Lowe’s offers up to $100,000 to drywall victims

Oct 29, 2010

This article was published in the Sarasota Herald-Tribune on October 29, 2010:

Lowe’s offers up to $100,000 to drywall victims


By Aaron Kessler and Joaquin Sapien

Lowe’s Companies Inc. amended a controversial Chinese drywall settlement so that customers who bought tainted drywall from its stores are now eligible for up to $100,000 in cash, according to legal documents filed Thursday in Georgia state court.

Previously, it was a maximum of $4,500 in cash and gift cards in the settlement, for which plaintiffs’ attorneys who negotiated the deal were paid $2.1 million in legal fees.

The amendment comes two months after the Herald-Tribune and ProPublica reported that the former version of the settlement offered relatively small amounts to drywall victims, but big payouts to plaintiff’s attorneys.

“This proposed amendment strongly enhances the potential benefits to Lowe’s customers,” said Gregg Weiss, an attorney who helped negotiate the deal on behalf of his client, Chris Brucker, a corrections officer who bought drywall from Lowe’s to build his three-bedroom home in Arcadia.

Under the previous settlement, Lowe’s drywall customers were eligible for a maximum of a $2,000 gift card plus $2,500 in cash, if they had a receipt or a credit card statement showing that they bought drywall at Lowe’s.

They also had to prove through an “independent third party” that they have more than $2,000 of damage to their home or more than $2,000 in medical bills.

The old settlement also included two other levels of compensation: a $50 gift card for customers who had no proof of purchase but said they bought drywall from Lowe’s and a $250 gift card for customers that had proof but no documentation that they suffered damages.

Those provisions of the settlement still stand, but now the amendment provides an additional $2.25 million for homeowners who can provide an estimate from an independent contractor showing that they will or already have suffered $4,500 worth of property damage.

Lowe’s customers who fulfill the new requirements are now eligible for a maximum of $100,000 in cash. Homeowners also can qualify if they have at least $4,500 worth of medical bills from symptoms related to the bad drywall.

After the Herald-Tribune and ProPublica published a story about the original settlement filed in August, public interest attorneys and consumer advocates criticized the deal, saying it set aside too much money for the plaintiffs’ attorneys and not enough for the plaintiffs themselves.

“The ProPublica and Herald-Tribune stories brought to the attention of Lowe’s concerns with the settlement, which I believe they have corrected in the amended settlement agreement,” said Robert Gary, a Sarasota attorney also representing Brucker, a father of three who bought drywall from Lowe’s in 2006 to build his 2,267-square-foot home.

Brucker, like thousands of homeowners around the country, learned that his drywall could be a problem after his air conditioner failed in 2007 and he began doing research about appliance failures online.

Air conditioners that frequently malfunction have become a tell-tale sign of defective drywall, which releases sulfur gases that can corrode electric wiring and trigger respiratory problems, nosebleeds, irritated eyes and migraines.

The U.S. Consumer Product Safety Commission says the only way to repair such homes is to remove the drywall and electrical wiring.

Brucker, while grateful to Lowe’s and his own attorneys for getting him relief, says that $100,000 is not enough to cover all of those expenses.

He estimates it will cost “somewhere around the $200,000 dollar mark to gut it and redo it. Plus, there are other expenses of living elsewhere during the construction.

“So it’s nowhere near enough to make me whole again, but it’s a start and you got to start somewhere,” he said.

Gary also is representing Brucker in another lawsuit against the manufacturer of the drywall in his home, National Gypsum, based in Charlotte, N.C. The bulk of the media and federal government’s attention on drywall has been focused on board imported from China.

“From our standpoint this is the first acknowledgement of any problems related to American drywall anywhere,” Gary said. “Lowe’s has told me that they didn’t sell any Chinese drywall, so as far as we know this settlement is going to pertain solely to American board.”

Despite Lowe’s assurances that it only sold American board, the original settlement touched a nerve with attorneys in the multi-district litigation in New Orleans federal court, which is focused on Chinese drywall.

Plaintiffs’ attorneys involved in that case asked U.S. District Court Judge Eldon E. Fallon to block the previous version of Lowe’s settlement, saying that the agreement “interferes with and erodes” the federal litigation and Fallon’s own authority to deal with the wide scope of the drywall problem.

Fallon scheduled a hearing on the matter for next week, drawing written arguments from both sides of the litigation.

Patrick Pendley, one of the plaintiffs’ attorneys who negotiated the original Lowe’s settlement, argued in court filings that the Georgia class-action case was “simply not a Chinese drywall case,” but rather “a defective domestic-drywall case which will affect a miniscule number of Chinese drywall claims in the MDL against a single defendant — Lowe’s.”

Pendley said there could be “thousands of non-Chinese drywall claims” against Lowe’s that would be blocked if Fallon upended the settlement.

Lowe’s attorney, Francis V. Liantonia, Jr., challenged Fallon’s power to block the settlement, stating that the MDL court “has no jurisdiction to review the Georgia court’s orders,” and said that if plaintiffs were “dissatisfied” with the state court’s rulings they “may appeal through the Georgia state-court system.”

Russ Herman, liason counsel for the plaintiffs in the MDL, told the Herald-Tribune and ProPublica that the amended settlement terms will not change their opposition to the Lowe’s agreement, as long as it continues to include all drywall.

“There’s one way to cure this situation: just take the word Chinese drywall out of that settlement,” Herman said. “If Lowe’s is going to contend under oath that they sold no Chinese drywall, then there’s no reason they should be forcing Chinese drywall homeowners to release their claims against the company.”

Herman said the plaintiffs remain unconvinced that Lowe’s did not in fact sell Chinese drywall — and he said they are investigating whether Lowe’s bought drywall from Interior-Exterior Building Supply, one of the Louisiana-based suppliers at the center of the Chinese drywall case.

Interior-Exterior is known to have denied selling Chinese drywall to certain builders, only to have those claims refuted when Chinese board was later discovered in homes.

“As far as I’m concerned either they’re telling the truth or they’re not. If they’re telling the truth, then eliminate Chinese drywall from your settlement,” Herman said, referring to Lowe’s.

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