At least one Chinese drywall maker that produced tainted gypsum board burdening U.S. homeowners with health issues and property problems has signaled its willingness to settle claims with American builders.
The material was brought in from China to replenish a shortage of domestic product during the housing boom. Now, however, homeowners are complaining that imports from Knauf Plasterboard Tianjin Co. Ltd. and other Chinese manufacturers has led to corrosion of metals, caused air conditioners and other appliances to fail, and produced a sulfurous odor as well as triggered human reactions including headaches and itchy skin.
More than 3,000 reports of defective drywall have been submitted in 37 states. The U.S. Consumer Product Safety Commission and the U.S. Department of Housing and Urban Development have advised homeowners to remove any offending material and replace electrical components and wiring that may have become corroded.
KPT just this week settled with one Louisiana homeowner for $164,000, and a court judgment earlier in April awarded seven families in Virginia $2.6 million – more than $385,000 each – against a different Chinese drywall firm. The settlement costs are considered low based on what actual remediation costs are believed to be.
"It would certainly be in the interest of some builders to accept less, because they get the money up front," said Tulane University law professor Edward Sherman. "A global settlement may be coming, but it may be many years off."
Source: Wall Street Journal, Dawn Wotapka, M.P. McQueen (4/28/10)
Source: INFORMATION, INC. Bethesda, MD
Friday, April 30, 2010
House passes legislation allowing Fla. property insurers to raise rates
The Florida House passed a broad measure Wednesday to strengthen the state's property insurance market by raising rates and lowering insurers' claims costs.
The bill, SB 2044, cleared the Florida Senate last week but the House made a minor change, so it must go back to the Senate. If the Senate makes additional changes, it then goes back to the House; if it's approved unchanged, it goes to Gov. Charlie Crist for his signature or veto.
Crist, who is running for U.S. Senate, previously said he doesn't support anything that would raise rates for consumers, but he has not weighed in on this particular bill, which the House passed by a 72-to-44 margin.
Consumer advocates oppose the parts of the bill that allow insurers to raise rates with less state oversight, noting regulators already approve many rate increases. Since last year, the Office of Insurance Regulation has approved about 100 statewide residential property insurance rate increases ranging from 0.2 percent to 27.9 percent, and it has rejected about 15 ranging from 0.7 percent 14.9 percent.
Proponents of the bill say it would help insurers that lost money in recent years and as they struggle to keep up with claims costs. Several national insurers have scaled back from Florida and a few smaller insurers folded last year.
Some insurance company officials say the rate provisions of the bill are less critical than other parts to reduce claims costs, which they say have increased in recent years despite four years without hurricanes.
The provisions affecting rates would allow insurers to:
Raise premiums up to 10 percent without full regulatory scrutiny. This would be folded into a law passed last year that already allows an increase of 10 percent or less for certain reinsurance costs.
Raise rates if the companies provided too high of a discount to homeowners for fortifying their homes.
Pass on to customers the cost of recruiting policyholders, including advertising and agent commission costs, without interference from regulators. In rejecting State Farm's request for a 47 percent or 67 percent rate increase in 2009, state regulators said, in part, that the company spent more than needed for agent commissions, marketing and advertising if it wasn't accepting new property insurance customers in Florida.
Some lawmakers say the bill could harm consumers. "It's not right to hit Floridians again and again in the pocket," said Rep. Julio Robaina, R-Miami.
But Locke Burt, president of Security First Insurance in Ormond Beach, said: "Rates are going to go up no matter what the Legislature does. … The only thing the Legislature can do is slow the rate of increase by addressing the cost. If you don't address those issues, rates are going to go up faster."
That's the intent of new restrictions in the bill for public insurance adjusters hired by policyholders during claims disputes with their insurers, and a requirement for homeowners to file a windstorm claim within three years after a hurricane. It's also the goal of a provision to allow insurers to withhold part of a claim until policyholders have a contract to make repairs.
Insurers say the changes, which would address rising costs for non-catastrophe and sinkhole claims, are critical to keeping some insurers afloat.
"Billions of dollars are paid out every year for reopened claims that happened five years ago," says Rep. Janet Long, D-Seminole. "We are all paying for that. … If we can get a handle on this, then we can make our rates better."
Floridians pay fees on their insurance policies to offset deficits in state insurance programs.
Gwyn Clarke-Reed, D-Deerfield Beach, says the bill could cause problems for people like her, who had to wait four years to get paid by state-backed Citizens Property Insurance for a hurricane claim. "I was looking to get a public adjuster because I wasn't getting anywhere," she says.
Consumer advocates and regulators back some provisions of the bill. For instance, the bill requires insurers and policyholders to provide any documents used to estimate damage costs if using the state's mediation program. The program is a non-binding process to help resolve claims disputes before they go to court. The bill also would require new insurers to have $12 million to $15 million in claims-paying reserves, and require insurers to file detailed financial information about affiliates they hire for certain products and services.
Regulators have raised questions in recent months about insurers that reported losses last year but sent some money to their affiliates.
Source: Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla., Julie Patel. Distributed by McClatchy-Tribune Information Services.
The bill, SB 2044, cleared the Florida Senate last week but the House made a minor change, so it must go back to the Senate. If the Senate makes additional changes, it then goes back to the House; if it's approved unchanged, it goes to Gov. Charlie Crist for his signature or veto.
Crist, who is running for U.S. Senate, previously said he doesn't support anything that would raise rates for consumers, but he has not weighed in on this particular bill, which the House passed by a 72-to-44 margin.
Consumer advocates oppose the parts of the bill that allow insurers to raise rates with less state oversight, noting regulators already approve many rate increases. Since last year, the Office of Insurance Regulation has approved about 100 statewide residential property insurance rate increases ranging from 0.2 percent to 27.9 percent, and it has rejected about 15 ranging from 0.7 percent 14.9 percent.
Proponents of the bill say it would help insurers that lost money in recent years and as they struggle to keep up with claims costs. Several national insurers have scaled back from Florida and a few smaller insurers folded last year.
Some insurance company officials say the rate provisions of the bill are less critical than other parts to reduce claims costs, which they say have increased in recent years despite four years without hurricanes.
The provisions affecting rates would allow insurers to:
Raise premiums up to 10 percent without full regulatory scrutiny. This would be folded into a law passed last year that already allows an increase of 10 percent or less for certain reinsurance costs.
