Wolfe Law Group, a construction law firm with offices in New Orleans, Louisiana and Seattle, Washington, is now offering services to homeowners with defective drywall who are interested in bringing a direct claim against their builder or supplier for recovery.

Recently, we’ve written on this blog about why class action litigation may not be the most direct and beneficial course of action for homeowners with Chinese Drywall.

Homeowners have contract and warranty claims directly against their builders and the builder’s insurer, which may produce tangible recovery much quicker than a prolonged and complex class action proceeding.

Wolfe Law Group is now offering services to homeowners who are interested in presenting these claims against their insurers and/or builders. For more information on this practice area and the associated fees, please click here to visit wolfelaw.com’s page on the same.

A seminar on the Chinese Drywall crisis will be held in New Orleans, Louisiana, this July 31, 2009. The seminar is being billed as “a practical, one-day seminar for attorneys, engineers, architects and contractors,” and will examine a host of topics related to Chinese Drywall claims including:

• The damages and health effects caused by defective drywall;
• The status of Chinese Drywall lawsuits in Louisiana and elsewhere;
• Option of pursuing damages through a class or individual action;
• Proposed Legislative solutions;
• Exploration of liability among manufacturers, builders, suppliers, and others.

Wolfe Law Group’s Scott Wolfe and Douglas Reiser are co-presenting at the seminar’s second segment on the matter of “Exploring the Current Status of Chinese Drywall Claims and Litigation.”

Scott Wolfe is sticking around to the seminar’s third segment where he will co-present with the Berniard Law Firm’s Jeffrey Berniard on the matter of “Exploring Potential Liability for Damages Caused by Chinese Drywall Problems.”

Learning credits are available for participating professionals, including 5.0 approved CLE hours for attorneys in the states of Louisiana, Alabama, Mississippi and Texas.

More information can be found at the Half Moon Seminars website promoting the seminar here or by downloading the brochure here.

As the Chinese Drywall crisis unfolded over the last few months, news reports were abound of class action litigation against large drywall manufacturers, but it appeared that builders were getting a “free pass” on liability.

Unfortunately, but inevitably, it appears the tide is changing.

Recently, the shoe dropped for Lennar Co., who was arguably the most predominate home building company facing Chinese Drywall claims. While Lennar Co. made every attempt to thwart litigation, suit was formally filed against them just last week, and they are now preparing a defense and examining applicable exclusions in their insurance policies.

However, large building outfits like Lennar Co. or South Kendall Construction Corp. are no longer alone as builder-defendants in Chinese Drywall claims.

Here are some examples from across the affected areas.

Flannigan v. Stafford Custom Homes, Inc.

Last week, a news station in North Carolina reported that a couple with Chinese Drywall had filed suit against their local builder: Stafford Custom Homes, Inc.

The plaintiff’s counsel in that case, Joel R. Rhine of Lea Rhine Rosbrugh & Chleborowicz was kind enough to share a copy of that complaint with the Chinese Drywall Blog, and its available to read here.

The complaint asserts the following claims against the homebuilder…and importantly, the homebuilder alone:

• Breach of Contract;
• Breach of Implied Warranties;
• Breach of Express Warranties;
• Negligence;
• Negligent Misrepresentation;
• Unfair and Deceptive Trade Practices

As mentioned, the suit against Stafford Custom Homes, Inc. is between the homeowner and the homebuilder only, and the plaintiffs did not bring suit against the subcontractor installer, the drywall supplier or the drywall manufacturer.

It will be interesting to watch this action progress, and especially to see how Stafford Custom Homes, Inc. defends itself in the case. Likely, a claim will be made against Stafford’s General Liability insurance policy, and an argument will ensue about the applicability of the pollution exclusion clause.

Further, the builder will be well-served to take a page out of the Lennar Co. defense book, and file suit against its supplier, installer and the drywall manufacturer.

The case is in Wake Count, North Carolina, and is captioned Flannigan v. Stafford Custom Homes, Inc., General Court of Justice Superior Court Division, No. 09CV006759.

We’ll monitor this case as it moves forward.

Pronto v. Venture Supply, LLC, et al.

In Virginia, another couple has brought a claim against their contractor individually, as opposed to a class action, suit. While the news report breaking the story doesn’t mention the contractors name, the couple also brought suit against Venture Supply, L.L.C., who is the purported supplier of the drywall.

Like Stafford Custom Homes, Venture Supply, L.L.C. is a self-proclaimed “locally owned” company.

The couple in this suit – Benjamin and Holly Pronto – are seeking more than $600,000 in damages associated with the Chinese Drywall contamination.

The estimate of damages by the Prontos is a haunting wake-up call to builders who have unknown exposure to Chinese Drywall claims.

