A Deadline For Homeowners

It’s no lawyer joke. Your customers may be entitled to money from a $324 million settlement.

In the early 1990s, nearly 25 million feet of Goodyear Tire & Rubber Entran II radiant hose was sold throughout the United States and Canada. However, a major defect was discovered and caused various types of property damage: leaks, corrosion and damage to boilers, all the way to catastrophic failures of heating systems, including major water damage from in-line breaks.

The court in charge of the lawsuit (Galanti v. Goodyear Tire & Rubber Co., Civil Action No. 03-209) was the U.S. District Court for the District of New Jersey. An amended settlement of $324 million was agreed to and approved in 2004, and now class members (those who have a valid claim) can receive their payout.

So, what does this mean for plumbing and radiant contractors?

David L. Black and William W. Maywhort see this settlement as a “great opportunity” for hydronic heating professionals. “They can enjoy a limited window of opportunity to build goodwill with their customers while also marketing their own products and services.”

Black and Maywhort are partners in the law firm of Holland & Hart LLP. They are among the class counsel who negotiated the Entran II hose amended class action settlement. We recently attended a seminar with Black in Las Vegas, where he informed a roomful of contractors about their customers’ claim rights. “Class actions have a bad rep, but this is real money; you can help your customers.”

Today there is roughly $170 million sitting in a New Jersey checking account - the remaining settlement monies - just waiting for homeowners to make claims. With November 2009 as the cutoff, Black says there’s no time to be timid.

“Typically, heating contractors know far more than homeowners about the brand name of the hose that has been installed. And if that hose is - or was - Entran II, those heating professionals may do homeowners immense service by informing them of their eligibility to file a claim.”

This is the only money that will ever be available from Goodyear to compensate home and business owners for Entran II, Black said. No matter the system’s performance, a claim can be made.

Payment is calculated based on the type of installation (e.g., in-slab, thin-set, staple-up finished, staple-up exposed, snowmelt, and baseboard). The square footage of area heated by Entran II is multiplied by the reimbursement rate.

Owners are also categorized with respect to property damage. Those in “Category I” have or had less-severe damage. “Category II” owners have had major water damage or serious failures. It also includes those who have replaced their systems prior to the claim deadline. “Category III” includes all those who do not qualify for the other two categories.

According to Black, the first cash payment arrives eight weeks after a claim is made and approved. Roughly 18 months after the first payment, the remaining payment is made to the owner.

To date, the claims administrator has processed roughly 2,000 valid claims representing nearly 5 million square feet of heated space and snowmelt. But this is only one-fourth the area estimated to be heated by Entran II.

That suggests there may be more than 6,000 property owners who are eligible to participate in the settlement, but who have not done so - presumably because they are either unaware that their homes contain Entran II or are unaware they are entitled to receive significant cash payments, even if they have not yet suffered leaks, according to Black and Maywhort.

“For hydronic heating professionals, this situation ads up to a great opportunity for proactive customer service. For their customers, it represents a last chance to receive money from Goodyear before the Nov. 19, 2009, claims deadline.”

How To Protect Yourself

Black admits the words lawyer, claims and lawsuit scare contractors like the boogeyman. But he offers this advice:

Have the homeowner submit a claim well before the claim deadline.
Recommend a replacement product with a proven performance record and a history of testing over the warranty period.
Use a construction contract that provides protection.

“A standard one-year correction warranty isn’t enough,” Black told the room. He suggested contractors draft an exclusive warranty that states the key intent of the parties and limits the remedy by defining time, claim, date, etc.

Taking on an Entran II claim can have a happy ending. One noted claim was made by movie producer Jeffrey Katzenberg, who's massive Deer Valley, Utah, home was filled with in-floor Entran II. The original plumbing manufacturer who installed the tube worked again with Katzenberg to remove and replace the radiant system with a more proven tubing product, to the satisfaction of everyone involved.

“You don’t have to be scared,” Black concluded. “Protect yourself through custom contracts and warranties and you can help your customers.”

Visit Holland and Hart LLP at www.hollandhart.com.