A local contractor won a minor victory in an appeal of its claim for damages against its insurance carriers, which refused to cover the costs of replacing tainted Chinese drywall.
A Norfolk federal judge had dismissed a $5 million suit brought by Dragas Management Corp., ruling that because Dragas voluntarily did the work, the insurance companies had no obligation to pay for it under federal law.
But the appeals court in Richmond on Monday ruled that federal courts lack jurisdiction over the matter and sent the case back to the Norfolk federal judge with instructions to dismiss it.
The appeals court ruled that because the parties exist in Virginia, the case belongs in state court.
That essentially keeps Dragas’ claim alive, although either side can try to appeal further to the U.S. Supreme Court.
Read more about Chinese Drywall issues in Williamsburg and Hampton Roads here