NU Online News Service, Nov. 12, 3:49 p.m. EST
A Florida court ruling, if adopted by other judges and upheld by higher courts, could limit builders' liability for damages caused by defective drywall, according to lawyers at an insurance industry trade group.
The decision, by a Palm Beach County judge, held that because homebuilders did not manufacture the problematic drywall and were not within the chain of distribution, they could not be held "strictly liable" for the alleged defects.
Jim Whittle, assistant general counsel and chief claims counsel at the American Insurance Association, said the decision was the correct outcome.
He said that under this decision, "a homeowner is not going to be able to assert strict product liability claims against non-manufacturers for those outside the distribution chain."
But, he noted that it is only one lower-court decision involving one plaintiff, and the case law in drywall cases is still evolving.
Mr. Whittle said, "The decision may be authoritative as a thoughtful examination of Florida law."
The decision was recorded Nov. 5 and made public Wednesday by Judge Glenn Kelley of the 15th Judicial Circuit in Palm Beach County, Fla.
The plaintiffs in most cases are asserting that they are affected by off-gassing of a variety of things associated with drywall mostly manufactured during a specific period of time in China.
In this case, a homeowner, Marlene Bennett, sued Florida-based homebuilder Centerline Homes Inc. under Florida contract, tort and nuisance laws.
The lawsuit sought to blame the homebuilder, installer, supplier and manufacturer of the drywall for installing faulty materials, and sought multiple damages including economic losses for declines in home values and personal losses based on the alleged nuisance caused by fumes emitted from the drywall.
Mr. Whittle said the decision "means that when you have a contract, by and large you are not going to pursue tort-type damages when all you are examining is a breach of contract." He said that is, "in essence, the contractual privity of economic loss rule in Florida," according to the court
Moreover, under the decision, "homeowners are going to have a difficult time asserting private nuisance claims for defective drywall installed in their home," Mr. Whittle said.
"The court analyzed the state's private nuisance law and effectively found that those are really claims between landowners for things tied to the land itself, not the drywall inside a home," he said.
Mr. Whittle acknowledged that this "is an important issue for property and casualty insurers, although no one has been able to accurately quantify the full extent of the problem yet."
Litigation, according to various sources, is ongoing on a state-by-state basis, with Virginia, California, Florida and Louisiana dealing with the most litigation.
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