Insurance Dispute Lawyer Blog

The New York Times recently brought up a casualty of the economic climate facing many states: the cost/benefit analysis being made by states in regards to insurance against dangerous storms. Often extremely costly and unnecessary, this reinsurance looks to bolster defenses against disastrous natural calamities but, with budget cuts at a premium, states are beginning to count every dollar and looking to go without.

Public insurance programs in some coastal states are flirting with the notion of saving millions of dollars every year by shrinking or canceling the coverage they buy from private reinsurers -- the deep-pocketed companies that insure insurers whose exposure to loss exceeds the budgets of some nations.

States are the insurers in this case. And they are either tired of paying piles of cash for reinsurance policies that are rarely needed, or too broke financially to maintain coverage that has saved state residents from paying billions in hurricane damage claims. In the parlance of the insurance business, without coverage or a hedge against their expensive risks, they are "running naked."

Here's the bet: Save hundreds of millions with no disaster, or pay perhaps billions with one.

Two of the nation's biggest states are looking to gamble on the odds of a disaster-free summer:

Texas let its policy die at the end of May, less than a year after reinsurers paid $1.5 billion in claims related to Hurricane Ike. That's not a bad return on the state's investment. Texans paid $180 million for the policy.

Texas will buck this hurricane season with no reinsurance.

California is also looking to reduce its coverage.

Overall an unfortunate situation that will leave many state budget workers hoping they made the right decision, depending on what decision they make.

In something around 24 hours, 3 tropical storms have popped up according to the National Weather Service. While two (Ana and Bill) are still off into the Atlantic, Claudette hit Florida late last night.

Now is as good a time as any to prepare for any future storms that may come. You can check out our section on various storm and hurricane preparedness tips, available here, and make sure that your home preparation checklist is complete before the height of storm season gets here.

In brief, from the Palm Beach Post:

Florida Atlantic University's School of Architecture plans to begin offering training classes for workers and supervisors who are going to be removing Chinese drywall from homes.

According to a flyer by the school, two courses - a one-day worker safety awareness class, and a supplemental two-day supervisor and worker safety awareness training - are currently being developed.

They are expected to be scheduled at FAU campuses in Fort Lauderdale, Jupiter and Port St. Lucie starting in mid-October.

The tainted wallboard is believed to be in hundreds of South Florida homes. The issue of removal has garnered attention because some Chinese drywall gives off a sulfuric odor linked to corrosion of metal components in homes. In addition, a growing number of homeowners have blamed it for health problems.

A quick blog posts for those residents of Florida who have been enjoying state-enabled discounts for storm-preparedness: get them while you can as they might not be around much longer.

"What we're giving them now is not right," Apopka State Representative Bryan Nelson (R) said.

Nelson is both a lawmaker and an insurance agent. He said those discounts need to be cut so inland homeowners can stop subsidizing premiums for coastal homeowners.

For example, the statewide average discount for fortifying your home is 13 percent. For coastal-area homes it's 50 percent -- a greater reward for protecting homes at greater risk of damage.

The discount, for those homeowners who had wind resistant shutters, fortified roofs, etc., was pushed upon insurance providers by the state to give homeowners some shelter from high premiums. However, some lawmakers believe it has gone too far.

During the next few months, lawmakers will review recommendations from insurance companies about how they may want to reduce or eliminate premium discounts especially for coastal homeowners. They'll vote on a measure in the spring and those changes would take affect in January 2011.

With State Farm increasing premiums and such, it will be interesting to see how the legislature handles this matter - and how policy-owners react.

The Wall Street Journal reports that government officials will be visiting China to investigate drywall manufacturing sites to better understand the problem occurring in homes across the United States. The report states

U.S. Consumer Product Safety Commission officials have received approval to visit several sites in China later this month to investigate problems with imported drywall that was manufactured there, the agency said today.

