A Norfolk Circuit Judge entered a default judgement against the Chinese manufacturer, Taishan Gypsum Co. Ltd., which sold defective drywall used in the construction of homes in Virginia and other states. This is the second ruling against the manufacturer this week.

According to the Virginian-Pilot, the hearing on Wednesday in Virginia Beach Circuit Court involved a couple suing over the drywall, and Thursday’s hearing included more than 170 homeowners in Virginia that currently have cases pending in Norfolk Circuit Court.

Venture Supply Inc., a former drywall supplier in Norfolk, is also being sued for importing the tainted Chinese drywall. Venture Supply named Taishan as a third party defendant and served the lawsuit to the Chinese manufacturer last year seeking a default judgement against the company.  This would mean that Taishan could be financial responsibility if Venture Supply Inc., losses the case.

This was the first time that the Chinese company has responded to a Virginia case. Their attorney, Jon Talotta says this is because it wasn’t clear whether or not U.S. Courts had jurisdiction over the Chinese company.

Ruling could cost drywall company: wavy.com

Watch the full episode. See more Need To Know.

Defective Chinese drywall; disclosure, assessed value, real estate tax exemption

“Requires licensees engaged by sellers and buyers, and landlords who have actual knowledge of defective Chinese drywall in a dwelling unit, to disclose that information to the prospective tenant or buyer. If a tenant is not provided disclosure within 60 days of discovery of defective drywall he may terminate the lease. The bill also provides, upon confirmation by a building official that defective Chinese drywall is present, that the commissioner or other assessing official may reassess the property accordingly. Local governments may also designate the property as a rehabilitation district for purposes of granting the owner a partial real estate tax exemption. This bill is a recommendation of the Housing Commission.”

Virginia’s Legislative Information System: HB 1610 Defective Chinese drywall; disclosure of information, real estate tax exemption.

In 2009 Dragas Management Corp., a Hampton Roads builder, faced threats by angry homeowners in Chesapeake and Virginia Beach whose homes were damaged by Chinese drywall.  Some hired attorneys, while others wrote their own demand letters, urging the builder to fix their homes or buy them back.

Dragas first attempted to notify it’s two insurance companies, but both denied coverage. 

So in good faith, Dragas signed remediation agreements with the homeowners to replace the drywall, damaged components, and to compensate them for relocation expenses. The agreement also stated that if the homeowner accepted the contract, they were to drop all property damage claims against the builder.

Dragas has been battling with their insurance companies over coverage ever since. Their first attempt to for a claim for coverage was dismissed, however they were allowed to refile the claim with more detail. After refiling they were granted permission for the case to move forward.

However, a summary judgment by the Norfolk U.S. District Court Judge Rebecca Beach Smith  was based on the following fact: “What the court finds decisive at this juncture in this case is that DMC [Dragas Management Corp.] had no ‘legal obligation’ to incur remediation costs ‘as damages,’ and this coverage is not available under any of the policies.”

The insurance companies argued that Dragas did not meet the requirements for coverage because Dragas “was not legally obligated to pay remediation costs as damages as is required to trigger coverage.” Instead coverage is meant to provide businesses against losses as a result of a legal liability and provides relief in the form of a legal defense to a lawsuit.

Sources:

1. No CGL Coverage for Contractor’s Repairs by Virginia Lawyers Weeklys 
2. Builders Mutual Ins. Co. v. Dragas Mgmt. Corp. et al., 2:09-cv-185

After 2 years, more than 170 Hampton Roads homeowners are still fighting the Chinese drywall battle.  According to the Virginian-Pilot, since many have sold their homes, lost them to foreclosure or bankruptcy.  Many who have sold their homes were only able to receive less than half of what they paid.

Virginia Beach homeowner, Colleen Nguyen, whose waterfront home resides in Little Neck, was forced to buy a second home and persuade the lender to offer forbearance on mortgage payments for the contaminated Chinese drywall home.  Their property was put on the market for $650,000, which was a little more than half of what it cost her. Since they’ve received an offer for $400,000 which they plan to accept.

In 2005, one of Norfolk’s construction suppliers imported more than 150,000 sheets of the contaminated Chinese drywall that was used to build homes in Hampton Roads.

Builder The Dragas Co., some of whose homes were built with the Chinese drywall, has paid to fix more than 70 homes.

Unlike the Chinese subsidiary Knauf Plasterboard Tianjin Co. Ltd who has agreed to a pilot program to repair 300 homes in other states, most Virginia homeowners have Taishan Gypsum Co. manufactured drywall who claims that U.S. courts do not have jurisdiction over the matter.

About a year ago Federal Judge Eldon Fallon in New Orleans awarded 7 Virginia homeowners $2.6 million, which Taishan has since appealed.

Since Attorneys have been battling insurance policy issues.

In May, Judge Mark S. Davis ruled that a commercial insurance policy from Builders Mutual Insurance Co. was too ambiguous to determine pollution exclusions.  Is another ruling, a Nationwide Mutual Insurance Co. policy was said to in fact bar the coverage for drywall.

“That Judge Davis declined to find our way on the pollution exclusion doesn’t end any of these claims,” said Richard Serpe, a Norfolk, Virginia attorney who represents most of the Hampton Roads  homeowners.

“But it went from a process where we had hoped for a clear consensus that, yes, there’s coverage, to a situation much more complicated,” he said. “We end up with a series of pigeonholes for some cases that will be covered and others that will not.”

View the FULL Virginian Pilot Article: Hampton Roads homeowners stuck in drywall limbo

ATTENTION ALL VIRGINIA CHINESE DRYWALL VICTIMS:

DEADLINES APPROACHING VERY SOON FOR SEEKING LEGAL REPRESENTATION:

It has been almost five years since Venture Supply Imported toxic drywall from China.  Virginia law requires that your claims for damage to property be filed BEFORE the expiration of five years.

