Chinese Drywall Maker’s 65% Owner Wants Out of Lawsuit

The majority owner of a company that made defective Chinese drywall says it should be dropped from a lawsuit with the potential for hundreds of millions of dollars in damages, because it does not manage the drywall manufacturer.

The suit is part of multidistrict litigation being heard by U.S. District Judge Eldon Fallon in the Eastern District of Louisiana.

A hearing is scheduled June 9 to decide damages to as many as 4,000 people who say sulfur emissions from drywall made by Taishan Gypsum Co. Ltd. damaged their homes and belongings in Virginia, Florida, Alabama, Mississippi, Louisiana and Texas.

Beijing New Building Materials PLC filed a motion asking U.S. District Judge Eldon Fallon to schedule a hearing on its request to get out of the lawsuit.

BNBM owns 65 percent of Taishan’s stock but does not run the company, attorneys wrote in a memorandum supporting the motion.

“Taishan operates independently and with separate management,” it said. “The two companies have entirely separate finances, assets, and liabilities. They make and market different drywall under different brands. Neither is the other’s agent and neither signs or fulfills the other’s contracts.”

The 65 percent ownership “is not accidental: Taishan bargained for BNBM PLC to purchase less than a two-thirds ownership interest so that it ‘would not have the right to make decisions on important matters’ — a limit on the ownership percentage designed to ensure Taishan would operate independently,” the attorneys wrote.

They said Beijing New Building Materials does make drywall, but tests by the Consumer Product Safety Commission found its drywall did not have the high levels of sulfur emissions found in some other companies’ drywall.

Topics Lawsuits China