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Byline: Jesse Hiestand Staff Writer

Moving to avoid a nationwide class-action suit, wood-products giant Weyerhaeuser Co. will pay homeowners to replace warped, buckled or failed composite siding installed as far back as 1981, officials said Tuesday.

California consumers bought nearly 40 percent of the estimated two billion board feet of the hardboard siding and plaintiffs' attorneys estimate that at least 500,000 homes across the nation could be affected.

The settlement covers the Weyerhaeuser product - wood fibers compressed with resins and wax - installed from Jan. 1, 1981, through Dec. 31, 1999.

Among the disgruntled homeowners is Mark Hollinger, who installed the siding on his Studio City house about five years ago when the wood paneling gave out.

``Over time it shrunk to the extent that all of a sudden there was a space that I could stick my finger in,'' said Hollinger. ``That stuff should not shrink - it's prefabricated. This was supposed to be forever.''

Weyerhaeuser, based in Federal Way, Wash., stands by the quality of the product and blamed improper installation for the bulk of the problems.

``We believe that it's a very effective exterior product and that if it's installed and maintained properly it will be just fine,'' said Weyerhaeuser spokeswoman Eileen Cavanagh.

Settling rather than engaging in a court fight was in the best interest of the company, shareholders and consumers, she said.

As a result, Weyerhaeuser said Tuesday that it took an $82 million charge in the second quarter to cover the cost of the settlement.

Even so, the company's second-quarter profits jumped 24 percent from a year ago.

The company earned $203 million, or 89 cents per share, on sales of $4.2 billion for the quarter ended June 30. That's up from the $164 million, or 82 cents per share, on sales of $3 billion a year ago.

Shares of the company were up 31.2 cents Tuesday to close at $45.88 on the New York Stock Exchange.

The settlement, given preliminary approval in San Francisco Superior Court on July 12, sets no limits on the number of claims or potential costs, leading plaintiffs' attorney Chris Brain to predict that the total payout could be far more than Weyerhaeuser anticipates.

In a similar case, Louisiana Pacific has paid nearly $500 million, some five times more than it expected, to replace defective siding.

In fact, publicity about the Louisiana Pacific case led hundreds of homeowners to come forward with complaints about the Weyerhaeuser product. The case was filed in June 1998 and certified as a class action in California last year. An effort to take the class action nationally was under way when the settlement talks began.

``An unreasonably high percentage of the product failed because it was defective,'' Brain said from his Seattle office Tuesday. ``It's basically a moisture-sensitive, fragile product. The water causes buckling, warping, a breakdown of the glue bonds.''

Next month the estimated 10,000 known class members will be notified by mail that they can file a claim. Ads in national media will follow and the claims process is expected to get under way if the final settlement is approved Dec. 21.

An independent administrator will be appointed in coming weeks to oversee the claims, which will be verified by independent inspectors.

Until then, Weyerhaeuser will handle siding defects through its regular warranty process. The warranties will no longer be valid after the administrator is appointed, Cavanagh said.

She said the company had only received a few complaints about the hardwood siding over the past two decades, less than 1 percent of which resulted in lawsuits.

And a company decision last year to halt production of the siding had nothing to do with the lawsuit, she said.

``If you don't properly paint or caulk or if the nails are not flush with the siding it allows water to get in behind the siding and that can cause problems with warping and deterioration,'' Cavanagh said.


Here are some tips for dealing with possible defective composite siding.

--Homeowners might not be able to readily spot damaged composite siding but telltale signs include swelling, buckling and warping as well as discolored or chipping paint.

--The defective Weyerhaeuser brand hardboard siding can be identified by the mill numbers AHA10 and AHA20.

--Web sites and toll-free numbers will be set up in coming weeks to help people with their claims. Until then, Weyerhaeuser is handling claims through its regular hardboard warranty line at (800) 871-3644.


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Article Details
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Title Annotation:Business
Publication:Daily News (Los Angeles, CA)
Geographic Code:1USA
Date:Jul 19, 2000
Next Article:THE BUZZ.

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