Raise rates if the companies provided too high of a discount to homeowners for fortifying their homes.
Pass on to customers the cost of recruiting policyholders, including advertising and agent commission costs, without interference from regulators. In rejecting State Farm's request for a 47 percent or 67 percent rate increase in 2009, state regulators said, in part, that the company spent more than needed for agent commissions, marketing and advertising if it wasn't accepting new property insurance customers in Florida.
Some lawmakers say the bill could harm consumers. "It's not right to hit Floridians again and again in the pocket," said Rep. Julio Robaina, R-Miami.
But Locke Burt, president of Security First Insurance in Ormond Beach, said: "Rates are going to go up no matter what the Legislature does. … The only thing the Legislature can do is slow the rate of increase by addressing the cost. If you don't address those issues, rates are going to go up faster."
That's the intent of new restrictions in the bill for public insurance adjusters hired by policyholders during claims disputes with their insurers, and a requirement for homeowners to file a windstorm claim within three years after a hurricane. It's also the goal of a provision to allow insurers to withhold part of a claim until policyholders have a contract to make repairs.
Insurers say the changes, which would address rising costs for non-catastrophe and sinkhole claims, are critical to keeping some insurers afloat.
"Billions of dollars are paid out every year for reopened claims that happened five years ago," says Rep. Janet Long, D-Seminole. "We are all paying for that. … If we can get a handle on this, then we can make our rates better."
Floridians pay fees on their insurance policies to offset deficits in state insurance programs.
Gwyn Clarke-Reed, D-Deerfield Beach, says the bill could cause problems for people like her, who had to wait four years to get paid by state-backed Citizens Property Insurance for a hurricane claim. "I was looking to get a public adjuster because I wasn't getting anywhere," she says.
Consumer advocates and regulators back some provisions of the bill. For instance, the bill requires insurers and policyholders to provide any documents used to estimate damage costs if using the state's mediation program. The program is a non-binding process to help resolve claims disputes before they go to court. The bill also would require new insurers to have $12 million to $15 million in claims-paying reserves, and require insurers to file detailed financial information about affiliates they hire for certain products and services.
Regulators have raised questions in recent months about insurers that reported losses last year but sent some money to their affiliates.
Source: Copyright © 2010 Sun Sentinel, Fort Lauderdale, Fla., Julie Patel. Distributed by McClatchy-Tribune Information Services.
Condo bill moves to the governor’s desk
A measure to provide condominium owners economic relief is now headed to the governor's desk. SB 1196, which passed the Florida House yesterday, was identical to a House proposal by Rep. Ellyn Bogdanoff (R-Fort Lauderdale), Rep. Matt Hudson (R-Naples) and Rep. Maria Lorts Sachs (D-Delray Beach) that passed earlier.
The bill makes a number of changes to Florida's condominium laws in line. The bill unanimously passed the Senate on April 16. It now goes to Gov. Crist for approval. If signed, it becomes effective July 1, 2010.
"We recognize that the current economic climate is very challenging for condo owners," says Hudson. "This bill proposes comprehensive reforms to provide relief to unit owners from certain burdensome regulations and expenses that cause them undue hardship at a time when many are struggling to stretch their dollars."
Some provisions of SB 1196:
Elevators and Fire Alarms: Permits a condo association, upon a majority vote of membership, to exempt the community from a requirement to retrofit elevators so that they will operate when the building loses power. The legislation also exempts one- and three-story buildings with exterior walkways from retrofit requirements for manual fire alarms.
Delinquencies: Allows an association to collect delinquent assessments directly from tenants when the unit owner/landlord is delinquent.
Condominium Insurance: Repeals a requirement that condo owners purchase individual unit owner insurance.
Rental Units – Assessment Delinquencies: Provides new statutory procedures that allow an association to collect delinquent financial obligations directly from rental payments if a tenant is occupying the unit.
Assessment Delinquencies – Suspension of Use Rights: Permits the association to suspend use rights to common areas if an owner is more than 90 days delinquent in a financial obligation due the association. It also provides for due process procedures when the association imposes a suspension, fine or other penalty.
Distressed Communities – Bulk Buyer: Provides for the modified regulation of a purchaser of condominium units in "bulk" in cases of financial distress or pending bankruptcy. It also provides regulations for the protection of existing unit owners.
Assessment Responsibility: Increases the responsibility of a mortgagee for delinquent assessments from 6 months to 12 months or 1 percent of the original mortgage balance, whichever is less.
Fire Sprinklers: Extends the deadline for retrofitting fire sprinklers from 2014 to 2019, and it eliminates the restriction on unit owners to waive the retrofit requirement. It also provides that building permits for the retrofit must be applied for by Dec. 31, 2016, if the community does not vote for the exemption.
Source: © 2010 Florida Realtors®
The bill makes a number of changes to Florida's condominium laws in line. The bill unanimously passed the Senate on April 16. It now goes to Gov. Crist for approval. If signed, it becomes effective July 1, 2010.
"We recognize that the current economic climate is very challenging for condo owners," says Hudson. "This bill proposes comprehensive reforms to provide relief to unit owners from certain burdensome regulations and expenses that cause them undue hardship at a time when many are struggling to stretch their dollars."
Some provisions of SB 1196:
Elevators and Fire Alarms: Permits a condo association, upon a majority vote of membership, to exempt the community from a requirement to retrofit elevators so that they will operate when the building loses power. The legislation also exempts one- and three-story buildings with exterior walkways from retrofit requirements for manual fire alarms.
Delinquencies: Allows an association to collect delinquent assessments directly from tenants when the unit owner/landlord is delinquent.
Condominium Insurance: Repeals a requirement that condo owners purchase individual unit owner insurance.
Rental Units – Assessment Delinquencies: Provides new statutory procedures that allow an association to collect delinquent financial obligations directly from rental payments if a tenant is occupying the unit.
Assessment Delinquencies – Suspension of Use Rights: Permits the association to suspend use rights to common areas if an owner is more than 90 days delinquent in a financial obligation due the association. It also provides for due process procedures when the association imposes a suspension, fine or other penalty.
