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Preliminary Settlement Reached in Tainted Chinese Drywall Claims

Source: AP

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Posted on 15 Jun 2011

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

Requiring approval from U.S. District Judge Eldon Fallon in New Orleans, the proposed settlement would resolve claims by thousands of plaintiffs against Banner Supply Co., several related companies and Banner's insurers, Chartis Inc., FCCI Insurance Co., Hannover American Insurance Co. and Maryland Casualty Co., who have agreed to pay out the proposed settlement, according to court documents.

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," Tuesday's 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. A 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.

 


Comments

 
Michael S. Foreman  Jun 18 2011 4:51AM Report Abuse
People ... Please think about this huge sounding settlement logically and legally. Judge Fallon's review and approval of this settlement will have to include, all potential victims or claimants. First, remember less than 200 sheets of 4 foot X 12 foot sheet-rock are in a typical 2,200 -2,600 square foot house. Now do the math ... 1,400,000 admitted and documented sheets covered by this specific settlement. 1,400,000 sheets of drywall, divided by 200+/- sheets per home = 7,000 potential victims, claimants, claims, or maybe more. Most houses built during this time-frame were actually 1,800 - 2,600 square feet. Most condos built during this time-frame were actually 1,200 - 1,600 square feet. Now do the math, one more time ... $ 54,500,000.00 divided by 7,000 potential victims = $ 7,785.00 Not such a GREAT SETTLEMENT when you actually look at the numbers ??? Yes, some money is better than none ... always ... but when that same 2,200 - 2,600 square foot home cost an average $100,000.00 plus to correct. Potential settlement money ($7,785.00) does not even cover 10% of the actual cost, and now you have to prove Banner supplied your house with sheet-rock boards from one of the Banner Supply locations in Florida. Now you have done the math, think this is a major pay-day for the victims ??? $ 54,500,000.00 divided by the actual number of potential victims, claims or claimants ??? What are the lawyers being paid per victim, claimant, or claim that they control or handle ??? Yes, you will have to be represented by a lawyer, more than likely !!! That answer or fact provides who really gets the BIG PAY-DAY. Michael S. Foreman Foreman and Associates http://www.ConstructionGuru.com
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