Full Notice of Proposed Partial Settlement

STATE OF NORTH CAROLINA IN THE GENERAL COURT OF JUSTICE
SUPERIOR COURT DIVISION
COUNTY OF NEW HANOVER 96 CVS 0059

WILLIAM ARTHUR RUFF and wife BARBARA ANN
RUFF, PETER T. BROWN, and wife MARLEE MURPHY
BROWN, JOAN BOZEMAN, ROBERT K. PENTZ,
ERNEST L. LIBORIO, and wife LOIS P. LIBORIO, MARY
FRANCES DILLON, DON CLARK, and wife PATRICIA
A. CLARK, and ANDREW J. HUTCHINSON, and wife
CAROL A. HUTCHINSON, and MILLER HOMES, f/k/a
RUSTIC HOMES OF WILMINGTON, INC., MARSH
HARBOUR GOLF & YACHT CLUB INTERVAL
ASSOCIATION, INC., and EDWARD A. DOWD and wife,
LEAH DOWD,
Plaintiffs,

V.

PAREX, INC., STO CORP., W.R. BONSAL COMPANY,
CONTINENTAL STUCCO PRODUCTS, SENERGY, INC.,
THOMAS WATERPROOF COATINGS CO., DRYVIT
SYSTEMS, INC., UNITED STATES GYPSUM CO., and
SHIELDS INDUSTRIES, INC.,

Defendants.

NOTICE OF PROPOSED PARTIAL
SETTLEMENT OF CLASS ACTION,
CONDITIONAL CERTIFICATION OF
SETTLEMENT CLASS, AND HEARING ON
PROPOSED SETTLEMENT AND PLAINTIFFS'
COUNSEL'S APPLICATION FOR AN AWARD
OF ATTORNEYS' FEES AND
REIMBURSEMENT OF EXPENSES

NATIONWIDE CLASS ACTION SETTLEMENT

TO: ALL PERSONS OR ENTITIES WHO, AS OF MAY 15, 1998, OWN OR OWNED A ONE OR TWO FAMILY RESIDENTIAL DWELLING OR TOWNHOUSE IN THE UNITED STATES CLAD, IN WHOLE OR IN PART, WITH AN SENERGY, INC. OR THORO SYSTEMS PRODUCTS, INC. EIF SYSTEM

THIS NOTICE MAY AFFECT YOUR RIGHTS.

PLEASE READ IT CAREFULLY

  1. Why should I read this notice?
  2. What is the lawsuit about?
  3. What are EIFS?
  4. When, where and why is a hearing being held.
  5. Who is covered by the proposed settlement?
  6. How do I know if I have Senergy's or Thoro's EIFS on my home?
  7. What are the terms of the settlement?
  8. What do I need to do to participate in the benefits of the Settlement?
  9. How do I make a claim?
  10. How can I exclude myself from the Settlement?
  11. Who represents the parties?
  12. What are Class Counsel's reasons for the Settlement?
  13. How will Class counsel's fees and expenses be paid?
  14. What if the settlement is approved by the Court?
  15. What if the settlement is not approved by the Court?
  16. Where do I get additional information?

1. WHY SHOULD I READ THIS NOTICE?

The purpose of this Notice is to inform you that there is now pending in North Carolina a proposed partial national class action settlement (the "Settlement") on behalf of all persons or entities who owned or own residential property in the United States on which Senergy, Inc. ("Senergy"), or Thoro Systems Products, Inc. ("Thoro"), ("Settling Defendants") Exterior Insulation and Finish Systems ("EIFS") was installed. This Settlement is pending in the Superior Court for New Hanover County, North Carolina, before the Honorable Judge Ben F. Tennille in a lawsuit known as Ruff, et al. v. Parex, et al, Civil Action No. 96-CVS-0059 ("Ruff"). Nothing in this Notice alters or is intended to alter the rights and/or obligations of any parties in Ruff except the parties to this national Settlement. Although the action originated in North Carolina, the Settlement encompasses persons with homes with Settling Defendants' EIFS in the entire United States.

If you own or owned a home clad, in whole or part, with Settling Defendants' EIFS, your rights may be affected by this proposed Settlement You should read this Notice to determine whether your rights are affected, the steps necessary to pursue your rights as a member of the Class, or whether to opt out of the proposed Settlement Class.

A MEMBER OF THE SETTLEMENT CLASS WHO FAILS TO SUBMIT A COMPLETE, VALID AND TIMELY CLAIM WILL BE BARRED FROM PARTICIPATING IN THE SETTLEMENT. IF YOU DO NOT OPT OUT OF THE SETTLEMENT AND FAIL TO COMPLETE A VALID AND TIMELY CLAIM FORM, YOU WILL BE BOUND BY THE SETTLEMENT AGREEMENT AND ALL ORDERS AND JUDGMENTS ENTERED BY THE COURT, AND YOU WELL HAVE RELEASED YOUR CLAIMS AGAINST SETTLING DEFENDANTS WITHOUT ANY RIGHT TO THE BENEFITS UNDER THE SETTLEMENT.

