Knauf Plasterboard Tianjin Agrees to Settle Thousands of Chinese Drywall Lawsuits

Knauf Plasterboard Tianjin Co., one of the major manufacturers of defective Chinese drywall, has reached an agreement to settle homeowners’ damage claims. According to a report from Bloomberg News, the Knauf settlement will resolve the claims of about 4,500 homeowners who have lawsuits pending in the mass Chinese drywall multidistrict litigation currently underway in New Orleans. The settlement could cost Knauf as much as $1 billion, plaintiffs’ attorneys say.

Sulfurous gases emitted from Chinese drywall have been being blamed for significant property damage, including damage to HVAC systems, smoke detectors, electrical wiring, metal plumbing components, and other household appliances. Since late 2008, the Consumer Product Safety Commission (CPSC) has received 3,924 reports from residents of 43 states and the District of Columbia, American Samoa, and Puerto Rico, regarding toxic Chinese-made drywall. Most of the drywall was imported into the U.S. during the housing boom of the early 2000’s.

The Chinese drywall debacle has sparked thousands of lawsuits, including 12,000 claims currently pending in the federal Chinese drywall multidistrict litigation in New Orleans. Last fall, Knauf Plasterboard Tianjin., a division of Knauf Group, agreed to participate in a pilot remediation program by which 300 homes in four states would be repaired. It was hoped that the program will pave the way for a settlement of all claims against Knauf.

The Knauf Chinese drywall settlement was announced yesterday in front of U.S. District Jude Eldon Fallon, who is overseeing the multidistrict litigation. However, the agreement didn’t contain a minimum or maximum number on the cost of repairing homes with the faulty drywall. According to Bloomberg, plaintiffs lawyers believe the final tally for the settlement will come in somewhere between $800 million and $1 billion, depending on how many homeowners can prove they have drywall made by Knauf Plasterboard Tianjin.

Attorneys for Knauf, however, said they don’t believe payments will reach that level, as not all claimants have the company’s drywall. They also said costs will be controlled via a “competitive bidding” process for the remediation work.

According to The Wall Street Journal, homeowners will be able to choose to have repairs performed by a selected contractor that has already been working to remediate homes, or their own contractor. The remediation could cost as much as $150,000 for a 2,500-square-foot house, and would include removing and replacing drywall, as well as electrical wiring, smoke alarms, fire alarms and other safety systems. As an alternative, claimants may opt for a cash option, but they will receive a discounted amount.

The Chinese drywall settlement covers both residential and commercial properties. According to an Associated Press report, homes eligible for the settlement are located mostly in Florida, Louisiana, Mississippi and Alabama. An uncapped fund will pay for remediation, while a separate fund capped at $30 million will pay for other types of losses, including those by people who blame drywall for health problems.

The Knauf agreement is the largest settlement reached to date in the Chinese drywall litigation. Over the past year, several drywall suppliers, including Miami-based Banner Supply Co., have reached agreements to resolve claims pending against them in the litigation.

Unfortunately, the Knauf settlement will not help between 6,000 and 8,000 homeowner whose homes were ruined by drywall made by units of Taishan Gypsum Co. and Beijing New Building Materials Public Limited Co. However, Judge Fallon is not giving up, and said he will travel to Hong Kong to take depositions in those cases, Bloomberg reported.

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