Siding Saga -- Homeowners With Failed L-P Siding Fuming About Settlement Delays

In the 1996 class-action settlement promising relief to homeowners whose nearly new house siding was warping, cracking, rotting, bulging and even sprouting mushrooms, it all sounded so straightforward.

Oregon-based Louisiana-Pacific made this agreement with the injured homeowners: "If your claim is verified, you will then receive a check for the costs to replace any damaged L-P exterior siding."

And the giant forest-products firm pledged a minimum of $275 million to do just that.

Were that it was so simple.

Instead, what has become one of the biggest, thorniest class-action suits of all time has spawned one heap of consumer discontent.

So much so that homeowners are forming informal support groups - just like after natural disasters - to help each other cope with years of delays, lack of information and lack of money to repair houses they say continue to rot.

It's not necessarily solace, they say, that on Oct. 26 Louisiana-Pacific announced it would potentially raise its payout to $500 million and inform each claimant, by the end of the year, exactly where they stood.

That's because the company also unveiled a new stipulation for getting money faster - accept a 9 percent or more reduction of the amount L-P told individual homeowners it would give them in the first place.

"L-P wanted to do the right thing for homeowners by providing the certainty of prompt payment," says company spokesman Gerry Soud. "Our intent all along has been to resolve this issue as quickly and as responsibly as possible."

Chris Brain, the Seattle-based class-action attorney representing homeowners, hopes they'll react positively to the new arrangement.

"If it's 9 percent or waiting three years, I certainly wouldn't have a hard time with that decision," says Brain, of the firm Tousley Brain. "The thing that's critical is everyone isn't in the same position. Everyone doesn't have the same damage; some people don't need the money."

And besides, Brain says, "Our feeling is, the majority of money has not gone back into the houses."

Where has it gone?

"Credit cards. I'm not being facetious. When you get a check for several thousand dollars, there's a lot of temptation."

Dennis Brunelle says he has a hard time believing the settlement's big players really know the sentiments of homeowners.

Brunelle certainly has some.

"Both Scott and I feel the rules have been changed on us," fumes Brunelle, who, with his friend Scott Van De Vanter, is standing outside Brunelle's Eastside home, with its moldy L-P siding that resists permanent clean-up no matter how often he scrubs it.

Brunelle and Van De Vanter own 6-year-old houses within shouting distance of each other. Both work for the city of Redmond where, together with a bunch of other employees, they've formed a loose-knit network of L-P siding homeowners.

They share facts, but mostly they share frustration, which is pretty much how they reacted to the latest news - from the media, not Louisiana-Pacific, which hasn't informed them - that an early resolution of their cases equals less cash.

"They're jamming this thing down our throats," Brunelle scoffs.

Van De Vanter entered the class-action suit with a claim filed April 22, 1997. Brunelle had filed just eight days earlier, with that sinking feeling one gets when something that should be good turns bad.

Brunelle and his wife Roberta bought their home in its framing stage. When it came to choosing siding, they went with their contractor's recommendation: L-P Inner Seal Siding, a composite wood and resin product made to look like wood siding, and advertised as "durable," "effective" and "superior" to other types of exterior siding, according to settlement documents.

Sold between 1985 and 1995, the siding was installed on an estimated 800,000 homes nationwide. The experts say there's no way to predict which batch, made which year, in which of several L-P factories, will remain durable and which won't.

The irony is that the Brunelles' contractor did a superlative job of installing it, and they couldn't have been happier. That lasted for three years after they moved in, in February 1993. Then, Brunelle says, "I noticed mushrooms growing out of the siding."

At first, Dennis Brunelle, a self-described stickler for home maintenance, tried dealing with the problem himself. And tried telling himself that the swelling and discoloration, particularly on the west side of his 2,400-square-foot house, wasn't spreading.

But it was, and he finally realized he must submit a claim, joining a pool that has grown to more than 100,000 homeowners nationwide. The largest number are from Washington state. Roughly half have been settled.

About 800 claims a week are still rolling in, and interest runs so strong that the L-P settlement hotline received 5,000 phone calls after October stories announcing the new payout plan ran in The Seattle Times and Portland Oregonian.

Brunelle entered a land of frustration when he filed his 1997 claim. He carefully followed L-P's written procedure, only to have his first claim rejected as incomplete; his L-P buddies reported the same occurrence. Brunelle resubmitted it.

Four or five months later, a court-appointed inspector visited his home and calculated 30 to 35 percent of his siding had gone bad, worth a payout of perhaps $4,000. But the inspector refused to give him a written report.

Brunelle did get a fact sheet from L-P that said he'd get his settlement "four to eight weeks after receipt of the inspection report, but due to the number of inspections, this time frame may vary."

Almost immediately it varied; Brunelle was told he'd get a check in three or four months. Then he was told it would be six months to a year. A couple of months later, he was told that, in fact, a dollar amount hadn't been assigned to his claim, and that's where it stands now.

"Virtually ever since we put in a claim, we haven't gotten good, concise information," Brunelle fumes. "I've been finding out more from newspapers than from L-P. That bothers me. Who's making the decisions?"

Down in Vancouver, Clark County, John Dick can tell almost the exact same story. "I have not heard from L-P by mail since my final correspondence submitting my claim," Dick says. "I have never received in writing the results of the inspection they did. I have not heard from them (about) the latest buy-down offer."

