Chinese Dryall Coverage Litigation
Chinese drywall coverage litigation proceeds apace
David Klein and Alexander Lathrop
August 5, 2010
Granite State Insurance Company and New Hampshire Insurance Company (both AIG companies) recently filed a complaint for declaratory judgment in a Florida federal district court against drywall supplier American Building Materials, Inc. ("ABM") and home builder KB Homes, Inc., alleging that their policies do not cover claims arising from defective drywall. Granite State Ins. Co. v. American Bldg. Materials, Inc., Case No. 10-01542 (M.D. Fla. July 13, 2010.) Homeowners have asserted numerous claims against ABM and KB Homes alleging that ABM-supplied drywall in homes built by KB Homes emits sulfur-related chemical compounds causing property damage and bodily injury. Granite State and New Hampshire allege that the defective drywall does not constitute "property damage," and that the chemical emissions from the defective drywall are "pollutants," and therefore coverage is barred by the pollution exclusions in the policies. The case comes shortly after a Louisiana judge ruled that a policy's pollution exclusion did not bar coverage for Chinese drywall claims and a federal district court in Virginia reached the opposite conclusion.