WCI Chinese Drywall Trust Files Suit Against 14 Insurers

January 6, 2010

The Trustee for the WCI Chinese Drywall Trust has filed suit against 14 insurance companies in U.S. District Court, Eastern District of Louisiana, seeking indemnification for losses arising from claims for the development and sale of homes allegedly containing defective Chinese manufactured drywall.

The suit is the first insurance coverage action regarding Chinese drywall to be filed in the Chinese Wall Board Multi-District Litigation in the Eastern District of Louisiana.

The WCI Drywall Trust (WCI) was formed in July 2009, after the bankruptcy of homebuilder WCI Communities and its subsidiaries, to assume liability for claims alleging harm from Chinese drywall installed in homes built by WCI. More than 700 homeowners may seek recovery through the Trust.

WCI, its subsidiaries and subcontractors purchased insurance policies with aggregate limits of more than $200 million during the policy periods triggered by Chinese drywall claims, which began in 2006. In response to WCI’s claims, the insurance companies and subcontractor insurance companies have either denied coverage, reserved their rights, failed to reply to WCI’s notice letters, or otherwise failed to acknowledge coverage.

WCI seeks a declaratory judgment finding coverage for the claims, as well as damages for breach of contract.

“A prompt and thorough insurance recovery is vital to enabling homeowners suffering from the effects of defective wallboard to remediate their homes and recover their losses,” said Robert M. Horkovich, lead counsel to the Trustee for the WCI Chinese Drywall Trust.

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

WCI is represented by Robert M. Horkovich of New York-based Anderson Kill & Olick, P.C. , and Burton LeBlanc of Baton Rouge, LA-based Baron & Budd, PC.

Source: Anderson Kill & Olick

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