Knauf Plasterboard’s Chinese Drywall Settlement Offers Starting Low

Knauf Plasterboard Tianjin Co. Ltd., one of the Chinese manufacturers at the center of the defective Chinese drywall debacle, has reportedly been offering some builders settlement offers. But according to a report in the Sarasota Herald Tribune, those offers – in the neighborhood of $18 per square foot – are substantially lower than what a federal judge awarded last week to a Louisiana couple that had sued Knauf over the tainted wallboard.

Last week U.S. District Judge Eldon E. Fallon awarded over $164,000 to the plaintiffs in that lawsuit. The case was the first contested trial in the Chinese drywall multidistrict litigation underway in federal court in Louisiana. It was considered a bellwether case, and could serve as a guideline in other suits.

The ruling by Judge Fallon mandated that the plaintiffs’ home 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. The award was based, in part, on Judge Fallon’s determination that it would cost about $81 per square foot to remediate the home.

Some attorneys interviewed by the Herald-Tribune said a figure like the $18 per square foot that Knauf has reportedly offered builders may be a way for the company to test the waters for a possible settlement. As the report pointed out, that amount is even lower than what Knauf had pushed for in the case decided last week. The company had argued the home only needed to have drywall removed and replaced, something it said could be achieved for $49 per square foot. Judge Fallon categorically rejected that assessment.

Because Judge Fallon rejected its argument, the Herald-Tribune said Knauf may now believe it’s in its best interest to settle Chinese drywall cases and cut its losses.

It is also possible the lower figure being bandied about by Knauf is based on the assumption that builders would require less money to remediate homes, due to factors like discounts they would receive on materials. However, according to the Herald-Tribune, remediating a home according to Judge Fallon’s specifications would still cost builders as much as $75 per square foot.

The report also said it would be legally risky for any builder not to follow the guidelines set forth by Judge Fallon.

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