So Dick, who like Brunelle has a support group of L-P owning co-workers, has been calling L-P's 800 number for answers. What he's gotten are several different dates for when he'd get his money, plus a verbal estimate that the amount would be maybe $6,000.

The call he made last January left him feeling particularly irate. "The person at the other end of the line told me, rather haughtily, that I would not get any money in 1998 and probably not in 1999. She sounded real happy about it."

Dick says his opinion of Louisiana-Pacific is unprintable. "I should have gotten my settlement money in August of last year. If I eventually get it, the settlement should come with interest added. The homeowners involved in this mess must not end up being the damaged parties."

But so far that's what's happened to him. Last summer he ripped all the L-P siding off his house and replaced it with another product at his own expense. "The cost was considerably more than what I was offered by L-P," notes Dick.

Perhaps the biggest mystery for these homeowners is why this whole settlement mess has developed.

In the years since its 1996 signing, there have been excuses and finger-pointing galore.

Right from the start, the original Portland, Ore., judge who approved the settlement had doubts. That agreement originally set up a fund, into which Louisiana-Pacific would pour $275 million in installments, to pay claims through 2002. At the same time, it paid the attorneys working on behalf of homeowners some $26 million.

"The litigants adequately took care of class counsels' attorney fees and limited the liability of Louisiana-Pacific, but seem to have bypassed the essential provisions for reimbursement to the class members," wrote Judge Robert Jones of the U.S. District Court for the District of Oregon.

Others, including Kirkland attorney James Murphy, with Hoffman Hart & Wagner, have faulted the class-action attorneys, saying they agreed to a settlement before they'd done enough research to know the true extent of the problem. Murphy represents several clients who are pressing L-P for damages outside the class-action arrangement.

"My feeling has always been the class-action suit was a terrible deal for all the homeowners who were in it," Murphy says. "This is one example of where the process was misused, and the consumers were handed a settlement by a group of lawyers who had not completed their job."

To compound matters, Louisiana-Pacific has been accused of inadequately testing its product, and its former CEO has admitted that it was developed without "a nickel's worth" of research.

Then, in the following years, has come criticism that the number of potential claims was seriously underestimated, a problem itself.

But class-action counsel Brain says what's truly been underestimated is the complexity of the case. And what's not appreciated is how many homeowners have cash in hand.

"Up until last week, $180 million in claims had been paid," Brain says. As a result of the new plan announced in late October, an additional $30 million was just mailed.

"Those normally would be have been paid in June of 1999," he notes.

Brain says there are several reasons why payouts have dragged on so long. For starters, claims were being paid so fast that a couple of times L-P's settlement account ran dry before L-P was obligated to replenish it.

Then there's the nature of the claims. Brain says their number wasn't underestimated, but the dollar amount of each was.

"Instead of homes coming in with expected damage of 20-to-25 percent, they're coming in much higher. And if they're coming in two to three times higher than expected, your money is going to run out two to three times faster."

Finally, there were major problems with the payment system. Brain says bluntly that it didn't work. And it took time to restructure it so that claims were organized by date, inspected, correctly calculated, verified.

"It sounds simple, but it isn't," Brain concedes. "The biggest frustration wasn't the payment. They (homeowners) couldn't even figure out what their damages were. I was just as frustrated as they are."

Brain promises that every homeowner who's filed a claim will get in writing the status of it, plus their options, by year's end. "They're just going to have to be patient."

Of course, knowing what's happening and actually getting the check in the mail are two different things. For many homeowners, the latter could still be years in the future - and the way the settlement was structured, homeowners who choose to bypass the class-action suit and sue individually can't do so until after 2002.

L-P wants the situation settled sooner. "Our hope is that homeowners will seriously consider taking advantage of the second settlement fund so they can move forward with their plans and put this issue behind them," says Soud, the company spokesman.

Meanwhile, Dennis Brunelle has found additional damage since the inspector's visit almost a year ago. He knows he can file an additional claim, "yet they're saying new claims might not be paid because there isn't enough money. It's their fault that I need more money!"

More pressing is what to do about his house. Brunelle feels he must replace his siding next spring, whether he has the L-P check or not. Even then it won't cover the estimated $10,000 cost of removing all the stuff and replacing it with something else. The other alternative is replacing only part of it with another product and potentially not having it match.

"I have two kids getting ready to go to college, and I want to spend $10,000 on siding on a 6-year-old house?"

Brunelle doesn't bother answering his own question. The response, he knows, is as obvious as the green mold spreading along his siding. ------------------------------- Others can jon class-action suit

Building owners who have damaged Louisiana-Pacific Inner Seal exterior siding may join the class-action suit if the siding was installed before Jan. 1, 1996. The claim must be submitted prior to Jan. 1, 2003.

The suit is open to those who have owned or currently own a home, condominium or other structure with L-P Inner Seal Siding. They need not be the original owner.

To learn more about the settlement call 800-245-2722 or write to L-P Siding Litigation, P.O. Box 3240, Portland, OR, 97208-3240.

Information also is available at this Web site:

http://www.lpsiding.claims.com

Another site, for the Defective Hardboard Siding Information Center, has information on products made by a number of manufacturers including Masonite and Louisiana-Pacific. Its Web address is:

http://www.siding.ilsweb.com/