not unless your lender agrees. Without an agreement from your lender, the lender still has the right to sue you for the deficiency. There are important deadlines once you are served with a summons and complaint and your failure to respond may result in a default. Moreover, you could be waiving important defenses. Please consult an attorney. Click here for article. * Can I go ahead and remediate now and still maintain a claim? Please consult your attorney first as this could affect your recovery, particularly if you do not preserve evidence in accordance with Judge Fallon's Order. It is not enough to have an inspection report or merely save a few pieces of drywall. Your attorney may also want to put your builder and other parties in the chain of supply on notice before you begin remediation. * What should I do if my builder offers to remediate my home? Please do not sign anything without understanding what your builder is proposing to remediate and the legal effect, including your ability or inability to bring future claims and whether the builder is asking you to assign your right to pursue other parties (such as the manufacturer, supplier or installer) for any other damages. You should be especially cautious if the builder asks you to sign a release for personal injuries. * Do I have any recourse against my builder if he filed for bankruptcy? You may. Please consult an attorney as soon as possible. If the claims bar date has passed, you still may be able to file a motion to seek to deem a late claim timely filed. * The value of my home has decreased due to the Chinese drywall. Can I have my property reassessed? Contact your county property appraiser for more information. For those in Florida, if the property is uninhabitable, then the property appraiser must assess the value of the building at $0. See CS/CS HB 965 Real Property Assessment * What should I do if I am purchasing a home built between 2001 and the present? In addition to a Chinese Drywall Disclosure form (which is now required in some states) and a thorough home inspection by someone who has experience with Chinese drywall, you may want to ask the seller to identify all remodeling/remediation work performed, along with prior A/C repairs, including the date and nature of the repairs. Specifically, ask the seller to disclose if he/she has replaced any appliances. You should be especially cautious if you are purchasing a foreclosed home because the lender may have no knowledge of the condition of the property and in some instances, you may not be able to inspect the home prior to purchase. Check with the property appraiser (usually available online) to see if the property has been reassessed due to Chinese drywall. A significantly reduced assessment may be a red flag. * Can I take a tax deduction? Revenue Procedure 2010-36 provides as follows: Individuals who pay to repair damage to their personal residences or household appliances resulting from corrosive drywall may treat the amount paid as a casualty loss in the year of payment. Taxpayers with pending claim (or intends to pursue reimbursement), a taxpayer may claim a loss for 75 percent of the unreimbursed amount paid during the taxable year to repair damage to the taxpayer’s personal residence and household appliances that resulted from corrosive drywall. Please consult an accountant. |
Terms of Use: Chinese Drywall Marketing, LLC operates this website to provide general information to the public about Chinese drywall. Chinese Drywall Marketing, LLC does not guarantee the accuracy and completeness of the information contained on this website. By accessing and using this website, you agree to each of the terms and conditions set forth herein Additional terms and conditions applicable to specific areas of this website or to particular content are also posted in particular areas of this website and, together with these Terms of Use, govern your use of those areas and content. Copyright © 2008-2011. Chinese Drywall Marketing, LLC. All rights reserved. *The materials on this site are for informational purposes only and are not guaranteed to be correct, complete or up to date. The information on this site does not constitute engineering, legal, medical or any other professional advice, and is not intended to create a professional relationship including, but not limited to, an attorney-client relationship. The hiring of any professional including, but not limited to, an attorney is an important decision that should not be based solely upon this website or any advertisement. Before you decide to hire a professional, ask for information regarding his/her qualifications and experience. Chinese Drywall Marketing, LLC does not endorse or support any product or organization linked to this website, nor is Chinese Drywall Marketing, LLC responsible for the content of any website promoted in or ad published on this website. |
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| THE LEGAL CORNER by Allison Grant, Esq. agrant@allisongrantpa.com www.chinesedrywallattorneys.com 561.994.9646 The following is for general informational purposes only and does not constitute legal advice. Please contact your attorney for information concerning your particular case. |
| welcome to chinesedrywall.com |
The first website dedicated to educating the public about Chinese drywall
| IS THERE INSURANCE COVERAGE? |
THE OMNIBUS COMPLAINTS
On December 9, 2009, the Plaintiffs Steering Committee filed an Omnibus Complaint
("Omni I") against Knauf Plasterboard Tianjin ("KPT") in the MDL. The Plaintiffs
Steering Committee has since filed three more complaints for those who have
(1) non-Knauf identifiable manufacturers ("Omni II"); (2) Knauf manufactured drywall,
but missed the first deadline ("Omni IV"); and (3) those who have Chinese drywall but
do not know the manufacturer ("Omni III"). There have been amendments to each
of these complaints. Additional Omnibus Complaints have been filed against Taishan
(Omni VII and IX) and Knauf (Omni VIII and X).