Distressed Communities – Bulk Buyer: Provides for the modified regulation of a purchaser of condominium units in "bulk" in cases of financial distress or pending bankruptcy. It also provides regulations for the protection of existing unit owners.
Assessment Responsibility: Increases the responsibility of a mortgagee for delinquent assessments from 6 months to 12 months or 1 percent of the original mortgage balance, whichever is less.
Fire Sprinklers: Extends the deadline for retrofitting fire sprinklers from 2014 to 2019, and it eliminates the restriction on unit owners to waive the retrofit requirement. It also provides that building permits for the retrofit must be applied for by Dec. 31, 2016, if the community does not vote for the exemption.
Source: © 2010 Florida Realtors®
Thursday, April 22, 2010
Bennett: insurance de-regulation bill dead
A skeptical governor and a rapidly shifting political landscape appears to be the death knell for a measure that would allow property insurers to raise rates without regulatory approval.
Sen. Mike Bennett (R-Bradenton), the sponsor of SB 876, said he’s throwing in the towel on the measure in the face of opposition from Gov. Charlie Crist, who vetoed a similar measure last year, and Insurance Commissioner Kevin McCarty, who has opposed the idea.
The measure would have allowed insurance companies to raise individual rates up to 20 percent a year without Florida Office of Insurance Regulation approval, providing their average statewide increase was no higher than 10 percent. The companion House measure, HB 447, was scheduled for a floor vote Wednesday but it was postponed.
Sen. J.D. Alexander (R-Lake Wales), a supporter of the measure, said the votes aren’t there to override a veto and prolonged debate would be a waste of time.
“It doesn’t make any sense to spend time debating something the governor has come to a committee hearing to oppose,” Alexander said.
Bennett’s measure is among a handful of industry-backed property insurance bills traveling through the Legislature. Another Senate bill, SB 2044, may still see the light of day. The measure does not contain the rate increase provision, but it does allow insurers to withhold a portion of a claims payment until repairs are started or replacements are purchased. It also reduces the time policyholders have to file claims after a storm.
“If any insurance bills come out of the session this year, I think (SB 2044) will be it,” Bennett said. “I just don’t see it happening otherwise.”
Political considerations may also play into the decision. With Crist considering a run for the Senate as an independent candidate, he could use a veto against his Republican opponent by noting that he alone saved Florida homeowners money on their property insurance rates. The governor has already vetoed party-backed legislation this session, and Republican lawmakers may not want to give Crist another chance to do it again, especially if Crist could use the veto as ammunition against a Republican candidate.
“Why would you vote for an insurance increase when they know the governor will veto it?” said Rep. Ron Saunders, R-Key West. “All along he’s been saying ‘make my day.’ They’ve already helped him enough (with two recently vetoed bills on teacher tenure and leadership funds). They don’t want to help him anymore.”
Source: News Service of Florida, Michael Peltier
Sen. Mike Bennett (R-Bradenton), the sponsor of SB 876, said he’s throwing in the towel on the measure in the face of opposition from Gov. Charlie Crist, who vetoed a similar measure last year, and Insurance Commissioner Kevin McCarty, who has opposed the idea.
The measure would have allowed insurance companies to raise individual rates up to 20 percent a year without Florida Office of Insurance Regulation approval, providing their average statewide increase was no higher than 10 percent. The companion House measure, HB 447, was scheduled for a floor vote Wednesday but it was postponed.
Sen. J.D. Alexander (R-Lake Wales), a supporter of the measure, said the votes aren’t there to override a veto and prolonged debate would be a waste of time.
“It doesn’t make any sense to spend time debating something the governor has come to a committee hearing to oppose,” Alexander said.
Bennett’s measure is among a handful of industry-backed property insurance bills traveling through the Legislature. Another Senate bill, SB 2044, may still see the light of day. The measure does not contain the rate increase provision, but it does allow insurers to withhold a portion of a claims payment until repairs are started or replacements are purchased. It also reduces the time policyholders have to file claims after a storm.
“If any insurance bills come out of the session this year, I think (SB 2044) will be it,” Bennett said. “I just don’t see it happening otherwise.”
Political considerations may also play into the decision. With Crist considering a run for the Senate as an independent candidate, he could use a veto against his Republican opponent by noting that he alone saved Florida homeowners money on their property insurance rates. The governor has already vetoed party-backed legislation this session, and Republican lawmakers may not want to give Crist another chance to do it again, especially if Crist could use the veto as ammunition against a Republican candidate.
“Why would you vote for an insurance increase when they know the governor will veto it?” said Rep. Ron Saunders, R-Key West. “All along he’s been saying ‘make my day.’ They’ve already helped him enough (with two recently vetoed bills on teacher tenure and leadership funds). They don’t want to help him anymore.”
Source: News Service of Florida, Michael Peltier
Monday, April 19, 2010
Senators seek drywall relief for affected homeowners in Florida
Three U.S. Senators have sent letters to Fannie Mae and Freddie Mac asking the home funding providers to offer six months of relief on mortgage payments to its Florida homeowners whose homes were built with defective Chinese drywall.
The requests from Sens. George LeMieux, R-Fla., Bill Nelson, D-Fla., and Mary Landrieu, D-La., are in response to an announcement last week that Fannie Mae was offering six-month forbearances to about 20 Virginia families whose homes contain the tainted wallboard. Those forbearances would not be recorded as a flaw on the homeowners’ credit report, Fannie Mae said. In addition, the company said it would work to “develop a nationwide approach to addressing this issue.”
“I applaud your commitment to working with homeowners in Virginia and hope that the same relief will be extended to Floridians,” LeMieux wrote to Fannie Mae president and chief executive Michael J. Williams in a letter dated Wednesday.
“A six-month grace period can help folks struggling to keep their heads above water,” Nelson and Landrieu wrote in a separate letter addressed to Williams and to Charles E. Haldeman, chief executive of Freddie Mac.
Many homeowners whose homes contain defective drywall say that they would like to move out of their affected homes, but cannot afford their mortgage payments as well as rent on another place. Some have moved out and stopped making mortgage payments, while others are struggling to make both payments.
The lead U.S. federal agency investigating the issue has received 3,082 complaints from residents in 37 states, the District of Columbia, American Samoa, and Puerto Rico. The majority of those reports have come from Florida.
