Pennsylvania Litigation Blog : Pennsylvania Litigation Lawyer & Attorney : Barley Snyder Law Firm : Serving Lancaster, Reading, York, Chambersburg

  Builders, developers, sub-contractors, shipping companies and suppliers, importers, distributors, architects and others may potentially be impacted if litigation in this area becomes prevalent in the Northeast, as the Gulf Coast is already seeing mass tort litigation forming. In particular, it is important to review insurance policies early to ascertain whether coverage is provided in the event of a claim. Further, we recommend checking your supply chain to identify drywall sources, handling and documentation and preserve any documents involved.

 There has been a great deal of discussion recently with respect to property damage and personal injury claims arising from Chinese-made drywall, which is alleged to have contamination issues causing property and personal injury damages. While the science behind this remains murky, the problem may be particularly significant as statistics show that there are approximately 600 million pounds of Chinese-made drywall in at least 60,000 homes in the U.S.A. today. Commercial applications can also be involved.

According to an April 17th article in the Wall Street Journal, “Complaints about foul smelling Chinese-made drywall that first emerged in a few dozen homes in Florida in January have spread to hundreds of homes in several states.” As we saw with mold and synthetic stucco, the science surrounding Chinese-made drywall is still being developed. CNN reported in March that the drywall is alleged to have high levels of sulfur, and that the material emits sulfur-based gases that smell of rotten eggs and corrode piping and wiring, causing electronics and appliances to fail. At this point, the Gulf Coast has been in the forefront of these claims as high temperatures and humidity are purportedly primary triggers of problems resulting from the Chinese-made drywall. The United States Consumer Products Safety Commission has posted an internet alert on Chinese drywall, noting that it has received 1,174 reports from residents in 24 states who believe their health symptoms or the corrosion of certain metal components in their homes are related to the presence of drywall produced in China. Consumers largely report that their homes were built in 2006 to 2007. recommend checking your supply chain to identify drywall sources, handling and documentation and preserve any documents involved.

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In the case Wampum Hardware Co v. DEP (March 2009), the Environmental Hearing Board sustained an appeal of a DEP order which was issued to Wampum relative to a blast at Wampum's quarry. The blast in question ejected rock into the air, which rock was expelled several hundred feet from the site of the blast. The blaster established a 950 foot safety zone which was nearly twice the size required by DEP regulations. No rock was expelled from the safety zone. The closest that any rock landed to any person on the site was 250 feet. Rock from the blast traveled up to 700 feet from the blast, which clearly was beyond what would have been the required safety zone under the regulations. The regulation that DEP relied on to issue the Order provided: “blasting…may not be done or performed in a manner…constituting a hazard or danger or do harm or damage to persons or property in the area of the blasting.” The Board found that there was no evidence that any harm or hazard to persons or property in the area of the blasting, due to the size of the safety zone. As part of DEP's order, Wampum was direct to revise its blasting plan and as a result, agreed to change the material used for stemming shots, to lower the depth of stemming and to increase the delay in shots, each of which were designed to decrease the potential for flyrock. It appears that the Board missed the point that the blast at issue was not properly designed and fired, as rock traveled well beyond what would have been anticipated within the typical safety zone, the fact that no one was hurt was not due to design, but rather good luck. 

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The Home Improvement Contractor Registration Act has become the law in Pennsylvania and is due to go into effect this Summer. At least part of the goal of this Act is to curb the impact of “fly-by-night” contractors by requiring all contractors that work in the residential home improvement area to register in a statewide database. The Act is designed to carry enforcement provisions and serve the purposes of protecting the public as well as legitimate contractors. It is expected that a form contract will be promulgated prior to the effective date of the Act. Highlighted points include:

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In 2006, the Superior Court of Pennsylvania and the Commonwealth Court of Pennsylvania issued decisions that may dramatically effect an injured party’s right to now recover economic (only) loss damages from “facility owners” in receipt of notices through Pennsylvania’s One Call Act and their failures to properly comply with the Act, and, “other professionals,” that are “in the business of supplying information” that provide false or inaccurate information when acting in compliance with the Act. The theory of recovery may differ between facility owner and a party that is a provider of information largely depending upon the status of the injured party and privity of contract or agreement, although the end result is the same--i.e., an aggrieved party may now be permitted to seek recovery for losses that are  purely economic that might otherwise have previously been precluded pursuant to the economic loss doctrine. 

