Chinese drywall claims are emerging as a would-be class action issues in the WCI Communities chapter 11 case pending in Delaware. Would be class representatives filed papers seeking permission to present a class proof of claim. WCI has now responded with a brief opposing the class. The opposition is routine in the sense that it follows all the now-standard tactics for seeking to block a class action regarding conditions in buildings. More interesting is the way this debtor wants to treat tort claims individually, in contrast to other “mass tort” cases in bankruptcy in which aggregation is said to be the answer. WCI’s opposition brief is here.
WCI explains the issue as follows:
“By her Motions, Goldstein seeks permission to file a claim on behalf of a group of
individuals who have allegedly suffered damages from defective drywall originating from China (“Chinese Drywall”) installed in homes by WCI built in Florida. In order to file a class proof of claim, Goldstein also requests that this Court certify a class for purposes of pursuing claims on theories of negligence, strict liability, breach of warranty, and negligent misrepresentation.”
Unlike debtors in some other mass tort cases, the debtors here provided individual mailed notice on a broad scope to potential tort claimants. Specifically, the brief says that notice was sent to all who purchased WCI Homes in the last 10 years:
“6. All individuals or entities that purchased a home built by the Debtors in
the last ten years (the “Home Purchasers”) received notice of the commencement of the Chapter 11 Cases and separate actual and constructive notice that February 2, 2009 at 4:00 p.m.”
According to the brief, the number of claims filed is small (“over 70”), and so one one sees why the debtor opposes a class action that would increase claims. Also interesting is the Debtor’s argument that bankruptcy court can and should individually resolve thousands of tort claims, an argument not heard when debtors and other plan proponents seek to “estimate” claim values.