Source: Copyright © 2010 The Palm Beach Post, Fla. Distributed by McClatchy-Tribune Information Services.
The requests from Sens. George LeMieux, R-Fla., Bill Nelson, D-Fla., and Mary Landrieu, D-La., are in response to an announcement last week that Fannie Mae was offering six-month forbearances to about 20 Virginia families whose homes contain the tainted wallboard. Those forbearances would not be recorded as a flaw on the homeowners’ credit report, Fannie Mae said. In addition, the company said it would work to “develop a nationwide approach to addressing this issue.”
“I applaud your commitment to working with homeowners in Virginia and hope that the same relief will be extended to Floridians,” LeMieux wrote to Fannie Mae president and chief executive Michael J. Williams in a letter dated Wednesday.
“A six-month grace period can help folks struggling to keep their heads above water,” Nelson and Landrieu wrote in a separate letter addressed to Williams and to Charles E. Haldeman, chief executive of Freddie Mac.
Many homeowners whose homes contain defective drywall say that they would like to move out of their affected homes, but cannot afford their mortgage payments as well as rent on another place. Some have moved out and stopped making mortgage payments, while others are struggling to make both payments.
The lead U.S. federal agency investigating the issue has received 3,082 complaints from residents in 37 states, the District of Columbia, American Samoa, and Puerto Rico. The majority of those reports have come from Florida.
Source: Copyright © 2010 The Palm Beach Post, Fla. Distributed by McClatchy-Tribune Information Services.
Wednesday, April 14, 2010
Citizens: in “best financial position” ever
State-backed property insurer Citizens Property Insurance Corp. told the governor and Cabinet Tuesday that it’s flush with cash and other assets. The company said it can weather a 25-year storm, and it wouldn’t have to levy assessments on all insurance-owning Floridians unless a $14 billion storm hit the state.
Responding to a query from Agriculture Commissioner Charlie Bronson, Sharon Binnum, Citizens’ chief financial officer, said market improvements and uneventful hurricane seasons mean the state’s largest property insurer is well-positioned to handle all but the most catastrophic storms through the upcoming hurricane season that begins June. 1.
“Citizens is in the best financial position it has ever been,” Binnum told Cabinet members. Minimal storms could be handled without imposing surcharges or assessments; more catastrophic storms, in turn, could be handled with emergency assessments and not additional long-term debt.
Citizens now enjoys a $3.9 billion surplus in its premium-to-obligations, and has $11 billion in cash and investments. The insurer recently obtained $2.3 billion in pre-season hurricane financing. Citizens now insures $405 billion in property value, or about 23 percent of the residential market.
“If we don’t have Citizens, I don’t know how our economy could continue,” said Belinda Miller, state deputy insurance commissioner.
Insurance policyholders have already paid more than $5 billion in assessments to pay for damage caused by hurricanes in the 2004 and 2005 hurricane seasons.
Sam Miller, vice president of the Florida Insurance Council, said the situation was not all rosy. The agency would still fall short in the event of a 50- or 100-year storm. “They acknowledged that in the event of a severe hurricane, the federal government will have to step in,” Miller said.
One reason things are improving for Citizens, Miller said, is because lawmakers ended a cap last year that kept Citizens’ premiums frozen for several years following the busy ‘04-‘05 seasons when many residents’ rates increased drastically.
Source: News Service of Florida, Michael Peltier
Responding to a query from Agriculture Commissioner Charlie Bronson, Sharon Binnum, Citizens’ chief financial officer, said market improvements and uneventful hurricane seasons mean the state’s largest property insurer is well-positioned to handle all but the most catastrophic storms through the upcoming hurricane season that begins June. 1.
“Citizens is in the best financial position it has ever been,” Binnum told Cabinet members. Minimal storms could be handled without imposing surcharges or assessments; more catastrophic storms, in turn, could be handled with emergency assessments and not additional long-term debt.
Citizens now enjoys a $3.9 billion surplus in its premium-to-obligations, and has $11 billion in cash and investments. The insurer recently obtained $2.3 billion in pre-season hurricane financing. Citizens now insures $405 billion in property value, or about 23 percent of the residential market.
“If we don’t have Citizens, I don’t know how our economy could continue,” said Belinda Miller, state deputy insurance commissioner.
Insurance policyholders have already paid more than $5 billion in assessments to pay for damage caused by hurricanes in the 2004 and 2005 hurricane seasons.
Sam Miller, vice president of the Florida Insurance Council, said the situation was not all rosy. The agency would still fall short in the event of a 50- or 100-year storm. “They acknowledged that in the event of a severe hurricane, the federal government will have to step in,” Miller said.
One reason things are improving for Citizens, Miller said, is because lawmakers ended a cap last year that kept Citizens’ premiums frozen for several years following the busy ‘04-‘05 seasons when many residents’ rates increased drastically.
Source: News Service of Florida, Michael Peltier
Friday, April 9, 2010
Judge awards families $2.6M over Chinese drywall
A federal judge on Thursday awarded seven Virginia families $2.6 million in damages for homes ruined by sulfur-emitting drywall made in China, a decision that could affect how lawsuits by thousands of other U.S. homeowners are settled.
It remains to be seen how the plaintiffs can collect from Chinese companies that do not have to respond to U.S courts, although some have talked about getting orders to seize U.S.-bound ships and cargoes from the drywall companies.
Thousands of homeowners, mostly in Florida, Virginia, Mississippi, Alabama and Louisiana, have reported problems with the drywall, which was imported in large quantities during the housing boom and after a string of Gulf Coast hurricanes.
The drywall has been linked to corrosion of wiring, air conditioning units, computers, doorknobs and jewelry, along with possible health effects.
U.S. District Judge Eldon Fallon ruled Thursday that the drywall needs to be removed and the plaintiffs’ homes need to be gutted because of the ruinous effects of corrosion. He said all electrical wiring, the heating and air conditioning system, appliances, carpet, cabinetry, trim work and flooring damaged by corrosion would have to be removed.
Fallon’s decision was the first in a series of federal lawsuits brought against manufacturers, distributors, suppliers and homebuilders by thousands of homeowners, all of them claims that Fallon is presiding over. Separately, thousands of plaintiffs are pursuing claims in state courts.
