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Chinese Drywall Settlement Establishes Pilot Repair Program

Oct 14, 2010 | Parker Waichman LLP

A major Chinese drywall settlement was announced today in the New Orleans federal court where litigation involving the defective wallboard has been consolidated. Under the settlement, Knauf Plasterboard Tianjin Co., a major Chinese drywall manufacturer, as well as suppliers, builders and insurers, will foot the bill to fix hundreds of homes in four states.

The settlement agreement establishes a pilot remediation program, the purpose of which is to establish a model for resolution for Chinese drywall problems. It could be a first step toward a global settlement of the drywall issue. The remediation protocol for the program was developed by U.S. District Court Judge Eldon E. Fallon, who is presiding over the litigation in New Orleans. Part of the pilot program’s goal will be to determine just how much implementing the protocol would cost when applied to several hundred actual homes.

The 300 homes affected by the Chinese drywall settlement are located in Florida, Louisiana, Alabama and Mississippi. According to Bloomberg News, the program calls for Knauf and other defendants to see that the defective drywall is removed, and replacements made for electrical wiring, appliances and fixtures damaged by drywall fumes. Knauf will hire the contractors that perform the work, and repairs will be inspected by an environmental engineer.

Homeowners will also be reimbursed for the alternative living arrangements they will need while the remediation is underway.

Since late 2008, the US Consumer Products Safety Commission (CPSC) has received more than 3,600 reports from residents in 39 states, the District of Columbia, American Samoa, and Puerto Rico regarding defective Chinese drywall. 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.

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