Chinese Drywall Supplier Agrees to Settle Lawsuits

Interior/Exterior Building Supply L.P., a supplier of construction materials based in New Orleans, has agreed to settle as many as 1,500 <"">Chinese drywall lawsuits. According to a report from Insurance Journal, under the proposed Chinese drywall settlement, two of the company’s insurers would pay $8 million to settle claims.

Interior/Exterior Building Supply distributed Chinese drywall made by Knauf Plasterboard Tianjin and Taishan Gypsum Co. that was used in homes built in Texas, Louisiana, Mississippi and Alabama. The Chinese drywall settlement still has to be approved by U.S. District Justice Eldon E. Fallon, who is overseeing more around 10,000 Chinese drywall lawsuits in a multidistrict litigation in federal court in New Orleans (MDL 2047).

If approved, the Interior/Exterior Building Supply Chinese drywall settlement would be paid by Arch Insurance Company and Liberty Mutual Fire Insurance Company. A lead attorney for plaintiffs told the Associated Press that the supplier’s third insurer, The North River Insurance Company, had shown no interest in a settlement. However, plaintiffs still intend to pursue roughly $72 million in claims against that firm.

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.

In a settlement announced by Judge Fallon last fall, Knauf Plasterboard Tianjin Co. 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 – including Interior/Exterior Building Supply – 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 a successful pilot program will lead to the settlement of many more Knauf Chinese drywall lawsuits. The Knauf settlement unfortunately leaves out more than 5,000 homes tainted with drywall from other Chinese manufacturers.

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