Agency officials also have started indoor air sampling in 50 homes and visited a synthetic drywall manufacturing plant in Florida as part of their investigation, the agency said in a status update report posted on its Web site. Chinese officials earlier accompanied U.S. officials in visits to some affected homes in Florida and Louisiana.

Imported Chinese drywall was used in an estimated 100,000 U.S. homes mainly from about 2004 through 2007, due to a domestic shortage. Residents have complained of various health symptoms they attribute to the gypsum board, including headaches, rashes and breathing problems, and corrosion of metal housing components, including electrical wiring. There have been no confirmed fires involving the drywall, the update said. An earlier CPSC report had stated two fire incidents were being probed.

These are very positive developments as homeowners are hoping for a push by the government to declare the products faulty sufficient for assistance and redevelopment of those properties built with the Chinese drywall. We can only hope the investigation goes positively and results develop after that.

It looks like the MDL proceedings dealing with Chinese drywall will be moving along quite quickly, or is at least planned to be according to the judge in charge. Meeting with attorneys, with attorney Jeffrey Berniard in attendance, Judge Fallon notified both sides that the litigation would be moving forward and that he hoped to even have cases beginning just after the new year.

The Herald Tribune reports

Judge Eldon E. Fallon, who plans to begin "bellwether" trials in January, told both sides during a status conference in New Orleans on Tuesday that he expected discovery to begin in a few weeks.

The process will be sped along by the use of "profile forms" rather than traditional interrogatories that can get mired in procedural delays.

Fallon also said he wanted an agreed-upon plan for inspecting and identifying affected homes by Friday. The inspections should determine whether a home had Chinese drywall and, if so, what kind of damage was present, Fallon said.

That homeowners dealing with the Chinese drywall in their homes will not be waiting years for trial proceedings to get kick-started is a very positive thing. Judge Fallon has experience in class action suits and his expedition has some positive results. Having such speedy results may encourage settlements on the part of those involved and narrow the scope of the matters being handled.

The Am Law Daily provides the first joint drywall report here.

Reported late last week, State Farm Florida is looking to shore up its finances and reduce discounts for customers... at the expense of those very customers. The Daytona Beach News-Journal reports

Trying to shore up its finances, State Farm Florida will eliminate or reduce some insurance discounts it offers to homeowners -- leading to an average premium increase of 28.4 percent.

The move, which comes as State Farm prepares to pull out of Florida's property-insurance market, will have widely varying effects on policyholders because they qualify for different levels of discounts.

Some will face large premium increases, while others will see little effect on their wallets.

But company and state officials said the biggest change will eliminate a discount customers receive when they go years without filing claims for fire, theft and other non-hurricane damages.

State Farm announced plans in January to leave the property-insurance market because it said its Florida subsidiary was losing money and in danger of eventually becoming insolvent. That decision came after regulators rejected a 47 percent rate increase.

With State Farm's exit plan already in place, this means customers of the insurance giant will face higher rates as they are indeed dumped by the company. Shopping around for another company, if they haven't begun to already, looks to be a fine plan for customers in Florida.

Perhaps one of the saddest recent stories coming out of the Chinese drywall disaster is the following, where the poor and elderly have been kicked out of their homes as a result of the buildings being built with the faulty wallboard. The News Inferno reports

Dozens of low-income elderly people are being evicted from a Florida apartment complex because of Chinese drywall and mold. According to naplesnews.com, the 33 residents have been given until the end of this month to leave the 30-unit Bromelia Place apartment building in Immokalee.

Many of the residents have been complaining of respiratory ailments. Other problems reported may be related to potentially-defective Chinese drywall, naplesnews.com said. The complex was only opened in 2007.

The decision to evict residents came after mold was discovered in the apartment complex while it was being checked for Chinese drywall. According to naplesnews.com, the mold is apparent in places on the outside of the building and has been found inside several units. The mold may have been caused by faulty windows or the possible use of defective Chinese drywall, naplesnews.com said.

On July 30, tenants received a landlord notice of termination and a 30-day notice of eviction.

