The Record – Front Page
By Bill Cook
December 24, 1999
A class-action lawsuit initiated by a Stockton homeowner irked because his new, 50-year roof of cement-and-wood-fiber shakes began deteriorating in less than five years is about to pay off with substantial damages.
Damage payments totaling $105 million are guaranteed by Weyerhaeuser Ltd. Under negotiated settlement of the lawsuit that was tentatively approved Thursday by San Joaquin County Superior Court Judge Carter P. Holly.
And in a pending second phase of the suit, these damages could increase to as much as $415 million, Holly said. Additional damages would come from the insurance carrier for the shakes’ manufacturer, American Cemwood Corp. of Oregon.
Weyerhaeuser purchased Cemwood’s parent company, MacMillen Bloedel of Canada, after manufacture of the shakes had been discounted.
The damages will be reserved for an undetermined number of the 33,000 homeowners who purchased defective shakes in 38 states from 1987 to 1998. Of these sales, 77 percent were in California.
Among those homeowners is Roy Richison of Stockton, a sales representative for a pipeline company. Richison paid $14,000 to install a Cemwood shake roof on his north Stockton home in 1992, only to notice cracking, curling and peeling. After what he termed unsatisfactory responses from Cemwood, he initiated the suit.
James Brown of Stockton, lead attorney for Richison and other homeowners, said even the initial $105 million in damages represents by far the biggest award by a Central Valley court.
“I’m sure of it”, Brown said. “Nothing else comes close”. This may, indeed, be the largest court settlement ever in the Central Valley.
In September, a Stanislaus County Superior Court judge overturned a jury’s $290 million punitive-damage verdict against Ford Motor Co., saying a juror’s dream and a television show tainted deliberations. And, Brown added, he believes chances are excellent that the class-action suit will add substantial damages from the insurance companies on representing the manufacturer. “Some of the attorneys we brought in to assist us are insurance specialists,” Brown said. “They believe we can prevail before a judge and jury on all of our claims.”
If the insurance companies settle, the case could be wrapped up by the end of next year, Brown said. If it goes to court, it might not be settled until late 2001, he said. Three Stocktonians joined Richison in the class-action suit against Cemwood and Weyerhaeuser Ltd. Before it was filed. They are John Zehner Sr., Sylvia Connelly and Harry Montgomery. Final court papers list 14 plaintiffs, represented by Brown and 11 other attorneys.
John Phillips, a Seattle attorney representing Weyerhaeuser, called the settlement “fair but not a giveaway”. To obtain a share of the award, Phillips noted, owners will have to show that their roofs have been damaged and warrant replacement. They will have up to 15 years to make claims for the damages.
Holly’s decision sets in motion a $978,970 program by a Washington, D.C., consulting firm to notify people who bought the shakes about the settlement. This will be done through the Internet; roofing businesses; full-page advertisement in such advertisements in such diverse publications as Time, People, National Geographic, TV Guide, Readers Digest, and Better Homes and Gardens; and newspaper advertisements.
The simulated-wood shakes were sold under the brand names of Cemwood, Permatek, Permatek II, Royal, Cascade, Pacific Slate and Trieste Tile Co. Experts for the homeowner group testified that the shakes were “inherently defective,” because they were made of incompatible materials: Portland cement and wood fiber.
The wood fiber absorbs moisture and expands; the cement has almost no capacity for expansion. Because of this, expanding wood fiber exerts pressure on the cement surrounding it, producing cracks and other defects in the shakes, the experts testified. However, Phillips said,” Many of the 33,000 people who bought Cemwood products have perfectly sound roofs. We’ve had a number of claims (for defective roofs) but nothing close to massive claims. But Weyerhaeuser is pleased to set up this safety net for people who may have problems.”
If Cemwood’s insurance carriers pay additional damages, Weyerhaeuser will withdraw $40 million of its $105 million settlement guarantee under terms of the agreement, the judge said. Phillips said Cemwood has minimal assets and “no longer is a going concern”. “I’m satisfied,” Richison said when told Thursday that the first part of his suit had been settled. “It was time for the company to realize what was the right thing to do. I had contacts with the company and they tried to put a Band-Aid on my problems, offering me some replacement shakes.
“The company was aware people were having some problems, and they continued to the market the product. I had recommended the roofs to friends and relatives and people I know, and they are having the same symptoms.” Court documents say the settlement was molded during “numerous lengthy and heated negotiating sessions” over 10 months.