300 Homes to Be Repaired in Settlement With Chinese Drywall Firm

A Chinese drywall manufacturer has agreed to participate in the remediation of up to 300 homes in Alabama, Mississippi, Louisiana and Florida that were contaminated by faulty drywall.

The agreement reached with Knauf Plasterboard Tianjin (KPT) in Chinese Drywall multidistrict litigation (MDL) establishes a demonstration remediation program, funded by KPT and a number of builders, drywall suppliers and their insurers. The impacted homes contain drywall manufactured by KPT; the selection of eligible homes will be based on certain criteria spelled out in the settlement and on “an equitable distribution” of homes in the named states.

The agreement does not constitute “admission of liability or fault of any kind on the part of the Knauf Entities,” according to the 151-page court document. Additionally, the agreement does not interfere with “other proceedings in the MDL or any State Court.”

Lawsuits have been filed against homebuilders, developers, installers, realtors, brokers, suppliers, importers, exporters, distributors and manufacturers over drywall from China, which was widely imported into the United States between 2004 and 2006. The defective, sulfur-emitting drywall has been linked to possible health problems along with a noxious odor, corrosion of wiring, plumbing, computers, plumbing and jewelry. Most of the problems have arisen in homes built during the housing boom and in some that were repaired after the busy 2005 hurricane season.

Because of the commonality of facts in the cases, litigation over the faulty drywall was designated as multidistrict litigation. In June 2009, all federal cases were consolidated and assigned to Judge Eldon E. Fallon of the U.S. District Court, Eastern District of Louisiana.

Among the participating builders, suppliers and insurers in the current settlement are Interior/Exterior Building Supply, the Louisiana Homebuilders Indemnity Trust, QBE Insurance Group and State Farm Insurance, according to an announcement by a group of plaintiffs’ attorneys involved in the litigation. The Louisiana-based supplier Interior/Exterior Building Supply was an integral component in reaching this agreement, and the company has agreed to help fund this pilot program, the announcement said. Other Knauf entities signed on and are participating in the agreement.

“The purpose of the demonstration remediation project is to establish a model for the resolution of the KPT drywall issue,” stated Gregory J. Wallance of Kaye Scholer LLP, who represented KPT with Kerry J. Miller of Frilot LLC.

U.S. Senator Mary L. Landrieu, D-La., applauded the agreement, stating it “provides a ray of light to the thousands of homeowners who have seen their dream homes turn into a nightmare. This is the first piece of good news that many of these families have received since this problem first arose two years ago. I’m encouraged by the outline of the settlement, but recognize there is still much work to be done.”

Landrieu said the pilot program is based in part on remediation and inspection guidance issued by the Consumer Product Safety Commission (CPSC). The CPSC reported in late September it had received 3,602 incident reports related to drywall from 38 states, the District of Columbia, Puerto Rico, and American Samoa. More than 90 percent are from five states: Florida (57 percent), Louisiana (19 percent), Mississippi (7 percent), Alabama (6 percent), and Virginia (4 percent).

Settlements and Awards

A Florida jury in June awarded a Florida couple a $2.4 million judgment in a case involving contamination of their home by KPT-manufactured plasterboard. The amount included the cost of renovating the home, as well as a consideration for loss of use and for the stigma attached to the home that might affect its resale value. The defendant was drywall distributor Banner Supply Co., which is named in thousands of other U.S. lawsuits, the Associated Press reported.

Also in June, KPT settled with plaintiffs Paul Clement and Celeste Schexnaydre Clement, and plaintiff John Campbell, in KPT drywall-related cases. The terms of that settlement were not revealed.

In late April, Fallon found KPT liable for the cost of remediating the home of Tatum and Charlene Hernandez of Mandeville, La., and assessed an amount of $164,000. A settlement was subsequently agreed upon in that case, as well.

Tax Deductions

On September 30, the Internal Revenue Service announced tax relief is now available for homeowners affected by contaminated drywall.

Topics Florida USA Louisiana China Homeowners Manufacturing