First Chinese Drywall Trials Start This Month

The litigation involving Chinese drywall will soon kick into high gear, with the first bellwether trials expected to start this month. More than 3,000 people across the country have filed suit against the manufacturers, suppliers, builders and other entities that played a role in the Chinese drywall crisis.

All of the Chinese drywall lawsuits filed in federal courts have been consolidated in the US District Court in New Orleans under Judge Eldon E. Fallon as part of a multidistrict litigation (MDL). One single class action lawsuit alone filed against Knauf Gips KG, its Chinese affiliate, Knauf Plasterboard Tianjin Co. Ltd., and 600 other defendants, involves nearly 2100 plaintiffs from Florida, Mississippi and Alabama.

The Knauf lawsuit charges the defendants with, among other things, negligence, breach of contract, breach of express and implied warranties, nuisance, and unjust enrichment. It seeks various remedies, including that Knauf Gips buy back or rescind the contracts for homes, or remediate, repair and/or replace the drywall. The lawsuit also demands that the defendants undertake an awareness campaign to warn the public about tainted wall board, and set up a medical monitoring program for people who have been exposed to drywall fumes.

Sean Payton, head coach of the New Orleans Saints football team, is listed as lead plaintiff on the Knauf lawsuit. Payton and his family were forced from their Mandeville, Louisiana home over summer because of defective Chinese drywall

The first Chinese drywall trial will involve a case from Virginia, and another company, Taishan Gyspum, which is actually controlled by the Chinese government. As we reported last year, Judge Fallon has already issued a default judgment against Taishan for failing to respond to lawsuits. If homeowners are successful in their case against Taishan, its ships and cargo could be seized and sold until the judgment is satisfied. The company would also be prevented from importing products to the U.S. until the matter is resolved.

The Consumer Products Safety Commission (CPSC) has received more than 2,700 complaints from dozens of states regarding defective Chinese drywall. The wallboard poured into the U.S. between 1999 and 2007 because of the high demand created by the housing boom. Imports accelerated when the rebuilding that followed Hurricane Charley in Florida in 2004, and Hurricane Katrina along the Gulf Coast in 2005, created a drywall shortage. According to an earlier Wall Street Journal report, some 500 million pounds of Chinese drywall was imported to the U.S. during the housing boom. That means as many as 100,000 homes throughout the country could have been built with the material.

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