Settlement Covers Chinese Drywall
July 6, 2011 – 1:35 amA Miami-based supplier of tainted Chinese drywall agreed in a court filing Tuesday 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.
There have been more than 600 reports of suspected Chinese drywall in Florida, including 20 in Brevard County. Based on the more than 400 million pounds of the drywall imported into the state since 1999, there could be 25,000 or more Florida houses containing it.
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,” Tuesday’s court filing says.
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.
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.
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