Truly just a sad and disappointing story .

Beginning with the unfortunately typical story of a family looking for a new home to raise their family, the Wall Street Journal's poignant piece on the uphill battle faced by families dealing with Chinese drywall brings more attention to the unfortunate situation. The piece opens

Shortly after buying their home in Cape Coral, Fla., in 2006, Keith and Denise Cramer noticed a peculiar acidic smell they thought was wet paint. The odor never left.

There were other strange occurrences. Chrome-plated faucets and showerheads became pitted or turned black. The central air-conditioning unit faltered and failed. Their baby son, Gavin, suffered frequent ear and upper respiratory infections, and Gavin and Denise got rashes.

The Cramers—along with thousands of other homeowners in Florida and elsewhere—now believe that imported Chinese drywall is making them sick and destroying their property. The drywall, which is used in walls and ceilings, is emitting sulfur-compound gases that homeowners have described as giving off a sour or “rotten egg” odor. Many blame the fumes for eye, skin and breathing irritation and nosebleeds, as well as the corrosion of copper pipes, electrical wiring and air conditioners.

The Cramers say if government tests conclude the Chinese drywall is a health hazard, they will be left with a difficult choice: “We will have to either ruin our son’s life by staying, or ruin our credit by walking away from the home,” says the 34-year-old Mr. Cramer.

An interesting item included notes the plight faced by the new attempts to sell homes that are bogged down by Chinese drywall and the neighbors who were not so fortunate

In Cape Coral, on Florida’s Gulf Coast, Mr. Cramer, a youthful-looking man in a baseball hat, says he feels trapped. He says he has been unable to get the builder, locally based Aranda Homes Inc., to make repairs. The builder didn’t respond to repeated requests for comment.

Mr. Cramer and his wife, who is 37, paid nearly $315,000 for the property and home, but similar properties whose owners disclose the presence of Chinese drywall, as required by law, are selling for as little as $19,000 online. Mr. Cramer says he doesn’t have the money to tear out the drywall or to relocate while the home is repaired.

He can’t refinance, and his bank has indicated it won’t allow homeowners with drywall problems to skip mortgage payments while they seek a remedy. Homeowner insurance generally doesn’t cover construction defects. “If something happened and we had to walk away from this home, we’d lose every penny we had,” Mr. Cramer says.

An all-out mess but the more papers like the WSJ feature the problem the more those involved can hope that a plan and solution will emerge.

Just a reminder to Louisiana residents that Friday and Saturday are sales tax holidays, where "eligible items will be exempt from the state’s 4 percent sales tax, though parish and municipal taxes will still apply." The Daily Advertiser reports

Because the savings are greatest on big-ticket items, furniture and electronics retailers tend to promote the holiday the heaviest, often tacking on their own specials as an added incentive. Elliott said that when the program started, she and some retailers were doubtful that a 4 percent savings would attract buyers, but it did. Home Furniture of Lafayette is reducing prices storewide to lure customers this weekend. “It’s usually one of the biggest weekends of the year for us,” said Home Furniture President Randy Paul. Sales at Home Furniture have been “about even” this year, Paul said. An in-store tax-free weekend helped boost sales last weekend, but Paul predicts this weekend will be even better. “This is the weekend they know they’re going to save some money,” he said. “I think it’s going to be good.”

The MDL has decided on the steering committees for the Chinese drywall lawsuit and while they did not include the Berniard Law Firm, our firm is in a key position to be highly involved as pretrial motions go on in the city of New Orleans. U.S. District Judge Eldon E. Fallon appointed 14 different attorneys from across the country to deal with the defective sheetrock and pretrial motions will be handled in the Eastern District of Louisiana. Judge Fallon will coordinate pretrial litigation and discovery, and, upon completion, all filings will return to their original jurisdictions for trial.

For more information about the MDL or Chinese drywall, please consult the section of our blog dedicated to this serious topic by clicking here.