Thursday’s ruling could set the standard for what needs to be done to make a tainted home fit for living in. Fallon’s guidelines went further than those put out by the Consumer Protection Safety Commission earlier this month. The CPSC called for removing the tainted drywall, electrical wiring, fire alarm systems and gas pipes.
“We got everything we asked for,” said Richard Serpe, an attorney for the Virginia plaintiffs. “This becomes a roadmap for any court that is going to consider how the litigation should go from here.”
Fallon’s ruling covered only property damage and did not look at possible health effects. The first cases with medical claims won’t be considered by the court until late 2010 or early 2011.
It was far from certain who would pay for the damages. Civil judgments in U.S. courts aren’t enforced in China. Plaintiffs are suing American drywall suppliers, distributors and homebuilders, too.
Phillip A. Wittmann, a New Orleans lawyer representing homebuilders and drywall installers, said homebuilders have been proactive and gutted tainted homes they built.
“The homebuilders are really the only class of defendants doing anything for the homeowners,” Wittmann said.
In this case, the plaintiffs sued Chinese drywall manufacturer Taishan Gypsum Co., which hasn’t responded to lawsuits and did not have a lawyer representing it at the February trial.
Plaintiffs’ lawyers have said they would try to seize the company’s U.S.-bound vessels and shipments if the company continues to ignore the litigation.
So far, only one Chinese manufacturer – Knauf Plasterboard Tianjin Co. – has responded to U.S. suits. A separate trial was held last month against Knauf. Fallon has not ruled in that case. Also, homebuilders are suing Knauf Plasterboard and Knauf Gips KG, a German company, for damages, Wittmann said.
In a statement, Knauf Plasterboard said Fallon’s findings in the Virginia case were “distinct from the cases against KPT.” The company said it would work with federal and state regulators and others “in evaluating the concerns about drywall manufactured in China.”
Fallon said that Chinese drywall “has a significantly higher average concentration of strontium and significantly more detectable levels of elemental sulfur” than U.S.-made drywall. He added that the “level of corrosive sulfur gases emitted by Chinese drywall ... exceed the safe level established by recognized standards, peer reviewed literature.”
The Taishan drywall was not tested under American engineering standards and Venture Supply Inc., the Norfolk, Virginia-based buyer, “relied on a representation that Chinese testing was equivalent to the U.S. testing standards,” the ruling said.
The ruling noted that Chinese tests were done by a Chinese government agency and not by an independent testing laboratory. The Chinese government agency issued “certificates of quality” based on a protocol that “predates the production of the drywall shipped to the United States by at least two years,” the ruling said.
Taishan and the owners of Venture Supply Inc. could not be reached for comment. A telephone number listed on Venture’s Web site was disconnected.
“The sulfur gases released by Chinese drywall cause offending odors in homes, making them hard if not impossible to live in,” Fallon said.
During the February trial, the plaintiffs gave emotional testimony about how their lives had been damaged because of the defective drywall that gives off a rotten-egg smell.
William Morgan and his wife, Deborah, moved to Williamsburg, Virginia, after he retired from the Norfolk police department. They quickly realized something was wrong with their “dream house.” Fixtures and mirrors turned black. Their lights malfunctioned. Their smoke detector system and water heater failed.
The problems drove them from their house into a rental home, leaving them in a financial mess that forced the couple to file for bankruptcy protection last year. Fallon awarded the Morgan family $481,613.
“I’m tickled to death with the decision, but as far as the mechanics of doing what needs to be done, I don’t know,” Morgan said by telephone Thursday.
Copyright © 2010 The Associated Press; Cain Burdeau, Associated Press writer; Michael Kunzelman, Associated Press writer.
It remains to be seen how the plaintiffs can collect from Chinese companies that do not have to respond to U.S courts, although some have talked about getting orders to seize U.S.-bound ships and cargoes from the drywall companies.
Thousands of homeowners, mostly in Florida, Virginia, Mississippi, Alabama and Louisiana, have reported problems with the drywall, which was imported in large quantities during the housing boom and after a string of Gulf Coast hurricanes.
The drywall has been linked to corrosion of wiring, air conditioning units, computers, doorknobs and jewelry, along with possible health effects.
U.S. District Judge Eldon Fallon ruled Thursday that the drywall needs to be removed and the plaintiffs’ homes need to be gutted because of the ruinous effects of corrosion. He said all electrical wiring, the heating and air conditioning system, appliances, carpet, cabinetry, trim work and flooring damaged by corrosion would have to be removed.
Fallon’s decision was the first in a series of federal lawsuits brought against manufacturers, distributors, suppliers and homebuilders by thousands of homeowners, all of them claims that Fallon is presiding over. Separately, thousands of plaintiffs are pursuing claims in state courts.
Thursday’s ruling could set the standard for what needs to be done to make a tainted home fit for living in. Fallon’s guidelines went further than those put out by the Consumer Protection Safety Commission earlier this month. The CPSC called for removing the tainted drywall, electrical wiring, fire alarm systems and gas pipes.
“We got everything we asked for,” said Richard Serpe, an attorney for the Virginia plaintiffs. “This becomes a roadmap for any court that is going to consider how the litigation should go from here.”
Fallon’s ruling covered only property damage and did not look at possible health effects. The first cases with medical claims won’t be considered by the court until late 2010 or early 2011.
It was far from certain who would pay for the damages. Civil judgments in U.S. courts aren’t enforced in China. Plaintiffs are suing American drywall suppliers, distributors and homebuilders, too.
Phillip A. Wittmann, a New Orleans lawyer representing homebuilders and drywall installers, said homebuilders have been proactive and gutted tainted homes they built.
“The homebuilders are really the only class of defendants doing anything for the homeowners,” Wittmann said.
In this case, the plaintiffs sued Chinese drywall manufacturer Taishan Gypsum Co., which hasn’t responded to lawsuits and did not have a lawyer representing it at the February trial.
Plaintiffs’ lawyers have said they would try to seize the company’s U.S.-bound vessels and shipments if the company continues to ignore the litigation.
So far, only one Chinese manufacturer – Knauf Plasterboard Tianjin Co. – has responded to U.S. suits. A separate trial was held last month against Knauf. Fallon has not ruled in that case. Also, homebuilders are suing Knauf Plasterboard and Knauf Gips KG, a German company, for damages, Wittmann said.
