Banner Supply Agrees to $55 Million Settlement to Resolve Florida Chinese Drywall Claims

Banner Supply, its affiliates and insurers have agreed to settle <"">Chinese drywall claims with thousands of Florida homeowners. According to a Reuters report, the $55 million global settlement, which still has to be approved by the federal judge overseeing the Chinese drywall litigation in New Orleans, covers as many as 3,000 Florida homes that were built with Chinese drywall supplied by Banner.

Chinese drywall was widely imported into the U.S between 2004 and 2006 during the housing boom. It is estimated that between 60,000 – 100,000 homes were built using defective Chinese drywall between 2004 and 2008 throughout the country. Since late 2008, the Consumer Products Safety Commission (CPSC) has received more than 3,800 reports from residents in 42 states, the District of Columbia, American Samoa, and Puerto Rico regarding defective Chinese drywall. Sulfurous 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. Some people living with the wallboard have also complained of health problems.

The CPSC has recommended that homes built with defective Chinese drywall be gutted. The cost to fix one home with Chinese drywall usually exceeds $100,000.

According to Reuters, Banner asserts in court documents that it was not responsible for the tainted drywall, but merely distributed the material, which it obtained from Knauf Group. When the Florida-based building supply company began receiving complaints about the material in 2006, it informed Knauf, which is based in Germany. After testing was complete, Banner claims Knauf told it that the drywall was completely safe, according to Reuters.

Banner claims Knauf knew that was untrue, and that the tests actually showed the drywall was contaminated. An attorney for Banner told Reuters that the company would pursue “all available remedies” to recover the damage done to its business.

The Banner settlement is just the latest Chinese drywall settlement to be announced in the past year. Last fall, Knauf Plasterboard Tianjin Co., a division of Knauf Group, agreed to participate in a pilot remediation program by which 300 homes in four states would be repaired. The settlement agreement calls for Knauf and other named defendants to see that the defective drywall is removed, and replacements made for electrical wiring, appliances including air conditioning, and fixtures damaged by drywall fumes, in accordance with the remediation protocol established by CPSC. It is hoped that the program will pave the way for a settlement of all claims against Knauf.

In April, Interior/Exterior Building Supply L.P., a New Orleans-based construction supply company, agreed to pay $8 million in cash and assign $72 million in insurance rights to settle roughly 1,500 claims.

Settlements reached thus far cover just a portion of the more than 10,000 claims currently pending in the Chinese drywall multidistrict litigation in New Orleans. However a plaintiffs’ attorney involved in the litigation said he expected more settlements to be reached in the coming months. Most of the claims remaining in the litigation name either Knauf Plasterboard or Taishan Gypsum Co. as defendants.

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