Posted on 09 May 2011
A Hillsborough County, Florida circuit judge ruled that an Odessa homeowner's damage from toxic, Chinese-made drywall is covered by his homeowner insurance policy - a ruling that could have widespread implications on the state's insurance industry.
Judge Robert Foster said the gas emanating from the drywall was an "unforeseen occurrence" that caused a "chemical reaction." He said he found no exclusion in the Springfield, Ill.-based Teachers Insurance Co. policy that should keep the company from paying to fix Craig and Melissa Walker's Odessa home.
"These (gases) then circulated throughout the house causing an odor, damage to the components within the home and creating an irritant and hazard to human beings," Foster said in his order.
Foster's ruling is particularly noteworthy because it is the first known ruling in Florida, and perhaps in the nation, in which a judge has ruled that a homeowner's insurance policy covers Chinese drywall.
Thousands of homeowners have the bad drywall, most of them in Florida. The drywall emits a gas that corrodes metal, destroys appliances and, some owners say, makes people sick.
The only way to remediate a home is to gut it down to the studs and rebuild, the federal government has said. That typically costs a whopping $100,000 — even more depending on the square footage.
Some builders have done that, but others either won't or have gone out of business. Insurance companies have said their policies typically don't cover defective drywall. Many homeowners have been stuck with uninhabitable homes or have been forced to make the costly repairs themselves.
The Walkers went to their insurance company for help.
"They didn't even send anybody out," Craig Walker said. "They just immediately told us, 'We don't cover that.' "
Lynne McChristian, the Florida representative for the New York-based Insurance Information Institute, said companies have various ways of wording what they cover in policies.
"Homeowners insurance policies were never designed to cover defective materials and defective building," she said.
Most policies have exclusions that pertain to defects, she said, and that's why many insurance companies have denied Chinese drywall claims.
"Coverage would depend on the interpretation of that language," McChristian said.
That's the case in the Walkers' lawsuit. The homeowners sued the insurance company for not covering their damages.
"Our clients paid for insurance and had loss," said Anthony Martino Sr., a Tampa lawyer who represented the homeowners. "This is no different than any other unexpected loss and should be treated no differently than other losses, like lightning or fire."
The Tampa lawyer representing Teachers Insurance Co. argued that a "wear and tear" exclusion and a defective material exclusion pertained to the corrosion of the drywall.
But Judge Foster disagreed. He said the drywall was not defective because it "serves its purpose and functions as drywall." But, he said, the drywall also does something else; it emits a corrosive gas.
Scott Frank, lawyer for the insurance company, declined to comment for this story.
Foster said the Walkers' policy should also cover damage to personal belongings. The policy specifically covered smoke damage, and he interpreted smoke to be the same as gas.
"The court finds that the ordinary meaning as found in a Merriam-Webster dictionary, defines 'smoke' as a 'suspension of particles in a gas.' "
Foster wrote in his order: "The court has applied the definition that allows coverage, which is at least as reasonable as the definition that might exclude coverage."
Foster did not determine how much money the policy should pay the Walkers. That will be determined by a jury. A trial date has not yet been set.
The Walkers lived in their home for two years before moving out two years ago. All this time, they say, they paid their mortgage in addition to rent for another house for their three children.
"I hate that we have to keep waiting," Craig Walker said. "But I feel a lot better now that we have this judge's decision."