2. WHAT IS THE LAWSUIT ABOUT?

William Ruff and other homeowners commenced the Ruff action in January 1996. The Plaintiffs in Ruff own residential dwellings that have EIFS as part of the exterior wall(s). They brought the case as a class action, on behalf of all persons and entities that own or previously owned any structure used as a one or two family residential dwelling or townhouse in North Carolina on which EIFS sold, marketed and/or distributed by the named Defendants, including Settling Defendants, was installed. Plaintiffs alleged, among other things, that EIFS are defective because they entrap water and cause damage to homes. The action seeks monetary relief from the named Defendants.

The Settling Defendants have denied, and continue to deny, Plaintiffs' claims and allegations. The Court has not ruled either on the merits of Plaintiffs' claims, or on the defenses asserted by Settling Defendants. This Notice does not imply that there has been or that there would be any finding that the Settling Defendants are liable for any reason or to any extent, or that any money could be recovered if the litigation were not settled.

This is a partial national settlement insofar as it only applies to Class Members with a Settling Defendant's EIFS products. The settlement applies to anywhere in the United States and is not limited to property in North Carolina.

3. WHAT ARE EIFS?

EIFS are multi-layered exterior wall systems consisting of a finish coat, a base coat and insulation board, all of which are mechanically or adhesively secured to plywood or another substrate. EIFS can be used as a component of the exterior wall for residential structures. EIFS are available in various external textures designed to look like traditional stucco.

4. WHEN, WHERE AND WHY IS A HEARING BEING HELD?

A Fairness Hearing will be held on September 11, 1998, before the Honorable Ben F. Tennille, in Courtroom 317, Judicial Building, 316 Princess Street, Wilmington, North Carolina, to determine whether the Proposed Settlement ("Settlement Agreement") is fair, reasonable and adequate. The hearing also will address Plaintiffs' Class Counsel's application for an award of attorneys' fees and costs. The hearing may be continued by the Court without further written notice.

At the Settlement Hearing, any Settlement Class Member who has not timely filed an Exclusion Request pursuant to this Notice may appear in person or by counsel (at his or her own expense) and be heard to the extent allowed by the Court in support of, or in opposition to, the fairness, reasonableness and adequacy of the Settlement Agreement. In order to appear in opposition to the Settlement Agreement and to file papers or briefs for consideration by the Court, on or before August 15, 1998, you must do two things: (A) timely file with the Clerk of the Court a notice of your intent to appear in opposition, together with a statement that indicates (i) the basis for such opposition along with any supporting documentation, (ii) your name, address and telephone number, (iii) the street address, city and state, or other appropriate description of the property you own or formerly owned that is subject to the Settlement Agreement, and (iv) that the EIFS was manufactured, sold, marketed and/or distributed by a Settling Defendant; and (B) timely serve copies of such notice, statement, and documentation together with copies of any other papers or briefs that you file with the Court, either in person or by first-class mail, upon each of Plaintiffs' Co-Lead Counsel and Counsel for the Settling Defendants, each of whom are identified below.

5. WHO IS COVERED BY THE PROPOSED SETTLEMENT?

On May 6, 1998, the Court granted preliminarily approval of the Settlement Agreement and conditionally certified a Settlement Class. The benefits of the Settlement Agreement are summarized in this Notice. The Settlement Class is composed of all persons who, as of Notice Date, own or owned any single or two family residential dwelling or townhouse in the United States clad, in whole or in part with a Settling Defendant's EIF system. The Settlement Class includes former owners, persons who previously reclad their property, and persons who have filed and served, by the Notice Date, an action against the Settling Defendants relating to their EIFS products.

A "mixed product" is not a Settling Defendants' EIFS and, therefore, is not included in the Settlement. "Mixed product" is defined as an EIFS that is not, in its entirety, EIFS sold, marketed and/or distributed by a Settling Defendant.

If you are not a member of the Settlement Class, you are not covered by the proposed Settlement. For purposes of determining whether you are a Settlement Class Member, you must own or have owned prior to May 15, 1998, a property included in the Settlement. The property included in this Settlement is limited to buildings designed to accommodate one family, buildings designed to accommodate two families (in separate living areas) and individual townhouse units. This Settlement does not include property, such as condominiums, apartments, hotels and other buildings that may accommodate more than two families; nor does this Settlement include any building that is used for any purpose other than residential purposes.

