Compensation plan for roofs wins approval

July 10, 1991|By Blair S. Walker

A plan to compensate up to 250,000 homeowners -- including tens of thousands of Marylanders -- for roofs allegedly weakened by a fire-retardant chemical has won preliminary approval after seven months of mediation.

Kenneth Feinberg, a Washington attorney, cautioned that the pact, which would call for more than 70 chemical treaters, homebuilders, insurance companies and wood manufacturers to put money into a fund, still faces obstacles. Mr. Feinberg is mediating the out-of-court resolution of the dispute.

The problem involves fire retardant-treated plywood that was used to make roofs, many of which subsequently began to leak, crumble or discolor, resulting in substantial repair bills. The plywood was widely used by the homebuilding industry from the late 1970s until last year. Many of the affected houses are town homes.

"There is an effort under way on the part of all of the companies involved in the plywood-roof problem to forge a settlement that would permit homeowners with degraded fire-retardant roofs to get a new roof," Mr. Feinberg said yesterday. "The parties have agreed on all of the major issues.

"The key remaining issue is the funding mechanism that will be used to pay for the cost of roof replacement," he said.

Still to be hashed out is the appropriate allocation of financial responsibility between the insurance carriers and their insureds.

"Sept. 30 is when we hope to resolve all remaining issues," Mr. Feinberg said. "I am confident that if a final agreement in all respects can be worked out, it will provide the type of relief that the homeowners seek and will be vastly preferable to litigation."

Because the proposal was reached in an out-of-court forum, plaintiffs can't be bound by it and are free to bring lawsuits.

In Howard County, where an estimated 18,000 homes have roofs with fire retardant-treated (FRT) plywood, a $1.5 million lawsuit was filed in Howard County Circuit Court in April against an FRT-plywood manufacturer.

The suit was filed on behalf of Ellicott Ridge Professional Park, a professional condominium park, against Hoover Treated Wood Products of Thomson, Ga. David F. Albright Jr., a lawyer for Ellicott Ridge, declined to comment yesterday when asked if he intended to withdraw the legal action.

A call placed to the president of Hoover Treated Wood Products, Barry Holden, was not returned.

In December, a multibillion-dollar, potential class-action claim against the major manufacturers and distributors of FRT-roofing plywood was dismissed in U.S. District Court in Baltimore. The suit was filed by lawyers with Cohen, Milstein, Hausfeld & Toll, a Washington firm serving as lead counsel in local attempts to settle the case.

An attorney with the firm, Michael Hausfeld, said that he plans to press ahead with other pending suits. "This settlement is not a settlement that is approved by any court," Mr. Hausfeld said. "We probably are going to oppose it."

The proposal didn't outline exactly how affected homeowners would be compensated, he said. His firm represents tens of thousands of Maryland residents in the matter, he said.

William Young, director of consumer affairs for the National Association of Home Builders, said he hoped the proposal is ratified.

"We hope that it will be successful. As of right now, we do not know for sure that it will be," Mr. Young said. "There are still some issues that need to be resolved with regard to whether there will be adequate money to fund the mechanism that is described in the proposal. You have to come up with something where the bucks are there to pay for it."

The FRT mediation is being directed by the Center for Public Resources Inc., a Manhattan concern that promotes mediation and arbitration of disputes.

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