BELLWETHER TRIALS IN THE MDL
Thus far, two bellwether trials have been heard by Judge Fallon. These were
non-jury trials that were limited to property damage and not personal injuries. The
purpose of these types of trials are to address representative samples of cases with
regard to geography, distinctive facts and certain legal issues with the goal of flushing
out or narrowing issues that could potentially apply to everyone.
GERMANO V. TAISHAN
The first Chinese drywall began on February 19, 2010. This trial involved seven
Virginia families and Taishan Gypsum, who did not respond to the Complaint filed
against it so a default judgment was entered. Another manufacturer, Knauf,
intervened in the lawsuit and defended on behalf of Taishan. On the eve of trial,
however, Knauf withdrew from the case after an adverse ruling by Judge Fallon in
which he ruled that the proposed fix by Knauf was experimental.
On April 8, 2010, U.S. District Judge Eldon Fallon awarded the seven families $2.6
million in damages for homes ruined by Chinese drywall. This ruling only addresses
property damage - personal injuries will be addressed later. CLICK HERE FOR
COMPLETE RULING
While this decision is not binding on anyone other than the parties to the Germano
case, this decision will impact thousands of other homeowners. Unlike the interim
guidance issued by the Consumer Protection Safety Commission (CPSC) in April
2010 which addressed safety items only, Judge Fallon’s decision sets forth a very
detailed protocol for what needs to be done in order to remediate a home with
Chinese drywall, including removal and replacement of the following: all drywall in
the home, all electrical wiring (insulated and uninsulated), all copper pipes, the entire
HVAC system (including the outside unit), most appliances (particularly refrigerators),
electronics, such as TVs and computers, all carpeting and padding, hardwood and
vinyl flooring, and all bathroom fixtures. After removal of all drywall, properties must
be cleaned with a HEPA vacuum, wiped or power-washed, and aired out for 15-30
days; and the property must be certified by an independent engineering company to
certify that the remediated home is safe.
In May, a Final Judgment was entered against Taishan (which is owned in part by the
Chinese government). Taishan has appealed the decision, which many interpret as
encouraging because for the first time in this case, a Chinese manufacturer is
participating in litigation in the U.S. This may be a sign that Taishan is concerned
about the plaintiffs collecting on the judgment.
HERNANDEZ V. KNAUF
This was the second Chinese drywall trial. Unlike the Germano case, the Hernandez
case was vigorously defended by Knauf. On April 27, 2010, Judge Fallon ordered
Knauf to pay a Louisiana family $164,049.64. Remediation costs were $136,940.46
or $81 per square foot (the protocol was very similar to the Germano case), plus
damage to personal property (including mattresses and clothing - the sulfur odor
could not be removed even after multiple washings), recurring alternate living
expenses, and attorney's fees (to be determined). On May 10th, a Final Judgment
was entered. Knauf has 30 days to appeal. Click here for ruling. Knauf has
appealed the Final Judgment.
CAMPBELL V. KNAUF; CLEMENTS V. KNAUF
On June 18th, days before the trial was scheduled to start, Knauf agreed to settle
the third case (which involved two Louisiana properties) to be tried in the MDL.
Unlike Germano and Hernandez, this was going to be a jury trial. It has been reported
that the settlement includes full removal and replacement of all drywall, the entire
electrical system and other components in line with the Judge Fallon's decision in
Hernandez v. Knauf, along with out of pocket expenses while the homes are being
remediated. The repair costs will be negotiated with the contractor. In addition, the
owners will receive out of pocket expenses and damages for personal property.
Knauf will pay the attorney's fees. Click here for article; Attorney Gary Mason
discusses legal significance and possible global settlement.
A BANNER DAY FOR DRYWALL VICTIMS
To date, there has been one Chinese drywall case tried in state court. On June 18,
2010, a Miami-Dade County jury awarded the Seifarts the sum of $2.4 million on
Friday, which includes remediation cost, loss of enjoyment, and damages for stigma
or diminished value. During the trial it was revealed that Banner Supply knew the
Chinese drywall was defective in 2006 and had entered into a confidential settlement
agreement with Knauf in early 2007, yet it failed to warn the public. The jury found
Banner Supply 55% liable; Knauf was found 35% liable and the shipper and
distributor 5% each even though they were not parties to the lawsuit.
