You probably haven't heard of HardiePlank. According to its manufacturer, James Hardie Industries NV, it is "the most popular brand of siding in America and can be found on over 4 million homes."
But you've probably heard of KB Home, one of the largest home builders in the country. It builds in North Carolina and throughout the United States.
On Monday, Judge Jolly certified a class action making claims against KB Home in Elliott v. KB Home North Carolina, Inc. The case focuses on HardiePlank. The class members are "all North Carolina residents" who own a home built with HardiePlank siding by KB Home where a weather restrictive barrier was not placed behind the HardiePlank. Another defendant in the case is Stock Building Supply, LLC, which installed the HardiePlank on many of the homes involved in the certified class. The class members allege water infiltration into their homes as a result of the lack of a barrier.
The lawyers for the parties have sparred over whether the North Carolina Building Code required the installation of the barrier at the time the homes were built. Judge Jolly ruled that it was not necessary for him to consider that issue at the class certification stage. Order ¶20. Also, the varying nature of damages experienced by the class members did not bar certification. Relying on a Ninth Circuit decision, Judge Jolly said "[t]he amount of damages is invariably an individual question and does not defeat class action treatment." (quoting Blackie v. Barrack, 524 F.2d 891, 905 (9th Cir. 1975)).
The number of class members ranges between 277 and 554, depending on whether the homes are owned by an individual or by a couple. They are located in KB Home's developments known as Amberly and Twin Lakes, both in Cary, NC.
This isn't the first time the Business Court has taken on a class action regarding a construction issue. The Business Court handled a significant case regarding the synthetic stucco problem which plagued homeowners in the late 1990's, Ruff v. Parex, Inc., 1999 NCBC 6 (N.C. Super. Ct. June 17, 1999)(Tennille).
There's no telling whether HardiePlank will prove to be as large a problem as synthetic stucco was. The plaintiffs' lawyers estimate the cost of repair for each home to be $30,000. Although KB Home disputes that figure, that puts the full exposure for nearly 300 homes at almost $9 million. For a public company like KB, whose last 10-K filing shows that it hasn't turned a profit between 2009 and 2011, that's a pretty daunting potential liability.