Land O Lakes Real Estate News - JLS Investment Realty

$55 milion reached over Chinese drywall cases
July 13th, 2011 4:45 PM

$55 milion reached over Chinese drywall cases

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A Miami-based supplier of tainted Chinese drywall agreed in a court filing today to a $55 million settlement of claims that the corrosive product damaged homes, all or nearly all of them in Florida.

The proposed settlement, which requires approval from U.S. District Judge Eldon Fallon in New Orleans, would resolve claims by thousands of plaintiffs against Banner Supply Co., several related companies and Banner's insurers.

Tuesday's deal covers just a portion of the claims by homeowners who blame drywall for a host of problems, including corrosion of electrical wiring, appliances and electronics.

Fallon is presiding over more than 10,000 claims by residents blaming damage to their homes on Chinese drywall, which was used in construction throughout Florida and the Gulf Coast before the housing bubble burst.

Only plaintiffs whose homes contain Chinese drywall supplied by Banner would be eligible for shares of the $54.5 million settlement fund, paid by four of Banner's insurers.

Banner purchased roughly 1.4 million sheets of Chinese drywall, most of which was made by Knauf Plasterboard Tianjin Co.

"Banner maintains it had no knowledge that the Chinese drywall was defective," the court filing says. "Banner merely distributed drywall manufactured in China, primarily by the Knauf Group, after receiving certifications and warranties from Knauf that the drywall was safe and not defective in any way."

However, plaintiffs' attorneys claim Banner knew by October 2006 that builders were complaining about odors from the drywall and yet continued to sell it. Banner also allegedly entered into a confidential agreement with Knauf in early 2007 that called for Knauf to replace about 44,000 pieces of its drywall with a domestic product.

Michael Peterson, a lawyer for Banner, said in an email that Banner intends to take legal action against its suppliers.

"We have learned certain facts during the litigation that lead us to believe that certain manufacturers made misrepresentations regarding their Chinese-manufactured drywall," Peterson said.

Plaintiffs' attorneys said they are trying to negotiate settlements with other companies. The Banner agreement is "an important step in the right direction toward global resolution of these claims," said Ervin Gonzalez, one of the lead plaintiffs' attorneys.

In April, insurers for a different Chinese drywall supplier, Interior/Exterior Building Supply, agreed to pay up to $8 million to settle similar claims. Interior/Exterior supplied drywall made by two Chinese companies — Knauf and Taishan Gypsum Co. — to builders in Texas, Louisiana, Mississippi and Alabama.

The vast majority of the remaining claims are against Knauf and Taishan, Gonzalez said.

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Posted by Jennifer Stepanek on July 13th, 2011 4:45 PMPost a Comment

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