In a statement, Knauf Plasterboard said Fallon’s findings in the Virginia case were “distinct from the cases against KPT.” The company said it would work with federal and state regulators and others “in evaluating the concerns about drywall manufactured in China.”
Fallon said that Chinese drywall “has a significantly higher average concentration of strontium and significantly more detectable levels of elemental sulfur” than U.S.-made drywall. He added that the “level of corrosive sulfur gases emitted by Chinese drywall ... exceed the safe level established by recognized standards, peer reviewed literature.”
The Taishan drywall was not tested under American engineering standards and Venture Supply Inc., the Norfolk, Virginia-based buyer, “relied on a representation that Chinese testing was equivalent to the U.S. testing standards,” the ruling said.
The ruling noted that Chinese tests were done by a Chinese government agency and not by an independent testing laboratory. The Chinese government agency issued “certificates of quality” based on a protocol that “predates the production of the drywall shipped to the United States by at least two years,” the ruling said.
Taishan and the owners of Venture Supply Inc. could not be reached for comment. A telephone number listed on Venture’s Web site was disconnected.
“The sulfur gases released by Chinese drywall cause offending odors in homes, making them hard if not impossible to live in,” Fallon said.
During the February trial, the plaintiffs gave emotional testimony about how their lives had been damaged because of the defective drywall that gives off a rotten-egg smell.
William Morgan and his wife, Deborah, moved to Williamsburg, Virginia, after he retired from the Norfolk police department. They quickly realized something was wrong with their “dream house.” Fixtures and mirrors turned black. Their lights malfunctioned. Their smoke detector system and water heater failed.
The problems drove them from their house into a rental home, leaving them in a financial mess that forced the couple to file for bankruptcy protection last year. Fallon awarded the Morgan family $481,613.
“I’m tickled to death with the decision, but as far as the mechanics of doing what needs to be done, I don’t know,” Morgan said by telephone Thursday.
Copyright © 2010 The Associated Press; Cain Burdeau, Associated Press writer; Michael Kunzelman, Associated Press writer.
Thursday, April 8, 2010
EPA to issue lead-safety requirements
More than half of U.S. homes could soon be affected by a little-known federal rule to reduce lead exposure.
On April 22, the Environmental Protection Agency will begin requiring that contractors who work on pre-1978 homes be certified in lead-safe practices or face daily fines of up to $37,500.
“We want people to take it seriously,” the EPA’s Wendy Hamnett says about the new rule to reduce lead-caused health problems. It will apply to plumbers, carpenters and other remodelers if their work disturbs lead-based paint. Fines apply to untrained workers, not the homeowners who hire them.
“It is a huge step forward. It’s long overdue,” says Rebecca Morley of the National Center for Healthy Housing, a private group.
Most people don’t know about the rule, and the EPA should have done a better job at informing them, Morley says.
Many remodelers haven’t been certified, and homeowners may unknowingly hire less expensive untrained workers, says Matt Watkins of the National Association of Home Builders.
“We’re doing everything we can to make people aware of this,” Hamnett says.
The EPA is rolling out ads later this month to explain the rule and lead’s health hazards. The rule applies to all homes built before lead paint was banned in 1978 unless contractors can show, using an EPA-approved test, that the job area doesn’t contain lead. Of 129 million U.S. housing units, 76.5 million were built before 1980, according to the Census Bureau.
Hamnett says 38 million homes, half of pre-1978 homes, have lead. She says the EPA has certified 100,000 workers to handle lead and expects to train 25,000 more by April 22.
That’s not enough, says Watkins, citing a recent Harvard University study that says there are up to 500,000 home remodeling companies. He says the eight-hour training, which the EPA says costs about $200 per worker, is another expense for remodelers in a difficult economy.
The EPA also charges $300 for a five-year certification.
Ron Jones, president of Green Builder Media, which publishes a monthly magazine, says a lead-certified builder recently lost a $250,000 job because he was charging more than an untrained competitor. He says the people most likely to be affected by lead – those in old homes with chipping paint – may be the least able to afford certified workers.
“It’s kind of a Catch-22,” Jones says. If the EPA enforces the rule, though, certified workers shouldn’t be at a disadvantage, he says.
The EPA estimates that lead-safe practices, such as sealing off a work area to avoid spreading lead dust, could add $8 to $167 to most interior jobs.
© Copyright 2010 USA TODAY, a division of Gannett Co. Inc., Wendy Koch.
On April 22, the Environmental Protection Agency will begin requiring that contractors who work on pre-1978 homes be certified in lead-safe practices or face daily fines of up to $37,500.
“We want people to take it seriously,” the EPA’s Wendy Hamnett says about the new rule to reduce lead-caused health problems. It will apply to plumbers, carpenters and other remodelers if their work disturbs lead-based paint. Fines apply to untrained workers, not the homeowners who hire them.
“It is a huge step forward. It’s long overdue,” says Rebecca Morley of the National Center for Healthy Housing, a private group.
Most people don’t know about the rule, and the EPA should have done a better job at informing them, Morley says.
Many remodelers haven’t been certified, and homeowners may unknowingly hire less expensive untrained workers, says Matt Watkins of the National Association of Home Builders.
“We’re doing everything we can to make people aware of this,” Hamnett says.
The EPA is rolling out ads later this month to explain the rule and lead’s health hazards. The rule applies to all homes built before lead paint was banned in 1978 unless contractors can show, using an EPA-approved test, that the job area doesn’t contain lead. Of 129 million U.S. housing units, 76.5 million were built before 1980, according to the Census Bureau.
Hamnett says 38 million homes, half of pre-1978 homes, have lead. She says the EPA has certified 100,000 workers to handle lead and expects to train 25,000 more by April 22.
That’s not enough, says Watkins, citing a recent Harvard University study that says there are up to 500,000 home remodeling companies. He says the eight-hour training, which the EPA says costs about $200 per worker, is another expense for remodelers in a difficult economy.
The EPA also charges $300 for a five-year certification.
Ron Jones, president of Green Builder Media, which publishes a monthly magazine, says a lead-certified builder recently lost a $250,000 job because he was charging more than an untrained competitor. He says the people most likely to be affected by lead – those in old homes with chipping paint – may be the least able to afford certified workers.