6. HOW DO I KNOW IF I HAVE SENERGY'S OR THORO'S EIFS ON MY HOME?

There are a number of ways you can determine the type of EIFS on your home. Documents such as warranties, correspondence or bills of sale should indicate who manufactured or distributed the EIFS. You may have already had your home inspected for moisture intrusion, in which case the inspector may have indicated who he believed manufactured the EIFS. You may also be able to obtain assistance in determining the type of EIFS on your home by contacting your builder, contractor or EIFS applicator.

7. WHAT ARE THE TERMS OF THE SETTLEMENT?

The following is only a summary of the terms and conditions of the Settlement Agreement. For more information, you may obtain a copy of the Settlement Agreement, and after June 15, 1998, a copy of the Inspection Protocol, by calling 1-800-350-4730.

On or about April 29, 1998, Plaintiffs in this action entered into the Settlement Agreement with the Settling Defendants providing, among other things, that the Settling Defendants will be obligated to pay up to twenty million dollars ($20,000,000.00) to a fund (the "Settlement Fund"). The Settlement Agreement provides for the full and complete release by the Settlement Class of all claims against the Settling Defendants that have or could have been asserted by Plaintiffs in the litigation, subject to the terms and conditions of the Settlement Agreement. In exchange, all Settlement Class Members who own a covered Property will be entitled to, among other things, an inspection of their home, at no cost to the Class Member, to detect moisture intrusion. Depending on the amount of moisture intrusion the inspection reveals, if any, Settlement Class Members may receive monetary payment or home repair, with additional follow-up inspections to assure any repairs are successful. In addition, those Settlement Class Members who timely file a Claim Form and who do not receive a monetary payment will receive a 5-year limited warranty against further moisture intrusion problems, effective as of the Settlement Date. Persons who previously reclad their Property also may be entitled to receive monetary payment. Former owners may be entitled to payment of actual damage up to one-thousand dollars ($ 1,000. 00). Settlement Class Members maintain their rights to pursue all related claims against all parties other than the Settling Defendants.

As part of the Settlement Agreement, Settling Defendants have paid for this and other forms of notice to the Settlement Class. These payments are separate and apart from payments to the Settlement Fund. The Settlement Fund shall be used to pay for the claims process, including a Claims Administrator; to pay for the initial home inspection and required follow-up repair inspections; to pay and train independent inspectors and remediation contractors; and to pay all recovery benefits under the Settlement Agreement, including monetary payments and warranty claims.

There are various conditions to the Settlement Agreement, any one of which could result in termination of the Settlement Agreement. One condition of the Settlement Agreement is that the Court confirm the Settlement as fair, reasonable and adequate and in the best interests of the Settlement Class.

8. WHAT DO I NEED TO DO TO PARTICIPATE IN THE BENEFITS OF THE SETTLEMENT?

If you wish to participate in the Settlement, you must timely complete and submit the Claim Form. Your interests as a member of the Settlement Class will be represented by Class Counsel without charge to you. You are not required to hire your own attorney.

You will be bound by any judgment approving the Settlement.

Persons who would be Settlement Class Members, but previously elected to "opt out" of the Ruff class action pursuant to the notice of class action disseminated on or about July 31, 1997, may participate in this Settlement Agreement ("Opt In") by timely completing the Claim Form and indicating that they are electing to Opt In. Opt In requests received after August 15, 1998 shall be submitted to the Claims Administrator and will be allowed, if at all, at the absolute discretion of Senergy, Inc.

9. HOW DO I MAKE A CLAIM?

To make a Claim, you must complete, sign and submit a Claim Form, which has been included with this Notice. Send your completed forms, along with required and/or elective proof and documentation, as requested in the form to:

Claims Administrator
P.O. Box 4349
Portland, OR 97208-4349

You should submit a separate Claim Form for each property you own. If you did not receive a Claim Form, or if you desire additional copies, you may obtain such copies by writing to: Claims Administrator, P.O. Box 4349; Portland, OR 97208-4349.

By filing a Claim Form, each member of the Class submits himself or herself to the jurisdiction of the Superior Court for New Hanover County, North Carolina, for purposes of this action only and agrees that the information provided on the Claim Form may be subject to verification, investigation and further inquiry as may be necessary.

The Claims Administrator shall determine whether the Claim is sufficiently complete for processing. If information relevant to the Claim is incomplete, the Claims Administrator may request and you must provide if possible such additional information as necessary to process the Claim.

