The Case of the Chinese Drywall
Wednesday, September 30th, 2009
What do you do when your new home is making you sick? And you learn there’s something in the building materials that is making the home unlivable? You’ve sunk your life’s savings into this home, and if you walk away from it you’ll have nothing. But your homeowner’s insurance refuses to pay, and you live in a "tort reform" state that limits your ability to sue for damages. What then?
This is the nightmare being lived by homeowners whose new homes contain defective drywall manufactured in China. The drywall puts out emissions of the sulfurous gases carbon disulfide, carbonyl sulfide, and hydrogen sulfide. On humid days, homes fill with an unbearable rotten-egg stench. People living in the homes report eye and skin problems, breathing difficulty, chronic coughs and bloody noses. New appliances, such as refrigerators and air conditioners, corrode and soon become unusable.
Rebecca Mowbray reports for the New Orleans Times-Picayune that “Tort reform prevents Chinese drywall victims in Louisiana from making a full recovery.” Because of the Chinese drywall, an estimated 4,000 to 7,000 Louisiana households face financial ruin. However, tort reform legislation passed in 1996 probably will not allow them to make a recovery.
“The most challenging factor of all is that the parties of ultimate responsibility, the Chinese manufacturers, may be beyond the reach of U.S. law, a circumstance some say is made worse by Louisiana’s tort reform,” Mowbray writes.
Under the pre-1996 law, the homeowners could have sued the Louisiana companies that imported and installed the drywall for 100 percent of their losses. This would have given them the money they need to rebuild, and the Louisiana companies would have sued other companies “further up the chain.”
But today, the local companies are responsible only for a portion of the fault. If a court decides the local companies bear only 20 percent of the fault, the homeowners can recover only 20 percent of damages. This may be good for business, but it is not fair to the consumer. And to make matters worse, residential insurers have been denying claims based on policy exclusions for pollution or “latent defects” in materials.
Although there is no indication the drywall also poses an asbestos hazard, the case of the Chinese drywall provides lessons that relate to asbestos exposure as well. In recent years a number of products exported from China have been contaminated with asbestos. Asbestos exposure causes a number of diseases, including the deadly lung cancer mesothelioma.
The unfortunate situation of the Chinese drywall shows us that some costs cannot be legislated away through tort reform. The Louisiana Recovery Authority, which was established to help the state rebuild after Hurricane Katrina, on Tuesday set aside $5 million to help homeowners recuperate their losses from Chinese drywall. So a cost has been pushed onto taxpayers. This is better? At least the old system gave importers and other companies an incentive to be careful with imported materials.
So far, it’s not certain how much of the contaminated drywall was imported into the U.S. or how many homes might be affected. One estimate said that since 2006 more than 550 million pounds of Chinese drywall entered the U.S., which is enough to build 60,000 average-sized homes. However, import of the drywall began two years earlier, in 2004. Further, some homes have been found in which Chinese drywall was mixed with other drywall, meaning a lot more than 60,000 homes might contain it.
So far, most of the complaints have come from the southern states, where hot and humid weather makes the drywall problem worse. Eventually the drywall might be found in homes throughout the U.S.