“It’s kind of a Catch-22,” Jones says. If the EPA enforces the rule, though, certified workers shouldn’t be at a disadvantage, he says.
The EPA estimates that lead-safe practices, such as sealing off a work area to avoid spreading lead dust, could add $8 to $167 to most interior jobs.
© Copyright 2010 USA TODAY, a division of Gannett Co. Inc., Wendy Koch.
Crist to veto anything that raises insurance rates
Gov. Charlie Crist reinforced his message Wednesday to lawmakers considering legislation that would allow insurance companies to boost property insurance premiums on home and business owners.
His advice: Don’t do it.
“This is the last time that people need to have property insurance go up,” Crist warned. “If there is any legislation that comes to my desk that would do that I will veto it and happily do so.”
Crist said he didn’t think legislators would attempt to overturn it.
“I can’t imagine how many members of the House and Senate would want to override a veto that reduces property insurance,” he said. “They would do so at their own peril.”
The Republican governor, who is leaving that office to seek his party’s nomination for the U.S. Senate in August, has been fighting members of his own party on the issue the past two years.
Just last week, former Gov. Jeb Bush weighed in, noting that the failure of several undercapitalized insurers could bankrupt the state and that the private insurance market should be bolstered.
Crist made an unusual appearance in a Senate committee last month to oppose legislation proposed by Sen. Mike Bennett, R-Bradenton, that would let property insurers offer unregulated rates to homeowners.
Crist vetoed a similar bill last year that would have given homeowners a choice to pay higher, unregulated rates for insurance covering hurricanes, fires and other hazards from well-funded national companies.
Florida residents with auto, residential property or commercial property insurance policies are already paying a 1 percent assessment to shore up the Hurricane Catastrophe Fund tagged with huge losses after the 2004 and 2005 hurricane seasons. They would be liable for much higher assessments if the CAT fund and the state-backed Citizens Property Insurance Corp. were unable to pay claims.
Citizens was created by the Legislature in 2002 as a safety net to offer property coverage to homeowners without private insurance options, although not necessarily at cheaper rates.
Copyright © 2010 The Associated Press, Brent Kallestad, Associated Press Writer.
His advice: Don’t do it.
“This is the last time that people need to have property insurance go up,” Crist warned. “If there is any legislation that comes to my desk that would do that I will veto it and happily do so.”
Crist said he didn’t think legislators would attempt to overturn it.
“I can’t imagine how many members of the House and Senate would want to override a veto that reduces property insurance,” he said. “They would do so at their own peril.”
The Republican governor, who is leaving that office to seek his party’s nomination for the U.S. Senate in August, has been fighting members of his own party on the issue the past two years.
Just last week, former Gov. Jeb Bush weighed in, noting that the failure of several undercapitalized insurers could bankrupt the state and that the private insurance market should be bolstered.
Crist made an unusual appearance in a Senate committee last month to oppose legislation proposed by Sen. Mike Bennett, R-Bradenton, that would let property insurers offer unregulated rates to homeowners.
Crist vetoed a similar bill last year that would have given homeowners a choice to pay higher, unregulated rates for insurance covering hurricanes, fires and other hazards from well-funded national companies.
Florida residents with auto, residential property or commercial property insurance policies are already paying a 1 percent assessment to shore up the Hurricane Catastrophe Fund tagged with huge losses after the 2004 and 2005 hurricane seasons. They would be liable for much higher assessments if the CAT fund and the state-backed Citizens Property Insurance Corp. were unable to pay claims.
Citizens was created by the Legislature in 2002 as a safety net to offer property coverage to homeowners without private insurance options, although not necessarily at cheaper rates.
Copyright © 2010 The Associated Press, Brent Kallestad, Associated Press Writer.
Monday, April 5, 2010
Feds: Homes with Chinese drywall must be gutted
Thousands of U.S. homes tainted by Chinese drywall should be gutted, according to new guidelines released Friday by the Consumer Product Safety Commission.
The guidelines say electrical wiring, outlets, circuit breakers, fire alarm systems, carbon monoxide alarms, fire sprinklers, gas pipes and drywall need to be removed.
“We want families to tear it all out and rebuild the interior of their homes, and they need to start this to get their lives started all over again,” said Inez Tenenbaum, chairwoman of the commission, the federal agency charged with making sure consumer products are safe.
About 3,000 homeowners, mostly in Florida, Virginia, Mississippi, Alabama and Louisiana, have reported problems with the Chinese-made drywall, which was imported in large quantities during the housing boom and after a string of Gulf Coast hurricanes.
The drywall has been linked to corrosion of wiring, air conditioning units, computers, doorknobs and jewelry, along with possible health effects. Tenenbaum said some samples of the Chinese-made product emit 100 times as much hydrogen sulfide as drywall made elsewhere.
The agency continues to investigate possible health effects, but preliminary studies have found a possible link between throat, nose and lung irritation and high levels of hydrogen sulfide gas emitted from the wallboard, coupled with formaldehyde, which is commonly found in new houses.
U.S. Sen. Bill Nelson, D-Fla., said now the question is who pays to gut the homes.
“The way I see it, homeowners didn’t cause this. The manufacturers in China did,” Nelson said. “That’s why we’ve got to go after the Chinese government now.”
Southern members of Congress have sought to make it easier to sue Chinese manufacturers and to get the Federal Emergency Management Agency to help homeowners pay for costs not covered by insurance. They also say the U.S. needs to pressure the Chinese government, which allegedly ran some of the companies that made defective drywall.
About 2,100 homeowners have filed suit in federal court in New Orleans against Chinese manufacturers and U.S. companies that sold the drywall. U.S. District Judge Eldon Fallon is expected to rule soon in a pivotal case against the Knauf Plasterboard Tianjin Co., the only Chinese company that has responded to U.S. suits.
Separate claims by thousands more homeowners against Chinese manufacturers are pending, said Jordan Chaikin, a Florida lawyer whose firm represents about 1,000 homeowners.
They are “continuing to live in their homes with Chinese drywall, patiently waiting for this thing to be resolved so they can move on with their lives,” Chaikin said. “We’re not waiting for the government to move quicker than we are in the courts.”
In some cases, homebuilders have paid to gut and rewire homes. In others, homeowners who can afford it have paid for the work themselves.
