Lawmakers Ponder Response as Chinese Drywall Pain Lingers

It has been three years since the problem of defective Chinese-made drywall first began to make headlines in Florida and other coastal states. But courts and lawmakers are still struggling to come to grips with the problem. This month, lawmakers from Virginia and Florida €” states where significant quantities of the bad material ended up in homes €” are making a push to hold Chinese manufacturers accountable, and to ensure that no more dangerous drywall enters the country. In Virginia, four Congressmen representing districts in the Hampton Roads region held a press event at a house built with Chinese drywall to draw attention to legislation they're sponsoring that would attempt to force the material's overseas manufacturers to submit to U.S. legal jurisdiction in drywall-related civil suits, the Newport News Daily Press reported (" Hampton Roads congressional delegation highlights Chinese drywall problem," by Joe Lawlor). "Vowing to help homeowners were U.S. Reps. Scott Rigell, R-Virginia Beach; Robert C. "Bobby" Scott, D-Newport News; Rob Wittman, R-Westmoreland; and Randy Forbes, R-Chesapeake," the paper reported. Besides requiring Chinese exporting firms to follow U.S. court orders, the group's bill would also ban further imports of drywall from China, and would regulate disposal of defective drywall removed from homes during demolition and remediation, to prevent it from being recycled and re-used. But Congressman Rigell "acknowledged that it would be difficult to force Chinese companies to comply with orders by U.S. courts," the paper reported. (One manufacturer, Knauf Tianjin, has agreed to pay for remediation of thousands of homes in a settlement in Federal court. But that company is owned by the German building materials conglomerate Knauf, which has extensive business assets in the United States and is vulnerable to U.S.-based damage collection efforts. Other Chinese drywall makers have no such exposure to U.S. enforcement action.) But in the meantime, U.S. federal courts are still tangled up in the arcane points of law that accompany any product defect lawsuit. One vexing issue is whether homeowner's insurance should cover the damage done to buyers of homes built with the defective drywall, or whether the coverage is excluded by one of the many disclaimers that insurance companies routinely attach to insurance contracts. In just one of many similar cases, the U.S. Court of Appeals for the Fourth Circuit recently "certified" a legal question to the Virginia Supreme Court, asking the state court to rule on an unclear point of state law concerning such an exclusion. The homeowner in the case, Larry Ward, is suing to force his insurance company, Travco, to pay for remediation of his Chinese drywall house (see " Travco v. Ward"). But the insurance company has declined, arguing that coverage is excluded in cases where the damage is the result of "latent defect or inherent vice," "faulty, inadequate or defective materials," "rust or other corrosion," or "pollutants." For various reasons, Ward's attorneys (with help from NAHB lawyers) argue that the four exclusions don't necessarily rule out coverage of Chinese drywall damage to other parts of the house. But the answer to that question depends on state law €” which is the state court's job to decide. And while the issue is under review, Virginia homeowners like Ward €” and companies such as his builder €” are still holding the bag.