Chinese Drywall - Recent Settlements and Verdicts

Defectively manufactured drywall has been in the news for the past two years. Recently, there have been a string of favorable rulings, verdicts, and settlement for those damaged by the defective drywall. 

On May 10, 2010, in the case of Germano et al. v. Taishan Gypsum, Judge Fallon, who is presiding over the Multi District Litigation, entered a default judgment in favor of the plaintiff homeowners and awarded in excess of $2.6 million in damages against Taishan Gypsum Company. Presently, Taishan Gypsum is appealing the entry of the default judgment. 

On May 10, 2010, in the case of Hernandez v. Knauf Gips KG, et al, Judge Fallon entered a judgment in favor of the plaintiff homeowners and awarded $164,049.64 against Knauf Plasterboard Tianjin Company, Limited, plus reasonable attorneys’ fees, costs of the action, and interest from the date the judicial demand until paid. 

Two other federal lawsuits filed against Chinese drywall manufacturer Knauf have been settled. The suits were brought by Paul Clement and Celeste Schexnaydre, who own a home near New Orleans, Louisiana, and John Campbell, who owns 21 contaminated apartments in Slidell, Louisiana. The agreements were reached following a June 18th conference with Judge Fallon. Knauf agreed to pay to remediate the homes, pay at least $25,000 to store furniture, pay for apartment rental while homes were rebuilt, pay at least $15,000 to replace damaged appliances and personal property, and pay attorneys’ fees.  Additionally, Knauf agreed to pay Campbell for lost rental income, and to replace and test the drywall in one apartment while negotiating about the remediation of additional apartments.

On June 22, 2010, in the nation’s first Chinese drywall jury trial, a Florida jury found in favor of a homeowner and awarded $2.47 million against Banner Supply, which was found liable on the grounds of negligence, public nuisance and violation of Florida’s Deceptive and Unfair Trade Practices Act. Banner was found 55 percent responsible. Under Florida law, non-defendants in the case were also apportioned responsibility: Chinese drywall manufacturer Knauf Plasterboard Co. was found 35 percent at fault, and a Chinese exporter and a Miami importer, were each held 5 percent responsible. The jury unanimously awarded the homeowners $494,443 for remediation costs; $9,984 for replacement costs for personal property; $169,268 for temporary housing costs and moving expenses; $20,775 for cleaning costs; $3,320 for additional utilities costs; $920 for storage costs; $6,651 for additional interest on credit cards; $1.7 million for loss of enjoyment; and $60,000 for diminution of the value of their house.

Finally, Lowe’s Companies, Inc, the nation’s second largest home improvement store chain has agreed in principal to a national settlement of claims involving defective drywall. Lowe’s has agreed to pay $6.5 million (primarily in gift cards) to those affected by the defective drywall Lowe’s sold. The amounts paid to each affected customer will depend upon the total amount of documentation, which should include proof of purchase, defects, and damages. 

The Consumer Product Safety Commission has received a total of 3,296 complaints from homeowners in 37 states plus the District of Columbia, American Samoa, and Puerto Rico who claim to have been damaged by defective drywall made by a variety of companies. The cause of the problem is still highly debated and unknown by the various entities testing and inspecting the products. However, despite the unknown and debated cause of the defect, plaintiffs are prevailing against the manufacturers, distributors, installers, and sellers of the defective drywall.

For more information, please feel free to contact one of our offices.

Chinese Drywall - $2.6 Million Dollar Plaintiff Verdict in MDL

Exposed drywall in new constructionIn the multi-district litigation arising out of Chinese manufactured drywall, Judge Fallon of the United States District Court for the Eastern District of Louisiana issued an Opinion on April 8, 2010 finding in favor of plaintiff homeowners and awarding in excess of $2.6 million in damages against Taishan Gypsum Company. 

Additionally, Judge Fallon found that based upon the Findings of Fact and Conclusions of Law, that “scientific, economic, and practicality concerns dictate that the proper remediation for the Plaintiff-intervenors is to remove all drywall in their homes, all items which have suffered corrosion as a result of the Chinese drywall, and all items which will be materially damaged in the process of removal.”

In the written Opinion, Judge Fallon cites to the Cozen O'Connor's Chinese Drywall Litigation: Subrogation White Paper (2009) as an authoritative text in numerous places in his findings of fact.

For more information on the multi-district litigation arising out of the Chinese manufactured drywall, or to get a copy of the Cozen O’Connor Chinese Drywall Litigation Subrogation White Paper, please feel free to contact one of our offices.