A story coming out of Coral Gables, FL, demonstrates it's not just the everyday homeowner who has been struck by Chinese drywall. Even builders have constructed homes for themselves unwittingly with the faulty wallboard. With timelines unclear in regards to when progress will develop, this builder decided not to wait any longer and gutted the 2,300 square foot home as soon as the sulfuric smell wafted into the air.

[quote]
...waiting could just make the problem worse, said Frank Mackle, a home builder who recently discovered his own house has the problem product.

So he gutted the townhome himself a few weeks ago.

"This is coming out of my own pocket,'' said Mackle, walking through the shell of the 2,300-square-foot Coral Gables home.

"I had it all tricked out,'' he said, recalling the custom wall treatments, plantation shutters and crown moldings. He estimates the repairs will cost at least $80,000 -- money he is borrowing to fix the property.

Watching the fumes from the drywall, Mackle is certain that the repairs would only be more expensive if he were to wait.

"If we let this thing fester, the amount of damage could be that much more,'' he said. "I'm not a scientist. I'm a victim who's trying not to go overboard.''

Mackle is hoping to save some of the pipes, some wiring, kitchen cabinets, crown moldings and baseboards. Other home builders remediating homes are recycling only the homes' outermost shell, for fear that the chemicals from the drywall may have seeped into other items, possibly leading to more corrosion in the future.[/quote]

While there is a lot of optimism about an eventual positive account coming from this with all the action being taken by the government, timing may be of the essence. Contact a construction or building expert immediately if you feel there may be Chinese drywall in your home and consult with a medical professional if you feel any ailments where you think staying in your home could risk your health. By contacting experts and speaking with an attorney, you can make sure that the worst case scenario - experiencing this nightmare and not being compensated or having your home returned to you - does not occur.

A quick news blurb regarding a topic we brought up earlier: the nearing expiration of the National Flood Insurance Program. Such an expiration has been delayed another six months as the House agreed to extend the program through the 2009 hurricane season:

Set to expire on Sept. 30, the House approved a six-month extension to March 31, 2010. The Senate and president must approve the extension.

The NFIP bill (HR 3139) was sponsored by House Financial Services Housing Subcommittee Chairwoman Maxine Waters (D.-Calif.) and committee chairman Rep. Barney Frank (D-Mass.).

In March, President Barack Obama extended the program through September just as it was about to expire. Frank and Waters introduced the new legislation in July for a second extension, citing the importance of the program following Hurricane Katrina and other storms that devastated the Gulf Coast.

Definitely a good thing.

New Orleans' Gambit had an impressive editorial a little while back that outlined how the Dow Hahnville chemical leaks demonstrate the need for a more prevalent presence on the part of state government in overseeing the safety habits of such plants. The Gambit's editorial staff writes

The first Dow leak also exposed communication gaps between emergency officials in St. Charles Parish and their counterparts in Orleans and Jefferson parishes, who said they were not notified until several hours after the event. The leak further revealed that too few residents have registered contact information with the St. Charles Parish emergency alert system. That's a cautionary tale for all residents this hurricane season. Earlier, a power outage at Cytec caused the release of a toxic ammonia vapor, plant authorities say. West Bank residents reported eye and throat irritations before the company gave the all-clear signal.

  Last week's incidents raise public concerns about potential toxic ammonia leaks from a cold-storage warehouse the Port of New Orleans wants to build on the riverfront near the historic French Market. In addition to trying to keep 500 jobs in the city while raising $40 million for the project, officials at the port and New Orleans Cold Storage Inc. (NOCS) must now assure the public that 40,000 pounds of anhydrous ammonia can be safely transported, stored and used to blast-freeze chicken packages on the Gov. Nicholls Street Wharf. The proposal has pitted French Quarter and Faubourg Marigny residents against port officials and business interests.

