Chinese Drywall: Some Insurance Coverage May Still Apply ~
Louisiana homeowners lost a key court battle last month when U.S. Federal Judge Eldon Fallon upheld the validity of exclusions in their homeowners' insurance coverage that allow insurance companies to avoid paying claims based on damage caused by defective Chinese-made drywall. But the Bradenton Herald reports that some other insurance-based claims may still be viable, leaving both homeowners and builders potentially able to recover costs for repair (" Drywall insurance coverage still possible," by Duane Marsteller). Judge Fallon’s ruling was based strictly on Louisiana law and applied only to Louisiana cases, legal experts told the paper. “Every state has different laws regulating insurance policies and the courts of each state have interpreted those laws differently,” attorney Scott Weinstein told the paper; “Judge Fallon’s rulings … have very narrow application to Louisiana homeowner’s polices.” And there’s another piece of good news for homeowners and builders. While he upheld some exclusions, Fallon shot down one of the insurance companies’ favorite defenses: the so-called “pollution exclusion.” Insurance companies typically refuse to pay for damage caused by industrial pollution releases (such as the recent BP oil spill, for example). But Fallon ruled that although the drywall does pollute indoor air, the pollution exclusion should not be construed as applying to off-gassing from a building product used in the house. Judge Fallon’s ruling is published on the website of the Louisiana Eastern District court. After analyzing Louisiana state court precedents, Fallon wrote, “The presence of Chinese drywall in the Plaintiffs’ homes is outside the ambit of the Louisiana Supreme Court’s concern with and focus upon environmental pollution for purposes of the exclusion. The plaintiffs are not polluters, nor does Chinese drywall cause environmental pollution by its presence in the Plaintiffs’ homes.” (As in the other parts of his decision, Fallon focused narrowly on Louisiana case law; court precedent in other states may not be as favorable for plaintiffs.) Meanwhile, some Louisiana residents in Habitat for Humanity-built houses afflicted with Chinese drywall have cause to celebrate: Crews for Habitat have begun to gut and remediate the affected houses, reports New Orleans station WWLTV (“ Action Report: Habitat acts against Chinese drywall,” by Bill Capo). Habitat has budgeted $8 million to repair affected homes, the station reports. Said homeowner Jovan Washington, “They responded very quickly. They moved very fast with me."