Chinese Drywall Litigation: Preservation of Evidence

Exposed drywall in new constructionOn June 15, 2009, a special panel on multidistrict litigation ordered 10 federal cases involving liability for allegedly defective Chinese manufactured drywall consolidated in the U.S. District Court of the Eastern District of Louisiana with Judge Eldon E. Fallon. It was also ordered that another 67 liability actions involving allegedly defective Chinese manufactured drywall pending in other federal districts, and any other related state or federal action, be treated as potential tag-along actions and consolidated in the same court.

This procedure, referred to as multidistrict litigation, is utilized in the federal court system to consolidate pending federal and state civil cases filed throughout the United States with common questions of fact. The consolidation allows one federal judge to manage, among other things, pretrial procedures, discovery, and dispositive motions. However, after all discovery and pretrial rulings, if issues remain to be tried, the case will be remanded back to the court where it was originally filed for trial.

Judge Fallon has entered a number of orders in the Chinese drywall multi-district litigation. One of interest was entered on October 9, 2009, as Pretrial Order No. 1(B). In that order, Judge Fallon sets forth the duties and obligations for the preservation of physical evidence that must be followed by all individuals in all jurisdictions.

In summary, all individuals and entities who have or intend to pursue claims relating to allegedly defective Chinese manufactured drywall must preserve certain portions of the defective drywall and the damaged property at their own expense. Parties are required to preserve multiple samples of the drywall, drywall end tape, HVAC coil material samples, plumbing component samples, electrical component samples, and other damaged property. All evidence must be photographed or videotaped. Photographs of the evidence should be taken before and after it is removed from the property and documented on a floor plan. Thereafter, all preserved evidence must be individually stored in double-bagged polyethylene zip-lock bags. The samples must be clearly labeled on the outside of one plastic bag and then placed inside the second plastic bag. The label should include the name and address of the property, the date the samples were taken, the type of evidence, and the location where the item was taken from within the property. Finally, the evidence must be stored in a reasonably climate controlled location and free of water or moisture. 

The preservation of evidence is key to any claim involving damage to property. As such, anyone pursuing or intending to pursue a claim for damage caused by allegedly defective drywall should read and strictly comply with Pretrial Order No. 1(B).

Chinese Drywall Litigation

Exposed drywall in new constructionFrom 2004 through 2006, the housing boom and rebuilding efforts necessitated by various hurricanes led to a shortage of construction materials.  As a result, U.S. builders and suppliers imported significant amounts of Chinese drywall, estimated to be enough to construct approximately 100,000 homes.  A number of putative class action complaints and approximately 100 other state and federal complaints including counts for negligence, strict liability, breach of warranty, and violations of consumer protection acts have been filed alleging that the Chinese drywall emits gaseous emissions or “off-gassing” that creates a noxious “rotten egg-like” odor and causes damage and corrosion to home structural and mechanical systems such as air conditioner and refrigerator coils, copper tubing, faucets, metal surfaces, and electrical wiring. Additionally, the “off-gassing” is alleged to cause health problems, including allergic reactions, coughing, respiratory problems, sinus problems, throat infection, eye irritation, and nosebleeds.

Various federal, state, and independent agencies have done testing to determine the cause of the “off-gassing” but none have reached a final conclusion.  On May 7, 2009, the U.S. Environmental Protection Agency’s Environmental Response Team published a drywall analysis comparing a limited number of Chinese drywall samples from Florida homes to U.S. made drywall samples purchased from a Home Depot in New Jersey.

The EPA found significant differences between the Chinese drywall and the U.S. made drywall:

  • Sulfur was detected in the Chinese drywall but not in the U.S. drywall.
  • Strontium in the Chinese drywall was anywhere from twice to ten times the amount found in the U.S. made drywall.
  • Iron concentrations in the Chinese drywall were also significantly higher.
  • Notably, there was no evidence of fly ash found in the Chinese drywall samples or the U.S. samples.

However, the EPA has not issued a final report on the cause of the “off-gassing” and whether it causes property damage and personal injury.

On June 15, 2009, a special panel on multi-district litigation ordered cases involving Chinese drywall consolidated in the U.S. District Court of the Eastern District of Louisiana with Judge Eldon E. Fallon.  The matters are also being closely followed by Florida Congressman Robert Wexler, an advocate for families adversely impacted by homes built with Chinese drywall.