Archive for the ‘Uncategorized’ Category

January Reorganizations

Tuesday, January 3rd, 2012

January is a time of new beginnings for municipal governments. In the first few weeks most municipalities seat the November winners and make appointments to boards for the coming year. The body also enters into contracts with professionals such as Engineers, Attorneys and other consultants. Long, Marmero will be welcomed as trusted advisor to several new boards and bodies in 2017 while continuing to serve our current clients. We look forward to helping our officials find new and innovative ways to improve their communities.

More Claims from Chinese Drywall

Tuesday, April 27th, 2010

Just When You Thought It Was Safe To Close Out Those Claims: The 2004-2005 Hurricanes and the Chinese Drywall Dilemma

First-party insurance professionals should brace themselves for a possible influx of fresh claims related to Hurricanes Charley, Frances, Ivan, Jeanne, Katrina, Rita, and Wilma, among other wind events from the unprecedented 2004-2005 storm seasons. The reason—an alleged mysterious, shadowy danger lurking in the walls of newly constructed or repaired homes–“Chinese Drywall.”
Chinese Drywall is the term commonly used for gypsum drywall which was manufactured in China for use in American homes. Large amounts of Chinese Drywall were imported into this country due to a shortage stemming from the housing boom and demand for construction materials used for hurricane-related repairs from the 2004 and 2005 storm seasons.
The federal government is conducting an investigation to quantify the amount of Chinese Drywall that came into this country. However, according to Associated Press writer Cain Burdeau, some 500 million pounds of Chinese Drywall entered the U.S. marketplace around the time Hurricane Katrina struck Louisiana. It purportedly contained sulfur and a coal byproduct called fly ash.
It is estimated that Chinese Drywall may have been used in more than 100,000 homes, including those that were rebuilt as a result of Hurricane Katrina. In certain instances, structures were built with Chinese Drywall alone. In others, Chinese Drywall was mixed with domestic drywall, which may drive the number of impacted homes higher.
Recently, allegations of product defects in Chinese Drywall have wreaked mayhem in those areas which were directly impacted by the aforementioned hurricanes, and this may lead to a resurgence of new insurance claims.
Exactly what is the scope of the problem? A Florida Department of Health study found that Chinese Drywall emits “volatile sulfur compounds” and contains traces of strontium sulfide. It has been alleged that Chinese Drywall causes a chemical reaction that releases a stench, similar to rotten eggs, and corrodes metal. Ultimately, it could cause damage to the structure itself, appliances, attachments, and personal property. In certain situations, the entire property may be condemned, requiring it to be torn down. Perhaps most significantly are the potential health-related effects to the individuals who have been living in homes containing Chinese Drywall.
Indeed, the issue of Chinese Drywall and its possible implications on public health has caused a number of states to investigate the problem.
The Louisiana state health department has received complaints from at least 350 people regarding the Chinese Drywall issue. In April 2009, Governor Charlie Crist of Florida wrote to the heads of the Environmental Protection Agency and the Centers for Disease Control and Prevention seeking assistance from these agencies to assess human health exposures. In this letter, the Governor also advised that reports from other states such as Louisiana, Virginia, and North Carolina have shown that this issue constitutes a multi-state concern.
So what does this all mean for the claims professional who thought the 2004-2005 storm season was a thing of the past? The proverbial bottom-line is this: A boomerang of claims related to the storms of 2004 and 2005 should be anticipated if the property in question was rebuilt or repaired with Chinese Drywall.

Lawsuits Involving Alleged Defective Drywall.
Professionals in the first-party property insurance business should take note of the litigation involving Chinese Drywall that have hit the courts thus far.
The case of Vickers et al. v. Knauf Gips KG, et al., one of two class action lawsuits involving Chinese Drywall filed in March 2009 in Florida district court, was brought by a group of plaintiffs/homeowners against parties involved in the manufacture, distribution, and sale of this product, as well as homebuilders.
The Vickers lawsuit did not name a first-party property insurer as one of the defendants. Still, an analysis of the allegations made by the Vickers plaintiffs is informative and enlightening for purposes of evaluating whether or not these claims might be covered under a homeowners policy as well as contemplating what the anticipated scope of losses an insured might seek if and when filing a claim against the carrier.
The Vickers plaintiffs assert that the drywall in question contains latent defects and “is inherently defective because it emits various sulfide gases and/or other chemicals through ‘off-gassing’ that causes property damage and potential health hazards.” This, in turn, “causes corrosion…of air-conditioner and refrigerator coils, microwaves, faucets, utensils, copper tubing, electrical wiring, computer wiring, personal property, electronic appliances, and other metal surfaces and household items.” According to the Vickers plaintiffs, repairs are not an option, as they allege that “there is no repair that will correct the defect.”
The other class-action lawsuit, Riesz, et al. v. Knauf Plasterboard, et al., further describes the cause and effect of the damages. According to that Class-Action Complaint, Chinese Drywall “…is defective in that it emits levels of sulfur, methane, and/or other compounds that causes corrosion of air-conditioner and refrigerator coils, copper tubing, electrical wiring, and other materials, as well as creating noxious, foul-smelling odors that can be harmful to humans and pets.”

Published by Kathleen M. Bonczyk, Esq. – Long, Marmero & Associates.