Faulty Siding Payout Grows -- Louisiana-Pacific To Pay $500 Million Under Settlement

Louisiana-Pacific has agreed to boost its settlement fund for defective siding to $500 million and to pay claims immediately for homeowners willing to take slightly less than they initially sought.

The original settlement of the class-action siding case, reached in April 1996, had totaled $275 million, plus an extra $100 million the company could choose to pay in the future to avoid further lawsuits.

Under a supplemental settlement announced today, the Portland-based lumber company will expedite payments for people who would have had to wait two to three years to receive their money, said Christopher Brain, lawyer for the homeowners who had brought the suit.

But to receive money now, individual homeowners will have to agree to a discounted payment. The discount would be 9 percent to 12 percent for every year the homeowner would have waited to receive full payment - generally 1 1/2 to 3 years.

The new agreement should clear up confusion and speed payments for "many tens of thousands" of claimants who have been wondering when, and if, they would get paid, Brain said.

"Our intent all along has been to resolve this issue as quickly and as responsibly as possible," said Ward Hubbell, director of corporate affairs at Louisiana-Pacific, in a company statement.

Claims in the case have far surpassed the $275 million original settlement - and even the $375 million that would be available if Louisiana-Pacific agreed to make two optional contributions of $50 million each.

An estimated 800,000 homes nationwide were built using Louisiana-Pacific siding, made from wood chips.

The siding, popular in the 1980s and early 1990s, began absorbing moisture, showing mold and even growing mushrooms in the early- to mid-1990s. The class-action lawsuit was filed in mid-1995.

More than 100,000 claims have been filed so far across the nation, with more coming from Washington state than any other, Brain said. The company so far has paid $195 million into the fund.

The new agreement affects homeowners in three groups: those whose claims came in early enough to be part of the $275 million fund; those in the pool that would be paid by the company's additional $50 million payments; and those in the new group created by the company's extra $125 million settlement.

Letters going out to homeowners now will notify them which group they are in and offer the following deals:

-- People in the earliest batch of claims, who would expect to be paid in mid-2000, can receive payment now if they accept a 9 percent per year discount. Someone with a $6,000 claim would receive $5,206, for example.

-- People in the middle batch of claims, paid from the company's optional $50 million contributions to the fund, would have to accept a 12 percent per year discount. Someone owed $6,000 would receive $4,321.

Brain said this group might have been paid in mid-2001 or not at all; the company might have chosen not to make the extra contributions and to let homeowners file individual lawsuits if they wished.

-- People with the last claims to be filed can accept payment now at a 50 percent discount. Their claims will be paid from the company's new $125 million fund.

Homeowners can opt to reject the new offer and stick with the original settlement. But the second group might not receive any money, and the third group definitely would not.

The letters, which will be mailed to homeowners beginning Monday, should reach homeowners by the end of the year.

The letter will include a check for the newly negotiated payment; by cashing it, a homeowner agrees to the discount.

Homeowners are being advised to wait to receive their letters before calling the claims administrator for further information.

Michele Matassa Flores' phone message number is 206-464-8343. Her e-mail address is: mmflores@seattletimes.com