EAPD participated in the October 22, 2009 sessions of the Chinese Drywall Insurance Conference taking place in Miami Beach, Florida.  The day included a lively discussion between attorneys on all sides of this emerging issue, including attorneys representing homeowners, builders, suppliers, and insurers.  Summaries of those discussions are set out below.

The Drywall Morass and the Legal Claims It Has Spawned – A Comprehensive Overview of the Current State of the Litigation

The discussion of this topic focused on the current status of the existing litigation as well as discussions regarding how many homes this issue could potentially impact.  The speakers also debated the current state of the science, inspection and remediation protocols, as well as the existence of domestic (non-Chinese) drywall claims.

What Types of Policies May Respond to Drywall Claims and How To Access Them

The speakers on this topic discussed the principal varieties of coverages that may be implicated in these claims, including a review of relevant first-party and third-party policies.  The speakers primarily discussed potential availability of coverage under homeowners, CGL and builder’s risk policies.

Potential Hurdles to Coverage: The Pollution Exclusion

The importance of choice of law issues was the centerpiece of the speakers’ discussions on this topic.  The speakers noted that the core states involved in this issue (Florida and Louisiana) have vastly different approaches to the pollution exclusion.  The speakers further discussed the characteristics of Chinese drywall claims and their application to commonly found pollution exclusion language.

Avoiding the Pitfalls of Asbestos Litigation:
Recognizing Where the Similarities to Chinese Drywall Litigation Begin and End

The keynote speaker at lunch, a policyholder attorney, advocated for outside of the box thinking with respect to finding a quick solution to the Chinese drywall problem.  He discussed the history of asbestos litigation and warned against repeating that model.

Third-Party (CGL) Policies: Is Coverage Available for the Lawsuits Brought Against You?

Policyholder and insurer attorneys discussed the anatomy of a Chinese drywall claim and compared it against typical CGL policy language.  The speakers specifically discussed the definition of “Occurrence”,  the operation of “Expected or Intended” and “Known Loss” issues, the “Your Work”, “Your Product”, “Sistership”, “Impaired Property” and other exclusions.  Speakers also conducted a detailed discussion of trigger of coverage issues in the relevant jurisdictions.

Who Are Those Insureds? Additional Insured Issues

Policyholder and insurer attorneys discussed additional insured issues, noting that these issues might be of particular significance given the types of insureds involved in the existing Chinese drywall litigation.