Settlement ‘very close’ in FEMA trailer lawsuit

NEW ORLEANS — Companies that manufactured mobile homes for the Federal Emergency Management Agency after Hurricane Katrina are nearing a settlement to resolve thousands of claims that the emergency shelters exposed Gulf Coast storm victims to potentially dangerous fumes, court records show.

A proposed class-action settlement involving about two-dozen mobile home manufacturers and their subsidiaries is expected to be filed today. A court filing last Tuesday says the companies and plaintiffs’ attorneys are “very close” to finalizing an agreement, which would have to be approved by a federal judge in New Orleans.

A lead plaintiffs’ attorney and a lawyer for the companies that made mobile homes for FEMA wouldn’t comment yesterday on the financial terms of the settlement.

The settlement doesn’t involve claims for residents who lived in FEMA travel trailers, which housed the majority of hurricane victims. Government tests found that travel trailers had significantly higher average formaldehyde levels than mobile homes, which are larger and sturdier.

The mobile home companies involved in the expected settlement include Cavalier Home Builders, Patriot Homes Inc., CMH Manufacturing and Champion Home Builders.

The deal could benefit several thousand families in Louisiana, Mississippi, Texas and Alabama who lived in government-issued mobile homes after the 2005 storms and claim they were exposed to dangerous levels of formaldehyde — a chemical used in building materials that can cause breathing problems and is classified as a carcinogen.

If U.S. District Judge Kurt Engelhardt approves the deal, it would be the second mass settlement of claims over formaldehyde exposure in the government-issued housing units that FEMA ordered after the 2005 storms.

Fleetwood Enterprises Inc., which supplied FEMA with travel trailers, agreed last year to a settlement resolving about 7,500 to 8,000 claims, according to attorney Jerry Saporito, who represented the company. Terms of the deal weren’t disclosed. Fleetwood had filed for Chapter 11 bankruptcy protection in 2009.

Three cases against companies that manufactured and installed FEMA travel trailers have been tried before Engelhardt, who is presiding over a batch of hundreds of consolidated lawsuits. The juries in all three trials sided with the companies and didn’t award any damages.

Engelhardt has dismissed all the claims against FEMA brought by residents of Alabama and Mississippi and limited the case against FEMA for Louisiana residents to gross negligence claims. Plaintiffs’ attorneys are appealing the rulings.

In May 2009, Engelhardt dismissed some of the state law claims filed against mobile home makers, ruling they were barred under federal law. Engelhardt said Congress never intended to allow states to set higher safety standards for mobile homes than those imposed by the Department of Housing and Urban Development.

“This would essentially require each mobile home manufacturer to tailor its industry, state-by-state, in an attempt to comply with the peculiarities of each state’s law, as then interpreted by each particular state’s judiciary,” the judge wrote. “This outcome is clearly at odds with the goal of uniformity that Congress sought.”

More than 143,000 families received temporary housing from FEMA after hurricanes Katrina and Rita.

FEMA initially downplayed concerns that elevated levels of formaldehyde were jeopardizing their health. In February 2008, however, the agency announced it would rush to move tens of thousands of residents out of travel trailers.

Government tests on hundreds of trailers in Louisiana and Mississippi had found formaldehyde levels that were, on average, about five times what people are exposed to in most modern homes.

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