  Unfortunately, the "frozen chicken" fight comes in the wake of a major environmental victory — the closing of the Mississippi River Gulf Outlet (MR-GO). By the time the U.S. Army Corps of Engineers closed the manmade shipping channel to navigation — on Earth Day — it was difficult to find any opposition to the move. It's been much harder to find leaders with a vision for offsetting the loss of 1,000 maritime-related jobs and other fallout from the closing of the MR-GO.

For more information on the Dow-Hahnville leak, visit this blog's section dedicated to the incident or click here for a legal timeline of our firm's actions against Dow Chemical.

The housing market has plummeted on tainted homes in the Gulf Coast area. While buyer beware appears to be the current premise for these sales, some are falling victim to sellers failing to disclose the condition of the homes.

WINK news in South Florida reports

A never-lived-in, four bedroom, two bath home in Northwest Cape Coral is selling for a steal -- just $19,800. But buyer beware: the low sticker price is because the home is infected with Chinese drywall. Still, people are interested.

"We are probably experiencing anywhere between 10-15 calls a day in addition to email leads inquiring about property with Chinese drywall," Realtor Jennifer Pentico says.

An out-of-town investor has a contract on this house.

"A lot of these consumers don't know the ramifications of Chinese Drywall and what it's potentially going to take to remediate something like this," Pentico says.

Pentico encourages buyers to hire an inspector and sign off on knowing Chinese drywall is in their new home. David Schwartz and Val Salerno bought a foreclosure to be closer to family. They heeded the warnings.

The story goes on to discuss how some are lured in by low prices to find out that the copper wiring and other elements of the home are harmed as a result of the toxic wallboard.

Some worry what Chinese drywall home sales are doing to property values. For example, the home selling for less than $20,000 might otherwise sell for around $70,000 if it did not have the toxic wallboard. Re/Max Realtors tell WINK News they'll essentially black-list properties known to have the toxic board so agents and appraisers don't factor in the ultra-low sale figure.

Obviously this is a situation where people must be careful and have inspectors check for yet another element or surprise in the condition of any purchased home.

During the pretrial coordination taking place in New Orleans regarding the Chinese drywall class actions taking place across the country, a judge has recently indicated steering committees may be named soon. These committees, one for the collective defenses and one for all of the plaintiffs, are comprised of attorneys within the respective sides and work towards strategy and motion filing. The steering committees are so important because, when matters such as an MDL come down, the various different attorneys from across the country need a coordinated approach to the pre-trial motions because what occurs there affects each of their cases, across the country.

In brief

Some of the many Chinese drywall lawsuits might be seeing a courtroom in as early as six months. The HeraldTribune.com reported that prominent Judge Eldon E. Fallon, who is overseeing “the combined litigation” taking place in New Orleans, is preparing to announce the legal leads for both sides-—so-called “steering committees”—said the HeraldTribune.com.

The HeraldTribune.com noted that Judge Fallon is best known for his handling of the recent Vioxx litigation. “He is the guru among all federal judges for handling MDLs fast, quick and fairly to both sides,” said a New Orleans attorney who argued the Vioxx case before Fallon. “The defendants respect him as much as the plaintiffs do. He doesn’t tip the scale in any direction, and he gets the job done,” quoted the HeraldTribune.com. An MDL is a Judicial Panel on Multidistrict Litigation, simply, a group of federal judges, explained the HeraldTribune.com. All Chinese drywall litigation nationwide is part of what is now MDL-2047, with Fallon presiding, explained the HeraldTribune.com.

The U.S. Consumer Products Safety Commission (CPSC) has received more than 681 complaints from residents of 20 states regarding Chinese drywall; the majority—510—originated from Florida. Homeowners have complained that fumes from the Chinese drywall produce a “rotten eggs” odor that permeates their homes, and causes metal, including air conditioning coils and even jewelry, to corrode. Eye irritation, sinus problems, and respiratory symptoms have also been reported among people living in homes containing Chinese drywall.

People with homes that have been made unbearable because of Chinese drywall can see this as good news because the quicker litigation begins, the sooner settlements may be reached or possibly verdicts that give them back a home.