Drywall maker to reimburse home builders in Florida, Gulf States

Nov 17, 2011

The following article was published in the Bradenton Herald on November 17, 2011:

Drywall maker to reimburse home builders

By Herald Wire Services

A settlement outlined Wednesday between a major manufacturer of Chinese-made drywall and homebuilders who used the tainted product in Florida (including Manatee County), Texas, Louisiana and Mississippi could affect anywhere from 800 to 1,500 homes, attorneys said.

Lawyers called it a significant step toward resolving problems with some 10,000 buildings blamed on the drywall.

“It allows the home builders who have been repairing homes to be reimbursed. It gets the homes out of litigation,” said Kerry Miller, and attorney for Knauf, a German company with plants in China that has been working to resolve problems while other overseas manufacturers have hid behind the limits of international legal jurisdiction.

Bruce Steckler, an attorney on the plaintiffs steering committee who works on insurance and builder issues, said the program will reimburse large national builders who went ahead and repaired on their own. It will also help medium-sized builders with the wherewithal to fix homes if they had the money to actually do so. He expects U.S. District Judge Eldon Fallon to approve the settlement.

Fallon presides over other cases involving more than 10,000 properties owned by people who blame damage to their homes, including corroding plumbing and electrical connections, on defective Chinese-made drywall.

Steckler acknowledged that there is a long way to go in settling the many cases but said the settlement was significant.

“We see now a collaborative and cooperative effort by homebuilders, the plaintiffs and Knauf to fix and repair homes,” he said.

“It’s a piece of the puzzle,” said Russ Herman, head of a committee of attorneys representing plaintiffs in the case. The attorneys noted that more than a thousand other homes are included in an earlier court-approved pilot remediation program involving Knauf.

Herman said Knauf was the maker of tainted drywall at plants in China that wound up in thousands of homes. Chinese-based businesses also provided significant amounts of the material that wound up in U.S. homes.

The program is aimed at subdivisions or neighborhoods of homes; it probably will not help small builders who had the misfortune to have a handful of scattered-site homes built with bad drywall.

The program also will not help homes that were built with a mix of Knauf drywall and bad drywall from other companies, such as Taishan Gypsum Co., a Chinese company that has so far dodged the litigation. The deal only applies to properties with solely Knauf-brand drywall.

In many homes built with bad drywall imported from China, metal components have corroded, appliances have failed and people complain of respiratory and skin ailments.

Traditionally, drywall has been produced with a few hundred miles of where it will be used in construction, but because of unusual amounts of construction during the housing bubble and in the rebuilding efforts after the 2004 and 2005 hurricane seasons, the United States stepped up imports of drywall because it couldn’t produce enough domestically to meet demand.

Repairing homes built with bad drywall requires temporarily moving out homeowners, ripping out drywall and other components and working carefully to contain the dust from the bad drywall before rebuilding homes.

The Chinese-Manufactured Drywall Products Liability Litigation, as the case consolidated in New Orleans is formally known, is considered incredibly complex, because most of the manufacturers are foreign companies without a U.S. presence, so they are beyond the reach of the law.

Underscoring the unique challenges and costs of the case, Judge Fallon announced at Wednesday’s meeting that he would travel to China to certify translators for a second round of Taishan depositions because translations of the first round were difficult to understand.

Until the court figures out a way to bring other manufacturers to justice, it has been working with Knauf and parties in the United States that had a role in the disaster, such as building material distributors, insurers and home builders.

Plaintiff attorneys have brokered agreements with companies such as New Orleans-based Interior-Exterior Building Supply to contribute money to an ultimate settlement.

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