Exclusions barred the homeowners from recovering for losses caused by Chinese drywall in their home. Ross v. C. Adams Const. & Design, L.L.C., 2011 La. App. LEXIS 769 (La. Ct. App., released for publication Oct. 5, 2011).
Two years after purchasing their home, the Rosses began experiencing chronic malfunctions in the heating, ventilation and air conditioning system. After discovering the presence of gypsum drywall, or "Chinese drywall", the submitted a claim to their insurer, Louisiana Citizens Property Insurance Company, for damages caused by the Chinese drywall. Louisiana Citizens denied the claim.
The Rosses sued. The trial court granted summary judgment to Louisiana Citizens based upon exclusions in the policy.
On appeal, the appellate court first agreed the Rosses had sustained a direct physical loss. The inherent qualities of the Chinese drywall created a physical loss to the home and the drywall had to be removed and replaced.
The court then turned to the various exclusions relied upon by Louisiana Citizens. First, the policy excluded loss caused by faulty, inadequate or defective materials used in repair. The Rosses argued the Chinese drywall was not faulty, inadequate, or defective because it functioned as drywall and served its intended purpose. The court disagreed. The plain meaning of "faulty, inadequate or defective" material led to a conclusion that the drywall was a faulty, inadequate or defective material and was specifically excluded by the policy.
Next, the court agreed with Louisiana Citizens that the Chinese drywall was a latent defect that was hidden and unknown for two years. Therefore, the exclusion for latent defects was applicable.
The policy also excluded loss caused by corrosion. Allegations in the Ross' petition that the emission of gases from the drywall caused corrosion of the components in their home made this exclusion applicable.
Finally, the pollution exclusion barred coverage. The sulfuric gas emitted from the drywall qualified as a pollutant under the policy's definition.
The Rosses also sought damaged for various contents of their home allegedly damaged by the Chinese drywall. The policy only covered loss to personal property when one of the sixteen specified perils listed in the policy existed. The emission of sulfuric gases from the drywall was not one of the listed perils.
Therefore, the claims submitted by the Rosses were not covered under the policy.
