Homeowner Sues Their Homeowners Insurer for Chinese Drywall Defects

On the Chinese Drywall Blog, we've talked about class action suits, individual suits against builders and suppliers, suits by builders against its suppliers, and other similar actions. However, in Florida, one couple seeks to hold another party liable for their Chinese Drywall damages:  their own homeowners insurer. The claim makes a great deal of sense, and it adds to the mystery of who will eventually be responsible for the Chinese Drywall damages. The suit was brought in a Florida U.S. District Court, and is captioned Baker v. American Home Assurance Company, Inc., Middle District of Florida, No. 09-cv-188-FtM-99DNF.  (read here) According to the complaint, the homeowners made a claim in December 2008 related to damages caused by Chinese Drywall.  The complaint describes the cause of the damage as coming from "drywall...emitting gases which have damaged the Subject Property and the contents therein." After inspection and testing, the insurer denied the claim for "contamination."     The Baker complaint argues that the damages were not caused by "contaminants" as defined by the policy. The policy at the center of the Baker action defines "contaminates" as follows:
An impurity resulting from the mixture of or contact with a foreign substance.
According to the complaint, there was not 'mixture or contact with a foreign substantance,' and therefore, the pollution exclusion would not apply. The Baker exclusion is far less detailed then some of the other pollution exclusions found in Commercial General Liability policies...and therefore, may be interpreted differently. If pollution exclusions in homeowners policies are generally less complex than GCL policies, it may be prudent for homeowners to make timely claims against their homeowner policies if they are faced with Chinese Drywall damages. It's too early to predict exactly who will be responsible for damages associated with Chinese Drywall, especially since so many parties are involved.   To rely simply on one remedy (i.e. a class action) is probably an irresponsible choice for homeowners faced with significant damages. We're likely to see a flood of suits in the coming months against builders, home insurers, suppliers and other responsible parties.   Home insurance policies will likely file subrogation claims against builders, suppliers and other parties as well. We'll monitor the Baker suit as it proceeds.  Stay tuned.
Scott Wolfe
About the Author: Scott Wolfe
Scott Wolfe, Jr. obtained his J.D. degree from Loyola University of New Orleans, and his B.A. from Southern Methodist University in Dallas, TX. In 2006, 2007, 2008 and 2009, Scott was recognized as a Leader in Law by CityBusiness Magazine. The son and grandson of general contractors, Scott is a construction litigator in the Pacific Northwest, and the founding member of the bi-coastal law firm, Wolfe Law Group. Scott is also the founder and CEO of Express Lien, Inc., a legal document preparation service for contractors. In 2008, City Business Magazine recognized Scott as one of its Innovators of the Year for the Express Lien concept. As an entrepreneur himself, Scott has a strong background in business and commercial transactions and laws. He focuses his practice on the legal issues facing the construction industry, and has represented clients in multi-million dollar construction disputes in litigation and alternative dispute resolution proceedings. Scott is a LEED AP.

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