Up to now, major court cases in the ongoing Chinese-made drywall situation have not dealt with any medical or health-related claims. But health issues are sure to come up in court eventually; and in the mean time, fears about possible health effects of the defective material are likely to impact the market value of affected housing — even after all the bad drywall has been removed and replaced with U.S.-made material.
The past month has seen a handful of news items about drywall-related health fears. In one case, the U.S. Army is looking into the possibility that drywall may have contributed to the death of an infant child at Fort Bragg, N.C., according to Raleigh-Durham television station WTVD (“Fort Bragg investigating infant deaths”). Army investigators are examining ten infant deaths in Fort Bragg base housing, all classified as “sudden infant death syndrome” (SIDS) fatalities, and are trying to determine whether any aspect of base housing may have been a contributing factor in the deaths. Parents of three of the infants told the station that they believe Chinese drywall may have been to blame. Specialist Nathaniel Duke, father of one victim, said the Army gave him several different test reports: “One shows two pieces of drywall from their home which tested positive for Chinese drywall – giving off gases at levels higher than a positive control sample.” But a different test, for elemental sulfur within the actual board, came back within normal limits, the station reports (“New information in Bragg baby deaths”).
In South Florida, meanwhile, physician Kaye H. Kilburn, whose California firm Neuro-Test Inc. specializes in “chemical disorders,” says he suspects the drywall emissions of causing premature aging in occupants of the home, reports Tampa Bay Online (“Physician links Chinese drywall, premature aging,” by Sherri Lonon). Dr. Kilburn toured the Tampa area and talked with residents of contaminated homes at the invitation the Greater Sun City Center Contaminated Drywall Coordinating Group, an advocacy organization that contracted with Kilburn to conduct a health survey “to demonstrate the need for government intervention and epidemiological testing on residents in contaminated environments,” according to Tampa Bay Online.
According to the report, “ ‘This is premature aging,’ Kilburn said after touring two homes in Sun City Center and listening to resident complaints. ‘This is a death-causing problem.’ According to Kilburn, the lack of response is often caused by financial motivations and an unwillingness on the part of government officials to delve into issues.’ “
But there is wide uncertainty within the medical field about the health effects of Chinese drywall — one reason why Judge Eldon Fallon, who is overseeing combined federal litigation of drywall-related cases, has deferred taking up any health-related lawsuits. Under the so-called “Daubert standard” for expert witness testimony in federal court, juries aren’t expected to assess competing “hired-gun” testimony — instead, judges are
tasked as “gatekeepers” of expert claims, and must determine whether a witness reflects the broadly accepted science in his field before allowing a jury to hear the evidence. Assertions like Dr. Kilburn’s typically are not admitted as court testimony, unless they represent a broad consensus within the expert’s field — particularly if the expert earns significant income from testifying in high-profile cases, or appears to display a personal bias. (In his website bio page, Kilburn is quite frank about his emotional involvement with his message about chemical injuries — a personal stance which may endear him to victims of pollution, but could throw his testimony into question when a judge, not a jury, is evaluating his opinion’s scientific basis.)
With or without a mainstream scientific basis, however, even the claim of a health problem can affect the market value of a property — and “stigma” that affects property values is an expert field of research in its own right. That’s a factor that could come into play in cases such as the Williamsburg, Va., rental development known as Wyndham Plantation. In that housing area, the owner, H. R. “Dick” Ashe, says he has replaced all the offending drywall and has test data showing that the homes are now free of contamination, reported the Newport News Daily Press (“Controversy brewing with renters over presence of Chinese drywall in homes,” by Joe Lawlor). “But renter Kianna Hart and former renter Cheryl Radcliff said they became sick from the air inside their 2,100-square-foot townhomes after they moved in late last year,” reports the paper. “Hart, who is still living in Wyndham Plantation, said she and her children are constantly sick, and she’s blaming the drywall gases.”
Proving a link between vague symptoms like cough, wheezing, runny nose, or itchy eyes — which can also be caused by a wide range of allergies to anything from pollen to dust mite droppings — is difficult in any particular case. But even the rumor of contamination and health effects could be enough to affect the value of a rental property, or an owner-occupied home for sale.
“Stigma,” defined as a loss of value that persists even after a defective dwelling has been fixed, is the specialty of experts like John A. Kilpatrick, Ph.D., of the Seattle firm Greenfield Advisors. In a 2009 presentation at a conference about Chinese drywall, Kilpatrick explained that even without health issues, homes with construction defects can suffer a loss of economic value that persists even after repairs are accomplished.
“The concept of stigma arose in the 1980s,” explained Kilpatrick, “when practicing appraisers observed that the decline in the market value of an impacted property was consistently greater than the engineering costs anticipated to remediate that property. In the 1990s, we also found that properties impacted by construction defects were similarly affected by stigma. For example, we worked on many of the synthetic stucco cases and found that even after affected homes had been re-clad by other siding materials, there was still a statistically and economically significant negative market impact.”
In a chapter of the book When Bad Things Happen to Good Property, by Robert A. Simons (Environmental Law Institute, 2006), Kilpatrick lists a set of criteria that are typical of situations where stigma can dog a property:
1. Responsibility — Is someone or some company specifically shouldering the blame?
2. Exposure — Has there been a risk amplification, such as in the media?
3. Disruption — Does the contamination affect daily lives?
4. Concealability — Is the risk hidden?
5. Aesthetic effect — Can the contamination be seen, felt, or smelled?
6. Prognosis — Will the contamination be cleaned up in the near future?
7. Peril — Is there a health risk?
8. Fear — What is the general concern level associated with this contamination?
9. Involuntary — Are the property owners themselves innocent in this contamination?
Plainly, if these are the signposts for likely stigma to attach to a property, Chinese drywall seems to fit the bill.
But the problem is not merely subjective, explained Kilpatrick in his 2009 presentation, because even if a home is repaired, lasting effects of the contamination or of the repair itself could raise the long-term financial cost of owning the house. “Simple remediation of the obvious problem will frequently leave secondary issues which can’t be addressed so simply,” he said. “For example, when we worked on moisture intrusion cases, we found that remediation may include replacement of windows, or seals, or some other quick fixes to stop the leak and remediate the obviously damaged parts of the dwelling. But the presence of the increased moisture itself for a period of time often causes damage to the hidden structural members, such as studs, joists, and sills, which can’t be replaced without tearing the whole house down. We are still learning about the residual damages from chinese drywall, and from an appraisal perspective, we want to know what sort of hidden residual damage remains, after a remediation is concluded.”
In some cases, said Kilpatrick, the combination of costs and value impairment could wipe out the whole value of a building. “There are certainly circumstances in which the remediation costs, the loss of use and enjoyment, and the loss of marketability, as well as the increased costs of ownership, all taken together, actually exceed the unimpaired market value of the home,” he said.
It’s unlikely that repaired houses will quickly catch up with the value of unaffected houses nearby, said Kilpatrick. In a neighborhood with appreciation rates of 5% a year, he said, a house that suffered a 30% or 40% loss of value from stigma would have to appreciate at 10% a year in order to catch up over a 10-year period — and that’s without considering any lingering claims about health effects. So for owners of affected houses, it’s likely that remediation will not fully solve their problem — and that even after the house is “fixed,” the house won’t really be fixed
Original Post by Costal Contractor Chinese Drywall Update: Medical Fears Persist