On Friday, Knauf Plasterboard agreed that high hydrogen sulfide levels appeared to be the main concern, but it noted the commission’s studies were preliminary and may not reflect conditions inside a home. The company said its studies have shown that drywall should be removed, but that plumbing and wiring do not need to go.
Daniel Becnel, a New Orleans lawyer representing Chinese drywall plaintiffs, including Sean Payton, the head coach of the Super Bowl champion New Orleans Saints, said the government guidelines issued Friday were “word for word what our experts said.”
He also said Congress should give homeowners grants to cover the cost of home gutting.
“Get these people out of this environment,” he said. “You’re making these people sicker and sicker and sicker. You will have long-term effects.”
In Cape Coral, Fla., Joyce Dowdy, 71, and her husband Sonny, 63, plan to move out of their $150,000, 1,600-square-foot home while it is gutted to get rid of tainted Chinese drywall.
Joyce Dowdy said she suffers from nose bleeds and her husband has a persistent cough. They blame the drywall.
“We can’t live like this anymore,” Dowdy said.
They’re borrowing money to do the gutting, which means that instead of a mortgage-free retirement they will be paying monthly bills to cover the costs of repair.
“It’s costing us as much as we paid for the house,” Joyce Dowdy said. “But we can’t just walk away … Our house is worth nothing at the moment.”
But Randy Noel, past president of the Louisiana Home Builders Association, said the Chinese drywall problem has been exaggerated. He called the new guidelines “overkill.”
“Nobody has come up with a house yet that has caught on fire from the Chinese drywall, no one has come up yet with a house that leaks water or gas because of Chinese drywall,” he said.
He has examined numerous homes containing Chinese drywall and found minor problems, he said.
“It’s a black soot on top of the copper, brass and silver,” he said. “You wipe the stuff off and it looks as good as new.”
On the web: Drywall Information Center: http://www.cpsc.gov/info/drywall/index.html
Copyright © 2010 The Associated Press, Cain Burdeau, Associated Press writer.
The guidelines say electrical wiring, outlets, circuit breakers, fire alarm systems, carbon monoxide alarms, fire sprinklers, gas pipes and drywall need to be removed.
“We want families to tear it all out and rebuild the interior of their homes, and they need to start this to get their lives started all over again,” said Inez Tenenbaum, chairwoman of the commission, the federal agency charged with making sure consumer products are safe.
About 3,000 homeowners, mostly in Florida, Virginia, Mississippi, Alabama and Louisiana, have reported problems with the Chinese-made drywall, which was imported in large quantities during the housing boom and after a string of Gulf Coast hurricanes.
The drywall has been linked to corrosion of wiring, air conditioning units, computers, doorknobs and jewelry, along with possible health effects. Tenenbaum said some samples of the Chinese-made product emit 100 times as much hydrogen sulfide as drywall made elsewhere.
The agency continues to investigate possible health effects, but preliminary studies have found a possible link between throat, nose and lung irritation and high levels of hydrogen sulfide gas emitted from the wallboard, coupled with formaldehyde, which is commonly found in new houses.
U.S. Sen. Bill Nelson, D-Fla., said now the question is who pays to gut the homes.
“The way I see it, homeowners didn’t cause this. The manufacturers in China did,” Nelson said. “That’s why we’ve got to go after the Chinese government now.”
Southern members of Congress have sought to make it easier to sue Chinese manufacturers and to get the Federal Emergency Management Agency to help homeowners pay for costs not covered by insurance. They also say the U.S. needs to pressure the Chinese government, which allegedly ran some of the companies that made defective drywall.
About 2,100 homeowners have filed suit in federal court in New Orleans against Chinese manufacturers and U.S. companies that sold the drywall. U.S. District Judge Eldon Fallon is expected to rule soon in a pivotal case against the Knauf Plasterboard Tianjin Co., the only Chinese company that has responded to U.S. suits.
Separate claims by thousands more homeowners against Chinese manufacturers are pending, said Jordan Chaikin, a Florida lawyer whose firm represents about 1,000 homeowners.
They are “continuing to live in their homes with Chinese drywall, patiently waiting for this thing to be resolved so they can move on with their lives,” Chaikin said. “We’re not waiting for the government to move quicker than we are in the courts.”
In some cases, homebuilders have paid to gut and rewire homes. In others, homeowners who can afford it have paid for the work themselves.
On Friday, Knauf Plasterboard agreed that high hydrogen sulfide levels appeared to be the main concern, but it noted the commission’s studies were preliminary and may not reflect conditions inside a home. The company said its studies have shown that drywall should be removed, but that plumbing and wiring do not need to go.
Daniel Becnel, a New Orleans lawyer representing Chinese drywall plaintiffs, including Sean Payton, the head coach of the Super Bowl champion New Orleans Saints, said the government guidelines issued Friday were “word for word what our experts said.”
He also said Congress should give homeowners grants to cover the cost of home gutting.
“Get these people out of this environment,” he said. “You’re making these people sicker and sicker and sicker. You will have long-term effects.”
In Cape Coral, Fla., Joyce Dowdy, 71, and her husband Sonny, 63, plan to move out of their $150,000, 1,600-square-foot home while it is gutted to get rid of tainted Chinese drywall.
Joyce Dowdy said she suffers from nose bleeds and her husband has a persistent cough. They blame the drywall.
“We can’t live like this anymore,” Dowdy said.
They’re borrowing money to do the gutting, which means that instead of a mortgage-free retirement they will be paying monthly bills to cover the costs of repair.
“It’s costing us as much as we paid for the house,” Joyce Dowdy said. “But we can’t just walk away … Our house is worth nothing at the moment.”
But Randy Noel, past president of the Louisiana Home Builders Association, said the Chinese drywall problem has been exaggerated. He called the new guidelines “overkill.”
“Nobody has come up with a house yet that has caught on fire from the Chinese drywall, no one has come up yet with a house that leaks water or gas because of Chinese drywall,” he said.
He has examined numerous homes containing Chinese drywall and found minor problems, he said.
“It’s a black soot on top of the copper, brass and silver,” he said. “You wipe the stuff off and it looks as good as new.”
On the web: Drywall Information Center: http://www.cpsc.gov/info/drywall/index.html
Copyright © 2010 The Associated Press, Cain Burdeau, Associated Press writer.
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