The court considered whether damages to the plaintiffs' home caused by Chinese drywall were covered under their homeowners policy. Dupuy v. USAA Cas. Ins. Co., 2012 U.S. Dist. LEXIS 31890 (M.D. La. March 9, 2012).

   The plaintiffs' complaint alleged that the Chinese drywall "emits odorous gases that cause damage to air-conditioner and refrigerator coils, copper tubing, electrical wiring, computer wiring, and other household items." Plaintiffs claimed damage to insulation, trimwork, floors, cabinets, carpet, and other items.

   The court first determined that the direct, phyiscal loss fell within the policy's "property damage" definition. The inherent qualities of the Chinese drywall required removal and replacement due to a direct, physical loss.

   The court next considered exclusions in the policy. Loss due to faulty, negligent, inadequate or defective materials were excluded. However, the policy covered "any loss that ensues from the such [damage], that is not otherwise excluded or excepted . . . ." The plain text of this exclusion meant the drywall itself was not covered.

   Further, the corrosion exclusion barred covering "loss . . . caused by or consisting of . . . smog, rust, or other corrosion, mold, wet or dry rot . . . ." Plaintiffs simplistically pled that the damage was not caused by corrosion, but by the drywall itself. Plaintiffs failed to explain how the noxious gasses from the Chinese drywall caused damage to the coils, wiring, and other metallic items. Instead, they hoped the ambiguous allegations would be resolved in their favor. This effort failed and did not get plaintiffs around the corrosion exclusion.

   While the policy could conceivably provide coverage under the ensuing loss provision, plaintiffs avoided certain factual allegations they were required to make under Twombly and Iqbal. To pursue claims under the ensuing loss provision, plaintiffs had to plead facts instead of conclusory allegations. At the very least, plaintiffs had to allege how the drywall caused damage to the trimwork, carpet, etc., not simply that it did so.

   Accordingly, USAA's motion to dismiss was granted.