Another Win for Plaintiffs in Chinese Drywall Lawsuit, Settlement Talks Reported

The Associated Press (AP) just reported that a federal judge awarded over $164,000 in a defective Chinese drywall case. The award was made to a family whose home was ruined by the defective home product, added the AP.

The ruling was made yesterday by U.S. District Judge Eldon E. Fallon and followed a previous ruling in which he awarded $2.6 million to plaintiffs in the first Chinese drywall lawsuit to go to trial in a multidistrict litigation, currently underway in New Orleans. The ruling by Judge Fallon mandates that the plaintiffs’ homes be gutted down to the studs. The Judge also ruled that the plaintiffs were entitled to damages for the cost of personal property damaged by the drywall gases, relocation costs, and loss of use and enjoyment of the home.

In addition to the Chinese drywall lawsuits consolidated before Judge Fallon, thousands of cases are also pending in state courts.

Since late 2008, the Consumer Products Safety Commission (CPSC) has received more than 3,000 reports from residents in 37 states, the District of Columbia, and Puerto Rico regarding defective Chinese drywall. Gases emitted from Chinese drywall are being blamed for significant property damage, including damage to HVAC systems, smoke detectors, electrical wiring, metal plumbing components, and other household appliances. These gases also produce a sulfurous odor that permeates homes, and cause metals, including air conditioning coils and even jewelry, to corrode. People living with Chinese drywall have also suffered eye, respiratory, and sinus problems that may be linked to the gases.

In yesterday’s case, Fallon again ruled for drywall removal, gutting of the home, and full replacement of electrical wiring, plumbing components, heating and air conditioning systems, and appliances, said the AP. Not unexpectedly, manufacturer Knauf Plasterboard Tianjin Co. (KPT) said the home could be repaired for a much smaller sum, citing less than $59,000 for repairs, added the AP.

Dow Jones said that KPT is negotiating with some homebuilders in the U.S. to compensate them for their use of defective Chinese drywall, although one builder, asking for anonymity, said the offer was too low. Although it seemed unlikely foreign companies could be forced to pay in these cases, KPT and its entities are seeking reduced settlements in advance of costly legal payouts, said Dow Jones.

According to Edward Sherman, a Tulane University law professor and an expert in complex litigation and products liability law, according to Dow Jones, said, “It’s not surprising that Knauf would engage with various [builders] to get some of these cases out of the way and, hopefully, from their point of view, set a pattern of less compensation.” “It would certainly be in the interest of some builders to accept less because they get the money up front. A global settlement may be coming, but it may be many years off,” Sherman added, quoted Dow Jones.

“The sulfur gases released by Chinese drywall cause offending odors in homes, making them hard, if not impossible, to live in,” Judge Fallon said previously. Judge Fallon’s rulings cover property damage not possible health effects. According to the AP previously, the court won’t consider the first cases with medical claims until late 2010 or early 2011.

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