Home Sick: More ways to deal with Chinese drywall

So far, litigation relating to the Chinese drywall allegations has focused on the foreign manufacturers of the drywall--not necessarily the most effective way for homeowners to benefit quickly in order to repair their homes or relocate, lawyer Scott Wolf says in "Drywall Drama" (August 2009).

"Homeowners aren't doing anything wrong necessarily about going after the manufacturers," Wolf says. "But from practical application standards, is the homeowner going to benefit quickly and completely by joining a class action against foreign manufacturers, or would the homeowner benefit by filing against the builder?"

Going after the builder, he says, is more likely to yield quick results and allow homeowners to remove the drywall or relocate. Many homeowners are turning their attention to homebuilders.

In March, Lennar Corp., one of the country's largest homebuilders, was served with its first class action relating the drywall. In a July 10 SEC filing, the company says it is currently dealing with 41 state lawsuits in Florida as well as two federal class actions relating to defective drywall allegations. Lennar also revealed in the filing that it built around 400 homes in Florida using Chinese drywall, mostly in 2006 and 2007.

Despite the lack of science on the drywall, Lennar has taken a proactive approach to dealing with it. In January it launched a program to relocate residents in some Florida homes so the company can replace the drywall and any items the drywall may have damaged. It covers all associated costs. It is also arranging monitoring services for other homes believed to contain the drywall. In the meantime, it continues to pursue the Chinese manufacturer of the drywall, Knauf Plasterboard Tianjin Co. Ltd. of China (a unit of The Knauf Group, based in Germany).

Taking the initiative to replace the drywall is a departure from some homeowners' horror stories of builders ignoring drywall complaints. It's also a smart move from the risk mitigation perspective, an area that Wolf has been mulling over lately.

"If they're living there and the cause of their health problems is their prolonged exposure, then there's going to be an interesting argument that maybe the people who were living in the drywall didn't mitigate their losses by tearing this drywall out or moving out," he says. "At the same time, if the losses continue to get worse, who has the duty to come in and stop and prevent this drywall from continuing to decay this building? Where does liability start and stop because someone doesn't mitigate the losses?"

Associate Editor

Melissa Maleske

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