In July 2011, a preliminary settlement with Banner Supply in the amount of $55
million was announced. Although the Banner settlement alone will not provide
enough money for remediation, this settlement is believed to be only part of the
puzzle which will lead to a global resolution for homeowners. This settlement, if
approved, would apply to all homeowners whose drywall was supplied by Banner
regardless of the brand of drywall in their home. The settlement has been
preliminarily approved. The Court has appointed an allocation committee to divide
the insurance proceeds. A fairness hearing will be conducted later this year.
On December 9, 2009, the Plaintiffs Steering Committee filed an Omnibus Complaint
("Omni I") against Knauf Plasterboard Tianjin ("KPT") in the MDL. The Plaintiffs
Steering Committee has since filed three more complaints for those who have
(1) non-Knauf identifiable manufacturers ("Omni II"); (2) Knauf manufactured drywall,
but missed the first deadline ("Omni IV"); and (3) those who have Chinese drywall but
do not know the manufacturer ("Omni III"). There have been amendments to each
of these complaints. Additional Omnibus Complaints have been filed against Taishan
(Omni VII and IX) and Knauf (Omni VIII and X).
BELLWETHER TRIALS IN THE MDL
Thus far, two bellwether trials have been heard by Judge Fallon. These were
non-jury trials that were limited to property damage and not personal injuries. The
purpose of these types of trials are to address representative samples of cases with
regard to geography, distinctive facts and certain legal issues with the goal of flushing
out or narrowing issues that could potentially apply to everyone.
GERMANO V. TAISHAN
The first Chinese drywall began on February 19, 2010. This trial involved seven
Virginia families and Taishan Gypsum, who did not respond to the Complaint filed
against it so a default judgment was entered. Another manufacturer, Knauf,
intervened in the lawsuit and defended on behalf of Taishan. On the eve of trial,
however, Knauf withdrew from the case after an adverse ruling by Judge Fallon in
which he ruled that the proposed fix by Knauf was experimental.
On April 8, 2010, U.S. District Judge Eldon Fallon awarded the seven families $2.6
million in damages for homes ruined by Chinese drywall. This ruling only addresses
property damage - personal injuries will be addressed later. CLICK HERE FOR
COMPLETE RULING
While this decision is not binding on anyone other than the parties to the Germano
case, this decision will impact thousands of other homeowners. Unlike the interim
guidance issued by the Consumer Protection Safety Commission (CPSC) in April
2010 which addressed safety items only, Judge Fallon’s decision sets forth a very
detailed protocol for what needs to be done in order to remediate a home with
Chinese drywall, including removal and replacement of the following: all drywall in
the home, all electrical wiring (insulated and uninsulated), all copper pipes, the entire
HVAC system (including the outside unit), most appliances (particularly refrigerators),
electronics, such as TVs and computers, all carpeting and padding, hardwood and
vinyl flooring, and all bathroom fixtures. After removal of all drywall, properties must
be cleaned with a HEPA vacuum, wiped or power-washed, and aired out for 15-30
days; and the property must be certified by an independent engineering company to
certify that the remediated home is safe.
In May, a Final Judgment was entered against Taishan (which is owned in part by the
Chinese government). Taishan has appealed the decision, which many interpret as
encouraging because for the first time in this case, a Chinese manufacturer is
participating in litigation in the U.S. This may be a sign that Taishan is concerned
about the plaintiffs collecting on the judgment.
HERNANDEZ V. KNAUF
This was the second Chinese drywall trial. Unlike the Germano case, the Hernandez
case was vigorously defended by Knauf. On April 27, 2010, Judge Fallon ordered
Knauf to pay a Louisiana family $164,049.64. Remediation costs were $136,940.46
or $81 per square foot (the protocol was very similar to the Germano case), plus
damage to personal property (including mattresses and clothing - the sulfur odor
could not be removed even after multiple washings), recurring alternate living
expenses, and attorney's fees (to be determined). On May 10th, a Final Judgment
was entered. Knauf has 30 days to appeal. Click here for ruling. Knauf has
appealed the Final Judgment.
CAMPBELL V. KNAUF; CLEMENTS V. KNAUF
On June 18th, days before the trial was scheduled to start, Knauf agreed to settle
the third case (which involved two Louisiana properties) to be tried in the MDL.
