Masonite Siding Lawsuit: The $1 Billion Naef Settlement Explained

The Masonite siding lawsuit was a nationwide class action filed in 1994 in Mobile County, Alabama, on behalf of roughly four million homeowners whose homes were clad in defective hardboard siding made by Masonite Corporation. A jury found the siding defective in 1996, and a settlement approved in January 1998 ultimately paid more than $1 billion to affected homeowners. The claims program closed in 2008, and no active claims window remains.¹

Why the Siding Failed

Masonite Corporation, based in Chicago, manufactured hardboard siding from the mid-1950s until 2001.² The product was a composite of wood fibers, wax, and resin compressed under heat and pressure. It was porous and highly susceptible to moisture. In humid climates and rainy regions, the siding absorbed water and then swelled, warped, buckled, rotted, and delaminated. Keeping it functional required constant painting or staining, and by the early 1990s homeowners across the country were watching their siding crumble.³

The Case: Naef v. Masonite Corp.

John Naef, a Baldwin County, Alabama, homebuilder, brought the crumbling siding on homes he had built to attorney John Crowder of the Mobile firm Cunningham, Bounds, Yance, Crowder and Brown. The resulting case, Naef v. Masonite Corp., International Paper Co., Civil Action No. CV-94-4033, was filed in Mobile County Circuit Court in December 1994.⁴

The plaintiffs argued that the siding was inherently defective because it absorbed water and deteriorated, and that Masonite knew about the defect and concealed it. Masonite denied the product was defective and blamed improper installation and poor maintenance.⁵

In November 1995, Circuit Court Judge Robert Kendall certified the class, which covered all U.S. homes and structures containing Masonite siding manufactured on or after January 1, 1980.⁶ The Alabama Supreme Court twice denied Masonite’s requests to decertify the class.¹

The 1996 Jury Verdict

A Mobile County jury heard the first phase of the trial in August 1996 to decide whether the siding was defective. On September 13, 1996, the twelve-person jury returned a unanimous verdict finding the siding defective on four of five counts. The jury found that the siding failed to meet ordinary consumer expectations, was unreasonably prone to failure, was unfit for its intended use as exterior siding, and would not have been marketed by a prudent company aware of the failure risk. On the fifth question, whether the design itself was unreasonably risky when weighed against the product’s utility, the jury sided with Masonite.⁷

Plaintiffs’ attorney Robert Cunningham estimated that with up to four million affected homes and average repair costs around $10,000, total potential damages could reach $30 to $40 billion.⁷

The 1998 Settlement

With a second trial on damages scheduled for the summer of 1997, the parties settled on the eve of that proceeding.⁸ The court approved the agreement on January 15, 1998.⁹

Who Was Covered

The settlement class covered homeowners nationwide whose properties had Masonite hardboard siding installed between January 1, 1980, and January 15, 1998. It applied to exterior hardboard siding and excluded interior products, roof and deck sheathing, and oriented-strand board siding.⁹

How Claims Worked

To file a claim, homeowners had to provide proof of ownership, evidence the siding was installed during the class period, and either a physical sample of the product or a $100 deposit. An independent claims administrator reviewed the paperwork, and validated claims triggered a home inspection to assess damage before any payment issued. A court-appointed special master oversaw the administration and could make binding decisions on disputes subject to court review.¹⁰

What Homeowners Received

Payments were based on regionally adjusted replacement costs and varied with the quantity of qualifying damaged siding, local replacement pricing, and the age of the siding. Qualifying damage included thickness swelling, fungal degradation, buckling, and raised or popped fibers. Damage caused solely by improper installation was excluded.¹¹ While the program was still active, homeowners were receiving an average of about $5,000 per claim.⁸

Home inspections began in mid-1997. About 10,000 homeowners had filed claims by the early stages of the program.¹² By the time the program closed in 2008, payouts for the hardboard siding alone exceeded $584 million.¹¹ Combined with related settlements covering OmniWood siding and Woodruff roofing, the total surpassed $1 billion.¹

Attorney fees came separately. Plaintiffs’ lawyers received at least $47.5 million, plus $2.5 million in reimbursed litigation costs, paid by Masonite rather than deducted from homeowner recoveries.⁸

The Separate OmniWood Class Action

OmniWood, an oriented-strand board product, was handled through its own class action. That settlement covered siding installed between January 1, 1992, and January 6, 1999, with a claims deadline of January 6, 2009. It is also closed.¹³

Masonite Stops Making the Siding

On March 6, 2001, Masonite announced it was ceasing all hardboard siding production, citing a significant decline in the market. The shutdown closed a mill in Ukiah, California, and two production lines in Laurel, Mississippi, affecting 620 employees. International Paper, which had acquired Masonite in 1998, committed to keeping hardboard siding available for repair and replacement purposes under the settlement.²

What Homeowners With Masonite Siding Can Do Now

The class action route is closed. The hardboard siding claims program ended in 2008, and no active litigation remains.¹ Homeowners who still have Masonite siding can contact International Paper’s Masonite Limited Warranty Department at 1-800-323-4591 to ask about any remaining coverage under the product’s original 25-year warranty.¹³ Because production stopped in 2001, an exact replacement match is generally no longer available, and most homeowners repairing failed siding today turn to vinyl, fiber cement, or engineered wood.¹⁴

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