The law, however, is far from settled. In fact, re-argument has been granted in that matter decided by Superior Court, now withdrawn and awaiting decision. Nevertheless, the cases are interesting from the standpoint of demonstrating both the courts trend of perhaps expanding the scope of recoverable economic damages, generally, where the actions sound in tort rather than contract law where privity of contract can not be established and more directly relating to actions maintained pursuant to the One Call Act. 

In the matter Excavation Technologies, Inc. v. Columbia Gas Company of Pennsylvania, (Pa. Super 2006)(re-argument granted - awaiting decision), the Superior Court permitted an excavator to seek recovery from a facility owner, and in this case, a utility company, for economic loss damages where a utility company allegedly marked several lines improperly, and, in some instances not at all. The utility company argued the excavator was precluded from maintaining an action because all of the damages were economic only and sounded only in tort, thus, were precluded pursuant to the economic loss doctrine where no privity of contract could be established. 

In its original holding, the Superior Court, relying upon Bilt-Rite Contractors, Inc. The Architectural Studio, 581 Pa. 454, 866 A.2d 270 (2005), reasoned that where information is negligently supplied by one in the business of supplying information, such as an architect, design professional, or in the instant action, a utility company, and where it is foreseeable that the information supplied will be relied upon by third persons, even absent privity of contract, a party may be held accountable for their consequences of a negligent failure to perform services in a competent fashion. The Court indicated that a duty exists to provide information accurately because parties justifiably rely upon information received from services required and provided pursuant to the One Call Act, and in fact, it is in the public’s interest for reporting companies to report accurately, the Court held that companies required to comply with the One Call Act are subject to negligent misrepresentation claims. 

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Allstate Insurance has lost a case in which it denied coverage to a Louisiana man who lost his home to Hurricane Katrina. The dispute centered around whether the home was destroyed by wind or storm surge. Storm surge damage was not covered by insurance, which resulted in a battle of the experts as to the cause of the home's destruction:

Jim Neva, a surveyor and engineer who inspected the house for Allstate, initially told Robert Weiss, who is listed as the policy holder, and his wife, Merryl, that wind may have destroyed the home before the surge of water washed away its remnants.

He later backed off that conclusion, however, and deferred to engineering consultant Craig Rogers of Rimkus Consulting Group. Rogers, who wrote the final report on the home for Allstate, convinced Neva that storm surge demolished the house.

Rogers said he didn't personally inspect the property until after he wrote the report. He said he based his conclusions in part on evidence gathered by other Rimkus engineers - a practice he described as common. But Trahant questioned the move.

"Why did Allstate elect to rely on the one engineer who never set foot on the property until long after he stamped his report?" Trahant said in closing arguments.

The $2.8 million verdict included a $1.5 million penalty for delay in payment of the claim.  The jury's decision, including the hefty penalty, will no doubt be closely analyzed by the insurance industry and plaintiff's bar in light of the numerous similar disputes pending in Lousiana and Mississippi.

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OSHA has set forth a standard that an employer shall insure that each employee uses protective footwear when working in areas where there is a danger of foot injuries due to falling or rolling objects, piercing the sole or where such employees feet are exposed to electrical hazards. Employers have frequently had questions over when safety shoes are required and who has to pay for them. Generally, it is believed that the OSHA standard will be interpreted with an eye towards the employer’s experience with foot injuries to determine whether there has been a history of foot injuries due to work-related accidents. Where the hazard is particularly great, a history of prior accidents may not be required. OSHA representatives have recently announced that they are “working on the standard to tighten it up,” presumably to create some certainty as to when protective footwear will be required in the workplace. 

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