A federal judge in New Orleans has denied requests by more thana half dozen insurers to have Chinese drywall litigation againstthem rejected.

Judge Eldon E. Fallon of the U.S. District Court for the EasternDistrict of Louisiana, who is presiding over multidistrictlitigation (MDL) on Chinese drywall, has ruled that subcontractorsdo not need to be a part of the lawsuits.

One of the cases at issue is Patevs. American International Specialty Lines, et al., filed inDecember 2009 by a trustee for the WCI Chinese Drywall Trustagainst WCI, a Florida contractor.

Subcontractors installed the drywall for WCI and took outinsurance policies naming WCI as an additional insured. Insurers ofthe subcontractors tried to tell the court that the case should bedismissed because the subcontractors were not required to bethere.

The insurers argued that subcontractors should have had aninterest in being present for the case since their insurance fundscould be paid out to the plaintiffs, leaving them with little or nomoney for future defense.

Robert M. Horkovich, an attorney with New York-based law firmAnderson Kill & Olick, who is representing the WCI trustee,said the motions to dismiss were attempts by the insurers to stayout of the MDL and out of Louisiana, known for its pro-policyholderstance on the pollution exclusion. In contrast, Florida rulingshave gone pro-insurer, he said.

Insurers have stood behind the exclusion to avoid coverageobligations.

“When WCI was added as a named insured, it was WCI's insurance,”Mr. Horkovich said. “We didn't need the subcontractors there todetermine that.”

Judge Fallon agreed. He said the best course was to present thecases without the subcontractors and that the “court sees no reasonto impose the burden of litigation on the subcontractors, nor doesit find dismissal of the present cases from the MDL warranted.”

Mr. Horkovich said the next move is to request a summaryjudgment from Judge Fallon on the pollution exclusion issue forthird-party claims.

The other cases implicated by the ruling are CenterlineHomes Construction Inc. vs. Mid-Continent Casualty Co. andNorthstar Holdings Inc. vs. General Fidelity InsuranceCo.

The insurers that looked to have the cases dismissed wereAmerican Guarantee & Liability Insurance, Amerisure MutualInsurance, Chartis, FCCI Commercial Insurance, Landmark AmericanInsurance, Mid-Continent Casualty, National Union Insurance Co. ofPittsburgh, and NGM Insurance.