The Duty to Mitigate Damages…and Chinese Drywall
Across the county, each state has some type of statute or jurisprudential rule stating that every party to a dispute is burdened with the duty to “mitigate its losses.” In addition to the legal requirements, this duty shows up contractually as well, and most famously in insurance contracts.
Here is what the Louisiana Civil Code says about mitigation in article 2002:
An obligee must make reasonable efforts to mitigate the damage caused by the obligor’s failure to perform. When an obligee fails to make these efforts, the obligor may demand that the damages be accordingly reduced.
Earlier this week, we discussed whether builders were getting a “free pass” on the Chinese Drywall defect claims since most affected homeowners have thus far sought remedies through class-action litigation. In essence, we were alluding to a question clearly posed by Donald Brenner at the Construction Litigation Law Blog: How does a class action suit help me get the defective material out of my home?
Insofar as the Duty to Mitigate is concerned, how builders, suppliers and homeowners act now is important to how they will remedy this situation.
Sooner or later, insurance companies are going to get involved with these claims, and individual actions are going to be filed against builders and suppliers. When this happens, there will be questions of whether each party has fulfilled their duty to mitigate.
Here are some example issues:
• If the imported drywall causes health problems, and a builder / supplier knows it installed the drywall in certain homes. Do they have a duty to notify the homeowner of the danger, to avoid the homeowner from getting sick or sicker?
• If defective drywall has ruined approximately 10% of electrical wiring and 25% of the building studs as of today, who is liable for additional damage if the drywall stays in the home is allowed to continue damaging building elements? In 2 years, if 75% of electrical wiring and 75% of building studs are ruined, is it the homeowners fault for not fixing the drywall problem when it arose?
• Under the same scenario, will a homeowner be responsible for increased damage if they fail to report the problem to their builder to allow the builder to fix it at that time?
Contact A Construction Litigator
As Mr. Brenner discusses on the Construction Litigation Law Blog, class action suits may not help homeowners for years….or ever. The simple phone call to a class-action attorney puts your name on their list, but those class action attorneys will not work to get your home repaired in the immediate future…and its likely that they will not help you take precautions as per your duty to mitigate.
Homeowners and condominium associations, contact your builder and exercise your rights under warranty and redhibitation laws while you still have time.
Builders and contractors, investigate your duties under warranty and defective construction laws, contact your insurer, and consider making claims against your suppliers and installers.
All in all, contact an experienced construction litigation attorney to get advice on how to deal with this volatile issue.
8 users responded in this post
You mention studs being damaged – this is the first that I have read of damage to the structure. I’m aware of electrical damage and it has been suggested that our house needs to be taken to frame. Can you point me to information about the potential stud damage? We are working with an attorney and have filed a single suit against our builder. Any information would be helpful!
Thanks for stopping by and commenting. It’s interesting that you have filed an individual suit against your builder related to Chinese Drywall, as those are few and far between so far. Would you mind sharing where the suit was filed?
As far the imported drywall causing problems to the building studs, I don’t remember exactly where we read that. However, I don’t think the damage is caused directly to the studs (meaning, I don’t think it actually causes the studs to degenerate). However, the “damage” still exists because some are recommending that all studs get replaced when curing a property of Chinese Drywall.
See an AP report here that mentions this: http://www.rgj.com/article/20090411/NEWS12/90411013. I found this by Google’ing the phrase: “chinese drywall damage to building studs.”
The best thing to do on this point is rely on your experts. Good luck – and if you are comfortable sharing a little bit about your suit, please post it here or email me directly at scott@wolfelaw.com. I’d like to speak to your attorney about the suit and write a post here about it.
Thanks!
[...] However, is the class action attorney sending certified letters to the builders under the New Home Warranty Act? Is the class action attorney asserting a claim under a tort or contract theory against the builder / installer? Are they mitigating their damages? [...]
I think drywall will cause health problems.
No doubt the Chinese drywall (CDW) is the cause of health effects. The CPSC has documented this quite clearly in their recent Incident Investigation reports. The same types of health effects are being reported independently by many affected occupants in affected structures with CDW that I have inspected.
Also, I have seen “nail pops” and apparent sagging of CDW panels in some affected structures. The CDW may be the cause of the nail pops that I’ve seen. I am not an expert in Construction, but if such an association were established, would it be covered under the structural in Builder’s warranty?
Hey. I have chinese drywall in a 3 unit apt. building and have notified the tenants. I have also spoke to an attorney who wants 40% plus expenses to represent me. As a contractor I am fully capable of removing and replacing the drywall pursuant to Judge Fallon’s just issued pretrial order No.1(B) and really don’t care to share anything with any attorney. As a member of the class action how do I add my name without legal representation? Thanks.
Thanks for your comment on the blog. Unfortunately, I’m unable to provide you with legal advice…without representation. Good luck.
[...] Mitigate Your Damages. We have mentioned this on the Chinese Drywall Blog time and again. The duty for those involved with litigation and disputes to mitigate its damages may play an [...]