If you have not sought legal representation to file a lawsuit or other claim for you in Virginia, it is critical that you act now to protect your rights.

If you would like more information contact us:

Law Offices of Richard Serpe, PC
Local: 757-233-0009
Toll Free: 877-5445323

www.ChineseDrywallClaims.com

The Internal Revenue Service (IRS) has announced that it would give victims of defective Chinese drywall a tax break by allowing them to claim their homes as a “casualty loss.”  According to the NY-Times, this will allow homeowners to make a deduction for the cost of repairs and damaged appliances.

According to the new policy, homeowners that pay to repair the damage can claim the payment as a ”casualty loss” during that year, as long as they have not been compensated by insurance or another party.  A casualty is defined as, “damage, destruction, or loss of property that results from an identifiable event that is sudden, unexpected, and unusual.”

There are several restrictions to this policy:

• deductions are allowed only if the amount exceeds $500
• deductions are allowed on amounts that exceed 10% of the taxpayers adjusted gross income for that year
• if you DO NOT have a claim, or a pending claim, for reimbursement through property insurance, litigation, or another source, you may claim the entire tax break
• if you do have a pending claim, you are eligible to claim a loss for 75% of the unreimbursed amount paid for damages

Click here to review the policy released by the IRS

According to the Herald Tribune, Virginia Senators Warner and Webb agree that this is an important effort made by the federal government, to provide some sort of relief to homeowners who are struggling financially due to Chinese drywall.  Senator Bill Nelson of Florida commented, “This is welcome and long overdue news.”

A Chinese drywall town hall meeting was held in Newport News, VA last night with representatives from the CPSC.

According to Wavy.com, representative Jay Howell went over a the steps that the Consumer Product Safety Commission has taken over the last year in testing the defective drywall, as well as drafting remediation guidelines.

There were questions concerning water safety, health problems, and  foreclosure but there seemed to be no answers.

“There were no representatives from the Health Department or the Centers for Disease Control in the meeting. Del. Glenn Oder (R-Newport News) who co-hosted the event said he would reach out to those agencies for future meetings.”

Homeowners were not the only ones present last night.  Renters who signed leases in homes who have discovered that they have defective Chinese drywall also attended the meeting.  There concern seemed to be focused on getting out of the situation without ruining their credit.

In what is being thought of by many legal experts as a “small victory” for insurers, the ruling last week is sparking much conversation.  (View the source article here: “Drywall damage not covered for Va. Beach man, from The Virginian-Pilot, provided by hamptonroads.com)

U.S. District Judge, Robert G. Doumar ruled last week that the policy which existed between a homeowner and TravCo. Insurance Company does not cover damages caused by defective Chinese drywall.  The problematic issue for the homeowner in the case was reportedly specific exclusions that were in the policy.  While the case might be disheartening upon first glance for homeowners across the country, this area of law is in flux, as courts are coming down on both sides regarding this particular issue.

The homeowner in this case requested his insurance company fix his Chinese drywall problem.  His appliances were malfunctioning and other electronics were corroding and ceasing to work.  According to the Pilot, legal experts believe the decision is binding only on this specific homeowner’s situation and policy.  There is the chance that other courts in other jurisdictions may very well rule differently on insurance policies and their relation to Chinese drywall damage.

The insurance companies facing mounting claimants pointing to dangerous drywall are paying close attention to how case law develops.  While insurance companies involved in litigation will presumptively utilize this case to their advantage, other cases exist where the judge has sided with homeowners.  For example, a recent case in Louisiana ruled that the homeowner’s policy did have to cover the damages his home sustained resulting from Chinese drywall, because the exclusions in the policy were not meant to disallow persons from filing claims regarding products that cause or “emit” pollution.   Compare this with the case relied upon in the instant case by Judge Doumar – a case allowing avoidance of liability because the contaminants in a water supply came from another source – and it seems to be apparent that that case involved a much less scrupulous contaminant.  Chinese drywall, unlike water, would enable the maker, distributor, builder, even possibly insurer to be more likely to know of the defect.  In addition, defective drywall causes harm by its emission; invisible particles disperse through the air, whereas contaminated water only produces its effects once “used” voluntarily.

Regarding the uncertainty of law in this area, the Virginian-Pilot noted how Judge Doumar expressed the ambiguities: “The judge acknowledged that the exclusions used by the insurer to deny coverage had been the subject of numerous court cases and that different courts in different states had reached different conclusions.” (click here for source article).

Norfolk attorney Richard J. Serpe represented the homeowner in this case and plans to appeal.  He told the Pilot that “”The language of these policies is so confusing that you’re going to have a dozen judges going off in different directions,” Serpe said. “Under Virginia law, an ambiguity goes in favor of the policy holder.”

Taishan Gypsum Co. Ltd, the Chinese drywall manufacturer that was ordered to pay $2.6 Million in damages to seven Virginia homeowners, has for the first time yesterday responded to the lawsuit with an appeal.

In April, U.S. District Judge Eldon Fallon, who is overseeing the Chinese drywall multi-district litigation process in the Eastern District of Louisiana, awarded $2,609,129.99 for seven families affected by tainted drywallmanufactured by the Chinese-controlled company – Taishan.  If you missed that article, view it here.

“Because Taishan never responded to lawsuits, Fallon entered a default judgement against the company last fall.  The company’s appeal and notice of appearance this week renewed hope that the company might eventually pay damages to local homeowners” (Virginian-Pilot). 

Recently the Consumer Product Safety Commission (CPSC) Drywall Information Center released a list of drywall manufacturers whose drywall produced high levels of hydrogen sulfide during testing. View the list here.

Judge Fallon awarded these damages based upon the relatively expensive and wide scope of remediating these homes.