After more than four years of litigation, five manufacturers of exterior insulation and finish systems (EIFS) have agreed to a multimillion dollar settlement that will help hundreds of North Carolina homeowners repair or replace damaged EIFS systems.
The final settlement, approved on March 24, 2000 by State Superior Court Judge Ben Tennille, applies to five of the original nine defendants in the case: Parex, Sto Corp., WR Bonsal, Continental Stucco Products, and Dryvit Systems. Three other EIFS companies — Thomas Waterproof Coatings, United States Gypsum, and Shields Industries — haven’t settled. Senergy broke from the pack and reached an agreement with the plaintiffs about two years ago.
To receive payment, the homeowner must show proof that the company installed the EIFS system and must have an inspection done. An independent inspector is required to inspect each house and submit a report with field notes and photographs. The inspection must reveal two or more moisture readings greater than 25% from separate water sources or 2 square feet of wall with evidence of loss of structural integrity of the sheathing. The five EIFS companies have hired a claims administrator to handle the process and have also agreed to pay for the initial home inspection, hire and train independent inspectors, and pay court costs.
The settlement applies to everyone who, as of September 18, 1996, owned or formerly owned any one- or two-family residential dwelling or townhouse in North Carolina that was clad, in whole or in part, with one of the settling defendants’ EIFS. Commercial structures are not included in the settlement.
The claim form and other detailed information are posted on the Web at www.ncstucco.com.
Judge Tennille, in ruling that the settlement is “fair, reasonable, and adequate,” noted that it provides some immediate relief to North Carolina homeowners, without further litigation, under circumstances where “the liability issues are still very hotly debated.” Indeed, the EIFS manufacturers have long maintained that home builders, window manufacturers and installers, and other third parties bear much of the responsibility for the failures and should have been included as defendants in the suit. To simplify matters, Judge Tennille disallowed that motion from the start, noting that the EIFS manufacturers can seek redress from those third parties through the courts.
Though it is hard to imagine anything good actually coming out of the EIFS catastrophe in North Carolina and the corporate fortunes that were wasted litigating Ruff vs. Parex, the episode has produced at least three long- term benefits. First, it has provided a technological push toward better moisture meters and improved our understanding of how they should be used (or not) in the field. Second, we’ve learned once again not to depend on county code inspectors for quality control, especially in a red-hot construction market where they are drastically overworked and undermanned. Lastly, the financial pain and pressure from insurance companies has prompted all of the EIFS companies to offer and recommend residential systems that have some sort of integral drainage. Yes, Virginia, windows do leak. And redundancy in building systems is a super idea.