Appeal Involving Newtown Chase, Toll Brothers Delivered

A decision by the US Court of Appeals recently refocused attention on an aspect of construction involving a Newtown subdivision. The Engineering News Record (ENR) reported last week that according to the court, a developer may sue the manufacturer of a exterior insulation finish system (EIFS) product for the cost of removing and replacing the synthetic stucco based on a defective design claim under Connecticut law, even though the there was no damage to any of the homes.

That decision was rendered by the US Court of Appeals for the Fourth Circuit.

The case dates back to 1999, when several homeowners of Newtown Chase complained to developer Toll Brothers Inc that it had used an EIFS synthetic stucco cladding manufactured by Dryvit Systems, rather than cement stucco. After the homeowners threatened to sue for misrepresentation, Toll agreed to remove the EIFS and reclad the homes in cement stucco.

Toll then sued Dryvit for the costs of recladding, claiming its EIFS product was designed defectively. A federal district court dismissed the case, ruling that Toll’s actions were caused by threats of homeowner lawsuits over Toll’s own misrepresentations and not any damage caused by the EIFS product, the trade publication reported.

On appeal, the federal appeals court noted that all Toll needed to do to avoid dismissal of its claim was to show a factual issue that the alleged defective design of the EIFS product  was the proximate cause of its financial losses. The court dismissed Dryvit’s claims that the homeowners’ threats to sue, not its own product, was the reason for the recladding, ruling that there was no direct evidence that this was the case.

Toll had claimed that it used the EIFS product because it believed at the time that “it was suitable for use on homes,” and that it ordered the product removed when it discovered that the product “was inherently defective,” and that the recladding was an attempt to prevent further damage, the ENR report stated.

The court also dismissed Dryvit’s claim that there was no damage, so there could be no liability. The Connecticut Product Liability Act does not require a victim to choose between allowing such damage to occur and then suing, or paying to prevent the damage at its own expense and waiving its right to sue, the court ruled.

The law allows lawsuits “for expenses [a plaintiff] has actually incurred in a reasonable attempt to avoid future liability resulting from a defendant’s tortious conduct.” The court said the trial court was wrong to dismiss Toll’s claim without a trial.