Concern Rises — and So Does the Hype Florida's contaminated drywall problem continues to make news across the U.S. While the scope and exact nature of the problem is far from clear, what is apparent is that builders around the country — and especially in Florida — cannot afford to ignore it. Federal and state officials are investigating the problem, but so far have little if anything to say to the press. Consumer Products Safety Commission spokesman Joe Martyak confirmed on Friday that the CPSC has been looking into the Chinese drywall issue for "a couple of months now," and said, "We have stepped up our activity." The CPSC's immediate goal, said Martyak, is "to identify what are the facts and what are the risks." The agency's focus is twofold, he said: "the health effects, and the safety risks of electrical corrosion." On the ground, said Martyak, CPSC personnel are working in cooperation with the U.S. Environmental Protection Agency and the Florida Department of Health. But he said the CPSC would not release more information yet about facts it may have already uncovered, "in order not to compromise the investigation or to impede its effectiveness." Keeping the Lid On?
According to a report in the Fort Myers News-Press (“ Officials Withheld Chinese Drywall Alert,” by Mary Wozniak), U.S. EPA officials looking into the drywall situation, along with Florida officials, knew about the drywall problem as far back as August, 2008, but held back information from the public for months, even though there was essentially no government investigation to compromise. The News-Press learned of the coordinated efforts to manage the story from government emails obtained through a public records request under Florida's Open Government and Public Records laws. (For more on Florida's open government rules, which are based on the State Constitution, see the "Government in the Sunshine" website.) According to the News-Press, the released emails "indicate the parties waited to coordinate with a homebuilder, Lennar, and its consultant [Tampa toxicologist Robert DeMott of Environ, on how and when to alert the public. One Environmental Protection Agency official even suggested television 'Sweeps Week' in November might be the time to tell the public, rather than acting independently from special interests and getting word to the public as soon as possible." The News-Press website has posted 495 official emails. While Lennar may have the government's cooperation, the company is far from being the only builder affected by the Chinese drywall problem — or in need of help in managing it. According to attorney Jordan Chaikin of the law firm Parker Waichman Alonso LLP, "25 or 30" builders may have used the Chinese drywall during Florida's recent boom years, beginning in 2004. (See archived coverage, including audio excerpts of an interview with Chaikin, at the Coastal Connection website.) Chaikin's firm is suing Chinese drywall manufacturers and importers, not builders, Chaikin said. However, the drywall mess is already spawning suits targeting builders: on March 17, the Miami law firm of Roberts and Durkee announced a class action lawsuit against national homebuilder Engle Homes, with four homeowner couples from the company's Coral Lakes neighborhood in Cape Coral as named plaintiffs. Watch Your Back
With the bad drywall rumored to be an endemic problem across the country in homes built since 2001, builders are advised to look into whether they might be exposed to the liability — and also consider whether they're adequately protected against it. Attorneys Stephen Henning and Patrick Schoenburg, of Wood Smith Henning & Berman LLP, warned that some builders might find their insurers reluctant to tackle the potentially huge liability they could incur if the drywall issue continues to blow up. "Insurance carriers may try to rely on broadly-written pollution exclusions in their policies to deny coverage to their insureds for Chinese drywall-related issues," the attorney wrote in a press release. In a follow-up email, Schoenburg explained, "In response to new, potential large scale losses, such as the Chinese drywall situation, insurers have historically tried to limit their exposure, first by determining if existing exclusions apply, and then including additional exclusions in new policies. In regard to existing policy language, the pollution exclusion should be the starting point. However, we believe the pollution exclusion will more likely delay carriers in defending these claims, rather than allowing them to avoid coverage all together." Typically, Schoenburg said, courts have refused to interpret boilerplate "pollution exclusions" as applying beyond cases such as industrial pollution, sewage spills, etc. However, the point is debatable — which could give insurance companies some wiggle room, and buy them time to at least try to back out on builder clients who get sued over fume-emitting drywall. Said Schoenburg, "We want builders to prepare for this issue and not simply expect their insurance carriers to quickly step in and handle it for them." The bottom line, said Schoenburg and Henning, is that builders should act now to get their ducks in a row: "It is recommended that home builders that may have used Chinese drywall compile documents -- such as subcontracts, purchase agreements, insurance policies, warranties and builders risk policies -- in order to ascertain the extent of the potential problem and possible mechanisms of risk transfer." Who Let the Dogs Out?
The scope and severity of the contaminated drywall problem nationwide remains a matter of confusion. There is uncertainty over basic questions: How much of the Chinese drywall made its way into the country? Where has it been installed? How dangerous is it to human health? Adding to the confusion is a barrage of publicity generated by a self-styled "consumer advocacy group" calling itself "America's Watchdog." In a series of press releases which have received some attention from the national press (including in USA Today), "America's Watchdog" has made increasingly strident claims, calling the problem "1,000 times worse that [sic] they ever dreamed." According to one release, "America's Watchdog" had found the drywall in every U.S. state as well as Canada and Australia. The statement advised homeowners not to accept homebuilder fixes, saying that homes "might have to be bulldozed." The drywall, according to the release, was potentially deadly and had already killed some people's pets. And after spending a week in Florida, said the release, "We know more about the toxic Chinese drywall than any group, organization, or agency in the world." However, when pressed for documentation of these claims — which go far beyond claims made by attorneys in official court filings — Thomas Martin, listed as a press contact in the release, responded with a one-line email: "No one is going to have to wait very long. I don't play poker, but I always have a better hand than what I show." Asked to provide more information about his "consumer advocacy group," Martin — who is listed on various websites as the founder and as the President of "America's Watchdog" — declined to specify whether "America's Watchdog" is a for-profit company or a non-profit, whether or not it is a corporation or has stockholders, how it is funded, or whether it has any vested interest in the drywall issue. Martin also declined to disclose his own education or background, whether or not he is an expert himself, or what experts he may be relying on — or to provide the name of even one other person associated with the "group" in any responsible capacity. Instead, Martin emailed simply, "What business is any of that of yours?" Martin's name and the phone number he supplies in press releases are associated with at least a half dozen websites and supposed organizations targeting various high-profile liability issues, including mesothelioma, mortgage fraud, and dangerous pharmaceuticals. None of the websites offers any expert credentials, any authoritative sources, any names other than Martin's, or any information about who controls the organization and directs its activities. The street address of the self-described "Washington-based consumer advocacy group," 5505 Connecticut Avenue NW in Washington, D.C., turns out to be a Mailboxes Etc. location. The "America's Watchdog" website is registered to a free-lance graphic designer in Seattle, Washington. And after several invitations to produce some sort of bona fides, Thomas Martin has declined to offer Coastal Connection any reason to believe that "America's Watchdog" is anything other than what it, on closer inspection, appears to be: A one-man publicity outfit looking to hitch a ride on a big breaking story. Attorney Schoenburg had nothing in particular to say about "America's Watchdog," but he said the phenomenon of "one guy trying to make a buck from mass torts currently receiving media attention" was a familiar one in the legal trade. "We have seen the same phenomenon in regard to mold, multiple chemical sensitivity, breast implants, et cetera," he said. "Most are fronts for steering business to plaintiff's attorneys." (For more about “America’s Watchdog,” read John Caulfield’s article “ Consumer Advocacy Group Heightens Profile in Chinese Drywall Controversy” at BuilderOnline.) As long as information from official investigations or the information generated by builders themselves are kept under wraps, however, Mr. Martin and his ilk will have the field to themselves. In the mean time, we'll pass along any facts that come to our attention. For the time being, the official complaints are available from two Florida lawsuits: Lennar v Knauf and Allen v Knauf