Developer Ordered to Remove Chinese Drywall in Virginia

The Chinese Drywall saga and how it relates to builders shook up a bit in Virginia this week when the Chesapeake Board of Building Code Appeals ordered a developer to remove Chinese Drywall from a hotel that was days from opening. While not an order from a Virginia court, the board's action demonstrates that builders and developers may actually be committing code violations and breaching their duties to the construction project by installing Chinese Drywall - whether they're aware of it, or not. Aside from what this order says about builder exposure, what is perhaps more interesting here is that Chinese Drywall is still being used on construction projects in the U.S., as this  project was just nearing completion. Developer Dilip Patel said the order will delay the hotel's opening by at least six months. Here are some of the legal questions this situation will present for the parties:
  • Whether or not there is a liquidated damages clause, is this excusable delay?  Or will Patel be liable for delay damages?
  • Is this going to be a change order, or will the developer be forced to swallow the added expense?
  • If the drywall was given the time to cause damage, it's possible that Patel would have a claim against his insurer.    But what now?   No damage, no claim?
The Virginia board's order is going to delay this project for six months and certainly cost more than one hundred thousand dollars. It's an outstanding order made upon the developer to remove materials that [individually] showed zero problems.  Indeed, the science is not yet clear about whether the drywall itself is always cause for concern, or whether only a segment of the imported drywall is problematic.  The science is further lacking in attributing the initiating cause for contamination to the drywall itself, or some sort of interaction with the drywall and its surrounding climate. As far as the science was concerned, the board's chairman, Stephens Johnson, stated that he didn't "think [the developer] gave us enough data or information to override the codes or our concern for public health." We don't have the board's proceedings here at the Chinese Drywall Blog, and don't know exactly what science and evidence was considered.   Nevertheless, the order is a stirring demonstration of how builders and developers are exposed to liability in the Chinese Drywall crisis. Perhaps another call to individual land owners to seek remedy from their home builders, and not class actions? For builders, let's hope not.   For homeowners...we'll see.
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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