Builders Mutual Insurance Company v. The Dragas Co.

This is another case out of Virgina, but unique in that here an insurance company has sued its insured.

The insured, The Dragas Co., is a Virginia builder who has installed Chinese Drywall in Virginia homes.

According to the report in The Virginian-Pilot, Dragas’ insurance company has denied coverage for Chinese Drywall damages, and has filed suit in federal court asking a federal judge to declare who is responsible for the drywall damages. Download the Complaint here.

The Chinese Drywall phenomenon continues….and it seems that as each day passes, builders are drawn closer and closer to the crisis.

Last week, we asked whether builders were getting a “free pass” on the Chinese Drywall issue.

However, just a few days later Lennar Co. was named as a party to a class action suit, and this week a local North Carolina construction outfit – Stafford Custom Homes, Inc. – was sued for installing Chinese Drywall.

So how are builders handling Chinese Drywall claims and complaints?

This morning, the Herald Tribune has posted an interesting article on this topic. Comparing Lennar Co.’s Chinese Drywall methodology with other national builders, the article says this:

Within just a few square miles sit four developments with clusters of affected homes, built by at least three different builders: Lennar Corp., Taylor Morrison and WCI Communities.

The East Manatee homeowners who have been touched by tainted wallboard — tied to corrosion of metals and the subject of an investigation by state and federal health officials to determine whether it poses health risks — find themselves caught up in a situation largely beyond their control.

For many, their experiences have been shaped by the behavior of their builders — whose responses have run the gamut from tearing out the bad drywall in Lennar’s case to taking no action at all.

Read full article.

More important than the question of how builders are handling claims, however, may be the question of how they should be handling claims.

Chinese Drywall has been in the news for just a few months, but that is enough time for vendors, home inspectors, contractors, engineers, and – yes – even attorneys to come to the surface and offer drywall-related services.

Home inspectors and engineers can inspect your property and report as to whether your home has Chinese Drywall.

Contractors can repair the Chinese Drywall in your home.

Attorneys can sue your supplier, builders or help you join a class action (or, like us at Wolfe Law Group, provide a defense and representation to builders or suppliers who have installed or supplied Chinese Drywall).

In March 2009, the Palm Beach Post ran an article about one of the first Chinese Drywall related companies, Chinese Drywall Screening, L.L.C. They interviewed its founder, Howard Ehrsam, who had these remarks:

Homeowners read about it and start getting paranoid. There’s more questions than answers on this right now, which is why it’s scary for homeowners.

Ehrsam’s comments ring true even still, as press about Chinese Drywall continues to snowball.

Here at Wolfe Law Group and the Chinese Drywall Blog, we’re inundated by emails and inquiries from either:

1. Homeowners unsure of whether they have Chinese Drywall problems, and if they do, what to do about it; or
2. Contractors or Inspectors who offer their services to our firm in the event any of the outstanding claims proceed to litigation, or if our clients require inspection or contracting services.

Right now, it seems that businesses are lining up to address a market that hasn’t quite figured itself out yet. Homeowners are still trying to make heads or tails of the Chinese Drywall situation, and builders are waiting anxiously to see whether they will be named in lawsuits related to the materials.

We have invited vendors to publish a post here on the Chinese Drywall Blog to answer questions posed by our readers – and mostly, the questions are these: What is causing the drywall problems? How do we determine if the drywall installed is defective? What type of remedy is required?

If you think your company can answer these questions, email me and let’s arrange to have you publish a guest post on our blog.

For those non-vendor readers (including homeowners and builders), a word of caution: We’re in uncharted waters, and those claiming to be “experts” in Chinese Drywall should be examined based on their pre-Chinese Drywall experience.

Since the imported drywall situation is new, barely anyone will have years of experience to flaunt. However, it is safer to go with someone established in the home inspection field or the construction industry rather than a complete new-comer hoping to cash in on drywall claims.

The shoe has dropped for one builder who has been working hard to avoid entanglement in the Chinese Drywall defective drywall class actions. According to reports all over the web, Lennar Co. has been officially named in a Florida class action suit over defective drywall.

The significance of Lennar Co.’s involvement with the class action is fairly great, as it begs the question of what exactly distinguishes it from smaller builders who may have also installed Chinese Drywall in homes. Will these smaller builders soon be named in class actions as well?

It also begs the question of whether class action suits are the answer to homeowner’s woes in the Chinese Drywall crisis. The question has been hinted here, and written about by Donald Brenner at the Construction Litigation Law Blog.

With regard to the class action suit, Lennar Co. said it had “already established reserves for the estimated cost of replacing the drywall” it has confirmed to be defective Chinese product “to the extent such costs are not covered by insurance.”