A MEMBER OF THE SETTLEMENT CLASS WHO FAILS TO SUBMIT A COMPLETE, VALID AND TIMELY CLAIM WILL BE BARRED FROM PARTICIPATING IN THE SETTLEMENT. IF YOU DO NOT OPT OUT OF THE SETTLEMENT AND FAIL TO COMPLETE A VALID AND TIMELY CLAIM FORM, YOU WILL BE BOUND BY THE SETTLEMENT AGREEMENT AND ALL ORDERS AND JUDGMENTS ENTERED BY THE COURT, AND YOU WILL HAVE RELEASED YOUR CLAIMS AGAINST SETTLING DEFENDANTS WITHOUT ANY RIGHT TO THE BENEFITS UNDER THE SETTLEMENT.

10. HOW CAN I EXCLUDE MYSELF FROM THE SETTLEMENT?

All Settlement Class Members, including former owners, have the right to be excluded from the Settlement. If you do not want to remain a Settlement Class Member and wish to exclude yourself, that is, to "opt out" of this lawsuit, then you must personally sign and return an Exclusion Request postcard or other personally signed written Exclusion Request, along with the information relating to product identification to EIFS Exclusion Requests, P.O. Box 4349; Portland. OR 97208-4349, postmarked on or before August 15, 1998. An Exclusion Request is included in this packet. All persons with an interest in the EIFS clad property must personally sign this Exclusion Request.

If you are a Settlement Class Member and properly and timely request exclusion from the Settlement Class, you will not receive any benefits of this Settlement and you will not be bound by any further orders or judgment entered for or against the Class. You may pursue at your own expense whatever rights you may have against the Settling Defendants, if any.

The above information is taken directly from Forms d9291, d9292, d9293 and d9294.

11. WHO REPRESENTS THE PARTIES?

Co-Lead Counsel for Plaintiffs and the Settlement Class are:

Marvin K. Blount, Jr.
The Blount Law Firm, P.L.L.C.
400 West First Street
Greenville, NC 27835
Gary K. Shipman
Shipman & Associates
11 South Fifth Street
Wilmington, NC 28401
 

Everette L. Doffermyer
Doffermyre, Shields, Canfield, Knowles & Devine
1600 The Peachtree
1355 Peachtree Street
Atlanta, GA 30309

Counsel for the Settling Defendants are:

W. Andrew Copenhaver
Jerry S. Alvis
Womble Carlyle Sandridge & Rice, P.L.L.C.
Post Office Drawer 84
Winston-Salem, NC 27102

12. WHAT ARE CLASS COUNSELS' REASONS FOR THE SETTLEMENT?

Plaintiffs, through their counsel, have made a thorough investigation into the facts and circumstances relevant to the Settlement Class claims in this case. Class Counsel also have considered the expense and length of time necessary to prosecute this action through trial and any appeals; the uncertainties associated with the outcome of this or any litigation; and the benefit provided to the Settlement Class by the proposed Settlement. Based upon these considerations, Plaintiffs and their counsel have concluded that it is in the best interest of the Plaintiffs and the Settlement Class to settle this case on the terms outlined herein, as reached after extensive arms-length negotiations, and as more fully set forth in the Settlement Agreement.

13. HOW WILL CLASS COUNSELS' FEES AND EXPENSES BE PAID?

Class Counsel will petition the Court for an award of no greater than 30 percent of the Settlement Fund for attorneys' fees for all services rendered to the Settlement Class, plus their costs and expenses related to the Settled Claims. The attorneys' fees and costs awarded by the Court shall be paid from the Settlement Fund. All payments to Class Counsel must be approved by the Court, and will be considered at the Fairness Hearing or at other hearings to be scheduled by the Court.

14. WHAT IF THE SETTLEMENT IS APPROVED BY THE COURT?

If the proposed Settlement is approved, it will be binding and will release Settling Defendants from any and all claims, including any claims for damages or equitable relief, arising out of or related to EIFS, that were or could have been asserted by Settlement Class Members.

15. WHAT IF THE SETTLEMENT IS NOT APPROVED BY THE COURT?

If the Settlement is not approved by the Court as being fair, reasonable and adequate, the Settlement Agreement will be null and void and the parties will be returned to the same positions they occupied prior to the execution of the Settlement Agreement.

16. WHERE DO I GET ADDITIONAL INFORMATION?

If you decide to remain a member of the Class and you wish to communicate with or obtain information from Class Counsel, you may do so by writing to counsel at one of the addresses listed in Section 11 above. DO NOT CONTACT THE COURT.

This Notice provides only a summary of matters regarding the case. You may seek the advice and guidance of your own private attorney, at your own expense, if you wish.

You may have additional legal remedies against other parties who participated in the construction or sale of your house. You should consult with an attorney to pursue these rights against additional parties.

BY ORDER OF THE COURT

DATED: May 6,1998

/s/ Ben F. Tennille

THE HONORABLE BEN F. TENNILLE
NORTH CAROLINA SUPERIOR COURT JUDGE

FORM d9295