Unlike Germano and Hernandez, this was going to be a jury trial. It has been reported
that the settlement includes full removal and replacement of all drywall, the entire
electrical system and other components in line with the Judge Fallon's decision in
Hernandez v. Knauf, along with out of pocket expenses while the homes are being
remediated. The repair costs will be negotiated with the contractor. In addition, the
owners will receive out of pocket expenses and damages for personal property.
Knauf will pay the attorney's fees. Click here for article; Attorney Gary Mason
discusses legal significance and possible global settlement.
A BANNER DAY FOR DRYWALL VICTIMS
To date, there has been one Chinese drywall case tried in state court. On June 18,
2010, a Miami-Dade County jury awarded the Seifarts the sum of $2.4 million on
Friday, which includes remediation cost, loss of enjoyment, and damages for stigma
or diminished value. During the trial it was revealed that Banner Supply knew the
Chinese drywall was defective in 2006 and had entered into a confidential settlement
agreement with Knauf in early 2007, yet it failed to warn the public. The jury found
Banner Supply 55% liable; Knauf was found 35% liable and the shipper and
distributor 5% each even though they were not parties to the lawsuit.
In July 2011, a preliminary settlement with Banner Supply in the amount of $55
million was announced. Although the Banner settlement alone will not provide
enough money for remediation, this settlement is believed to be only part of the
puzzle which will lead to a global resolution for homeowners. This settlement, if
approved, would apply to all homeowners whose drywall was supplied by Banner
regardless of the brand of drywall in their home. The settlement has been
preliminarily approved. The Court has appointed an allocation committee to divide
the insurance proceeds. A fairness hearing will be conducted later this year.
JUDGE FALLON DENIES CLAIMS UNDER OWNERS' INSURANCE POLICIES
Judge Eldon Fallon ruled that homeowner’s insurance policies do not provide coverage to victims of
Chinese drywall for damage to their home or personal property or additional living expenses.
While Judge Fallon rules that policy exclusions for latent defects and pollution do not apply (which is very
significant in interpreting commercial general liability policies), Fallon went on to hold that Chinese
drywall is a faulty material and, therefore is properly excluded. The corrosion exclusion also applies,
however, if corrosion causes fire, it may be covered. However, a Hillsborough County Judge recently
ruled that Chinese drywall is a covered loss under an "all-risk" homeowner's insurance policy. CLICK
HERE FOR RULING.
Judge Eldon Fallon ruled that homeowner’s insurance policies do not provide coverage to victims of
Chinese drywall for damage to their home or personal property or additional living expenses.
While Judge Fallon rules that policy exclusions for latent defects and pollution do not apply (which is very
significant in interpreting commercial general liability policies), Fallon went on to hold that Chinese
drywall is a faulty material and, therefore is properly excluded. The corrosion exclusion also applies,
however, if corrosion causes fire, it may be covered. However, a Hillsborough County Judge recently
ruled that Chinese drywall is a covered loss under an "all-risk" homeowner's insurance policy. CLICK
HERE FOR RULING.
WHAT IS THE MULTI-DISTRICT LITIGATION (“MDL”)?
MDL is a procedure to consolidate similar cases for the purpose of, among other
things, conserving resources and preventing inconsistent rulings in different courts.
All such cases are assigned to a judge in one federal district court.
In June 2009, all federal lawsuits filed around the country against foreign
manufacturers of Chinese drywall were ordered to be transferred to the United States
District Court for the Eastern District of Louisiana, where Judge Eldon Fallon will
preside over discovery and pre-trial hearings. Click here for current developments.
In addition to suing the foreign manufacturer, claimants (which are primarily
homeowners, but some are commercial property owners) can also name U.S.
builders, installers, suppliers and distributors as defendants in the MDL. Note, some
attorneys are also bringing separate actions in state court.
MDL is a procedure to consolidate similar cases for the purpose of, among other
things, conserving resources and preventing inconsistent rulings in different courts.
All such cases are assigned to a judge in one federal district court.
In June 2009, all federal lawsuits filed around the country against foreign
manufacturers of Chinese drywall were ordered to be transferred to the United States
District Court for the Eastern District of Louisiana, where Judge Eldon Fallon will
preside over discovery and pre-trial hearings. Click here for current developments.
In addition to suing the foreign manufacturer, claimants (which are primarily
homeowners, but some are commercial property owners) can also name U.S.
builders, installers, suppliers and distributors as defendants in the MDL. Note, some
attorneys are also bringing separate actions in state court.
| FREQUENTLY ASKED QUESTIONS The foregoing does not constitute legal advice. Please consult an attorney to discuss your particular case/situation. |
