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Chinese Drywall Homes Must be Gutted, Federal Judge Rules

Apr 8, 2010 | Parker Waichman LLP

Judge Eldon E. Fallon has ruled in favor of the plaintiffs in the first Chinese drywall lawsuits to go to trial in the massive multidistrict litigation currently underway in New Orleans. The Judge has awarded seven Virginia homeowners $2.6 million, and mandated that their homes 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 trial was considered a “bellwether” or test case, and the decision could affect how lawsuits by thousands of other homeowners are settled.

The Judges ruling goes further than remediation guidelines released earlier this month by the Consumer Products Safety Commission (CPSC) and the Department of Housing and Urban Development (HUD). The cost of remediation as prescribed by Judge Fallon’s order will run anywhere between $200,000 to $300,000.

However, it’s still not clear who will foot the bill. The main defendant in this case, Taishan Gypsum Co., never responded to lawsuits and did not have a lawyer present for the trial. Civil judgments in U.S. courts aren’t enforced in China. Plaintiffs lawyers have said in the past that they would seek to seize Taishan Gypsum’s U.S.-bound vessels and shipments if it continues to ignore lawsuits.

So far, only one Chinese manufacturer — Knauf Plasterboard Tianjin Co. — has responded to U.S. suits. A separate trial naming Knauf as a defendant was held before Judge Fallon last month. His decision in that case is still pending.

Judge Fallon’s ruling covered only property damage and did not look at possible health effects. According to the Associated Press, the first cases with medical claims won’t be considered by the court until late 2010 or early 2011.

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