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Tuesday, July 11, 2000 - Page updated at 12:00 AM

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Weyerhaeuser poised to settle massive suit over bad siding

Seattle Times business reporter

Weyerhaeuser siding settlement

What siding would be affected: The proposed settlement covers Weyerhaeuser siding sold and installed from 1981 to 1999.

Filing claims: If the settlement is approved, ads explaining how to submit claims will run in newspapers and on television and radio.

Hundreds of thousands of people throughout the West could be compensated by Weyerhaeuser for defective hardboard siding under a nationwide settlement proposal announced yesterday.

The proposal would settle a class-action lawsuit filed two years ago in California, but Seattle attorney Christopher Brain said it also would apply to claims against Weyerhaeuser in other states.

Few details of the settlement - including how many homeowners and others it would cover, how they would apply for payments and how much the deal ultimately might cost - were disclosed, pending preliminary approval of the deal by a state court in San Francisco. But Brain, one of the three lead attorneys for the plaintiffs, said he expected "at least 500,000" people eventually could receive payments over the projected nine-year term of the settlement.

Officials of Federal Way-based Weyerhaeuser said they would set aside $82 million of the company's second-quarter profit to cover the expected cost of the settlement.

"We just thought it was in our interest and the property owners' interest to have a settlement," company spokesman Frank Mendizabal said. "It was either that or continued prolonged litigation, and that's always to be avoided."

Weyerhaeuser becomes the latest siding maker to settle a multimillion-dollar product-liability lawsuit. The biggest such deal, involving Louisiana-Pacific and its Inner-Seal brand of pressed wood-flake siding, has cost the Portland-based company about $500 million so far, and claims are still coming in. Brain also represented homeowners who had sued Louisiana-Pacific.

Georgia-Pacific, Jefferson Smurfit and Masonite also have settled class-action suits about their siding. Lawsuits are pending against Boise Cascade and Stimson Lumber, among other siding makers.

Details of the suits vary from manufacturer to manufacturer. In general, though, they claim that an inordinate amount of siding warps, splits, rots or otherwise deteriorates, especially when exposed to damp climates.

In Weyerhaeuser's case, the lawsuits concerned hardboard siding manufactured by the company or sold under its name and installed from 1981 through 1999. The siding is made by mixing wood fiber, waxes and resin, and then compressing the mixture so that it looks like real wood.

Most of the siding was sold to homebuilders in Western states, Brain said. More than a third of the defective siding is in California, he estimated. Colorado, Arizona, Washington and Oregon round out the top five states.

Weyerhaeuser made and sold the siding until 1996, when it sold the business. The new owner continued to make hardboard siding under the Weyerhaeuser name through 1998, Mendizabal said.

The California case originally was filed in June 1998; it was certified as a state class action the following February. The plaintiffs' lawyers and Weyerhaeuser have been negotiating a settlement of the case for about six months, Brain said.

A proposed national class-action lawsuit filed in King County Superior Court was dismissed last July, although it is on appeal. Lawsuits also are pending in Nebraska, Oregon, Iowa, Texas and South Carolina.

If the San Francisco court gives the settlement preliminary approval, ads containing details of the deal and instructions on how to submit claims will run in newspapers and on television and radio, Brain said.

People in the class action will have their homes inspected by a court-appointed inspector. The company expects $82 million to cover all payments to homeowners and administrative costs related to the settlement, Mendizabal said.

Weyerhaeuser, for its part, has sued 20 insurance companies, saying they refused to pay defense costs and claims stemming from the siding suits. That suit, filed last month, is pending in U.S. District Court in Seattle.

News of the settlement had little discernible effect on Weyerhaeuser's stock; shares closed at $44.0625 yesterday, up 93.75 cents.

Dan Nelson, an analyst with Ragen McKenzie in Seattle, said settling the siding claims was, at best, a modest positive for Weyerhaeuser - assuming the price tag doesn't rise much past $82 million.

"In the grand scheme of things, that's not a lot of money for Weyerhaeuser," Nelson said. "But it's a good thing to get behind them."

Drew DeSilver's phone message number is 206-464-3145. His e-mail address is ddesilver@seattletimes.com.

Copyright (c) 2000 Seattle Times Company, All Rights Reserved.

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