Chinese Drywall Lawsuit Filed in Louisiana but Most Claims Are in Florida

On Jan. 6, the WCI Chinese Drywall Trust, an entity formed in bankruptcy proceedings of residential homebuilder WCI Communities Inc., announced it had filed suit against 14 insurance companies seeking indemnification for losses arising from claims related to allegedly defective Chinese manufactured drywall.

WCI builds homes and residential communities in Florida, New York, New Jersey, Virginia, Maryland and Connecticut.

Although the suit was filed in U.S. District Court for the Eastern District of Louisiana, the claims at issue are primarily in Florida — including Ft. Lauderdale, Ft. Myers and Bradenton. According to papers filed with the court, the venue is appropriate because the defendant insurance companies “are subject to personal jurisdiction in this judicial district.”

The affected homes were closed on primarily between Sept. 5, 2006, and Sept. 12, 2008. WCI began receiving drywall complaints in 2006.

The 14 insurance companies listed in the suit are:

1. American International Specialty Lines Insurance Co.
2. American Guarantee and Liability Insurance Co.
3. Amerisure Insurance Co./Amerisure Mutual Insurance Co.
4. Auto-Owners Insurance Co.
5. FCCI Commercial Insurance Co./FCCI Insurance Co.
6. Hermitage Insurance Co.
7. Illinois Union Insurance Co.
8. Landmark American Insurance Co.
9. Lexington Insurance Co.
10. Mid-Continent Casualty Co.
11. National Union Fire Insurance Company of Pittsburgh PA
12. Old Republic Insurance Co.
13. Scottsdale Insurance Co.
14. Steadfast Insurance Co.

WCI Communities Inc. and subsidiaries filed for bankruptcy on Aug. 4, 2008, and July 1, 2009. A plan of reorganization created the Chinese Drywall Trust to assume WCI’s liability or losses relating to Chinese drywall claims, and to pursue recoveries from insurance companies and to prosecute actions against subcontractors and suppliers, etc. Robert C. Pate was named trustee.

Aggregate insurance policy limits purchased by WCI, its subsidiaries and subcontractors amount to more than $200 million. The Trust has said that more than 700 homeowners may seek recovery.