As the risk and exposure of builders opens up, the role of a company’s GL insurance will be examined. More on this later…

It was really only a matter of time.

The Wall Street Journal’s “China Journal” has translated an article written in Chinese that provides us with some insight into how the U.S.’ Chinese Drywall crisis is playing out in Chinese media.

The verdict? They blame America.

According to the report, China is simply confused (and I’m paraphrasing) that Knauf Plasterboard could supply 75% of the drywall for the Beijing Olympics and over a million tons of drywall to countries around the world in 2006 and 2007, yet only receive complaints from the United States.

Xu Luoyi, the head of the National Building Materials Industrial Technology Supervisory Research Center (real organization) offered this potential explanation:

It’s worth considering why this problem has only emerged in the United States. The U.S. credit crisis has caused the real estate market to collapse, and as a result domestic drywall manufacturers have seen their sales suffer and their product is relatively expensive compared to the Chinese-made drywall, so we should also consider these issues.

Cryptic quote from Xu Luoyi, but the commentary does offer a perplexing thought: Why is the United States the only ones complaining? Is it a climate issue? Is it because we’re more litigious than other countries? Or did we coincidentally get the only contaminated drywall?

It is important to note that the concern from China (and its defensiveness) comes at the heels of 2 U.S. Senators proposing federal legislation to put a hold on certain Chinese imports.

Gulfport’s Sun Herald reports that the first Chinese Drywall class action suit has been filed in the state of Mississippi, formally adding another Gulf Coast state to the Chinese Drywall crisis.

Like the suits in Louisiana and Florida, Knauf Gips and Knauf Tianjin are named as Defendants. The Mississippi suit goes on to name “Taishan and possibly other unknown Chinese manufacturers.”

While builders and local supply-houses are still caught up in litigation, the class actions in LA, MS and FL provide these smaller outfits with cautious optimism as the large-scale class actions suits have not been lodged against all parties in the chain.

As reported by the Wall Street Journal and other news agencies, Louisiana Senator Mary Landrieu has joined Florida Senator Bill Nelson to propose legislation “aimed at initiating a recall and imposing an immediate ban on defective building products from China.” The bill is the latest effort by agencies and legislatures to address problems caused by imported drywall.

The bill – aptly titled the Drywall Safety Act of 2009 – is summarized in a press release from Mary Landrieu’s office as follows:

The centerpiece of their legislation is a resolution pressing the Consumer Product Safety Commission (CPSC) for a recall on Chinese-made drywall, based in part on findings by a Florida homebuilder and state officials who have confirmed the presence of sulfide gases in homes built with the drywall. The Nelson-Landrieu legislation also asks the CPSC to work with federal testing labs and the Environmental Protection Agency to determine the level of hazard posed by certain chemicals and as yet unidentified organic compounds in the drywall. In addition, the legislation calls on the commission to issue an interim ban on imports until it can review federal drywall safety standards to ensure that consumers are protected in the future.

Rather than regurgitate the news, however, we wanted to comment on two things exposed in Sen. Landrieu’s press release.

1. That behind Florida, Louisiana is the second largest recipient of Chinese Drywall. This is a bit of a revealing fact for builders in Louisiana who were a bit unsure of how likely it was that they encountered imported drywall. The press release confirms that “Louisiana has received 60.2 million pounds of imported Chinese drywall, and it may have been used in an estimated 7,000 homes in Louisiana.”
2. That the federal government is not only interested in aiding homeowners, but has builders on its mind as well. Sen. Landrieu’s very quote strikes at the heart of contractors’ concerns, stating “”This defective Chinese drywall represents an attack on our homeowners, a defrauding of our homebuilders and another obstacle on our road to recovery.” While the legislation doesn’t provide any specific relief for homebuilders, the press release seems to consider the homebuilders as victims to the contamination as well, and hope that the bill will “provide clarity to businesses in the construction and homebuilding sectors.”

Good news that homebuilders are not off the federal government’s radar, but cautious news as well – since the primary focus is on the homeowners, and the government is looking for a remedy that doesn’t burden the U.S. taxpayer.

Check out this video from a Florida new-station, who landed an interview with Florida Sen Nelson:

New Orleans’ Fox 8 has been reporting on the Chinese Drywall crisis as it’s appearing in Louisiana. They recently turned the tables on the story, asking not about problems faced by homeowners, but those problems faced by builders, contractors, suppliers and other participants in the construction industry.

This has been a focus of Wolfe Law Group, who recently launched a practice group to advise and represent contractors and suppliers with regard to the Chinese Drywall crisis. Fox’s Nancy Parker interviewed Scott Wolfe, Jr., partner at Wolfe Law Group, with respect to how contractors and suppliers are affected by the Chinese Drywall problem.

The story itself is here. Here is a video from the newscast: