Class settlement claims against Sto were required to be submitted by July 31, 2000. Payment on the claims was based upon a lump sum of $1,750,000.00 provided by Sto to settle the case. Homeowners who were forced to accept the Sto settlement were certainly left on the short end of the stick, as the ultimate payments only amounted to approximately $1.34 per square foot of EIFS. Before anyone realized the figure would be his low, Sto's counsel had indicated that payments would be in the range of $5, $6 or even $7 per square foot. Sto's lawyers then back-peddled and revised their estimate to $2.50 per square foot. Because Sto threatened that it might declare bankruptcy if the settlement did not proceed, virtually every attorney who was faced with making recommendations to clients suggested that they accept the Sto class settlement and seek any additional amounts needed for reclad from builders, applicators and other parties. Had we known then that the estimates of Sto's lawyers were so far off the mark, I feel confident that many of us would have recommended that the settlement be rejected, and that our clients take their chances with a lawsuit against Sto outside of the class action.

Likewise, the Senergy class settlement has not been entirely satisfactory. Senergy agreed in 1999 to resolve it's EIFS claims arising from the class action for $4 per square foot. Claimants seeking to recover this meager amount from the Senergy claims facility, however, have met obstacle after obstacle. Senergy has resisted paying class claims in a very large number of cases based upon the assertion that systems the EIFS on claimants' houses were not made by Senergy. Unfortunately, the subcontractor who applied most of Senergy's products in North Carolina is now dead, and cannot testify that Senergy was used. Furthermore, Senergy has begun employing a testing lab in an effort to demonstrate that the Senergy base and finish coats on many North Carolina homes has been adulterated, and that this adulteration should exclude class participation.

For example, in several recent cases, Senergy has claimed that because the base and or finish coats contain 'silicate,' which is not a part of Senergy's special recipe, then the houses do not qualify for class status. In fact, we have heard that up to 80% of recent Senergy claims have been rejected on this spurious basis. In our individual lawsuits, we have been able to depose the analyst retained by Senergy who promotes this theory. Upon questioning, he admits that the 'silicate' could actually be dust particles from the work site, and that he cannot unequivocally state that the products on the houses were not manufactured by Senergy. Still, this is the sort of unreasonable resistance claimants are meeting upon filing their Senergy claims.

While class claims against Dryvit, Parex, and Continental Stucco seem to be going somewhat more smoothly than those in the Sto and Senergy pipeline, there appear to be frequent problems with class claims against these manufacturers as well. For example, the inspection protocol for these settlements requires that a home have at least two moisture readings in excess of 25% from 'separate water sources.' We have received calls from homeowners who have had expensive engineering reports which verify multiple readings from difference sources in excess of 25%. Yet, after these homeowners have filed their claim, the manufacturers have sent an 'independent' inspector to take new readings, which fail to satisfy the criteria. The difference between the homeowner's report and the manufacturer's report can be explained by a number of factors. The 'dry' readings could now be dry-rot. Or, the 'independent' inspector employed by the manufacturer may not have taken comprehensive tests. However, to contest this new 'independent' information (rather than relying upon the original report), the homeowner, under the class action agreement, must pay $500 to obtain a new test. Some homeowners are throwing in the towel, disgusted with the process. Others are being forced to spend additional monies to chase a remedy which, at $6 per square foot, still falls far short of the amount needed to reclad their houses.

Another problem that we have encountered is the resistance of manufacturers to pay claims based upon 'product identification.' Even though the class action settlement agreement specifies the types of evidence that are sufficient to prove that an EIFS system was manufactured by a particular manufacturer, the class action claim facilities frequently ignore this information. Homeowners have called us with affidavits of general contractors and engineers stating that a particular manufacturer's product is on the house; the claims facility has rejected these claims because the general contractor or engineer does not have 'personal knowledge' that the house is clad with a specific brand of EIFS. Likewise, limited use of mixed components has resulted in arbitrary denial of class claims.

A related issue is the wholesale exclusion of DEFS products manufactured by Dryvit from the class settlement. While DEFS looks like EIFS and acts like EIFS, DEFS was not included in the class action settlement. Accordingly, the claims of homeowners with DEFS on their houses have been rejected. DEFS homeowners should know that there is a separate class action which has been filed in the United States District Court for the Eastern District of North Carolina against Dryvit covering this product. Information about the DEFS class action and DEFS claims against Dryvit can be obtained from Gary Jackson or Dan Bryson at Lewis & Roberts (919-981-0191).

While most of the class action settlements cover only North Carolina structures, the Senergy settlement purports to resolve claims nationwide. Senergy was used pervasively outside North Carolina. It has been our experience that even North Carolina EIFS homeowners lacked information about how to stay in or get out of the class action; one could hardly expect homeowners outside North Carolina to be aware of the need to opt out of the Senergy class action. Yet, the class action covering Senergy pretends to cover Senergy homeowners throughout the United States, whether they received notice or not. In other words, if you have Senergy on your house and you live outside North Carolina, you may have not have any rights to file a lawsuit against Senergy. We understand that lawyers in South Carolina may challenge the nationwide scope of the Senergy class settlement.

Finally, it is important to note that several manufacturers were not included in any class action settlements. These include: Finestone; Colormatch Exteriors; Acrocrete; Cota; Bestcoat; and H.B. Fuller. Last year, a class action was filed against Finestone in North Carolina. That case is currently pending in Forsyth County. The parties have agreed to have the Finestone class action transferred to Judge Tennille, who is the judge who oversaw the class actions described above.

As the deadlines for filing class action claims have not yet run (except against Sto), we expect to have more information on the progress of the class action settlements within the coming months. We can only hope that the process becomes smoother and more equitable.