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Rules Sought for Chinese Drywall Settlements

Jul 16, 2010 | Parker Waichman LLP

Homeowner attorneys are hoping to protect their clients by seeking rules in settlements over defective Chinese drywall. Bradenton.com said the lawyers are asking a federal judge to put some rules in place on manufacturers’ settlement attempts with home builders, noting that builders and Knauf Plasterboard Tianjin Co. Ltd. (KPT), could potentially use settlement talks to persuade homeowners to agree to terms that would not be in their best interests.

For instance, wrote Bradenton.com, builders could unfairly use talks to ensure homeowners—who might not fully understand the ramifications involved—waive legal rights or accept inadequate remediation.

The attorneys are hoping the judge will oversee the case, which Bradenton.com described as “massive,” to ensure broader disclosures by builders and KPT, such as settlement decisions and prior court decisions, in all homeowner communications.

KPT is just one of hundreds of drywall makers, suppliers, distributors, and installers that are looking at a range of lawsuits over the defective drywall, generally from China, said Bradenton.com.

Since late 2008, the Consumer Products Safety Commission (CPSC) has received more than 3,000 reports from residents in 37 states, the District of Columbia, 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.

These gases also produce a sulfurous odor that permeates homes, and cause metals, including air conditioning coils and even jewelry, to corrode. People living with Chinese drywall have also suffered eye, respiratory, and sinus problems that may be linked to the gases.

The CPSC says the only way to fix Chinese drywall homes is to remove both the wallboard and the electrical wiring and other components, which typically involves essentially gutting the homes.

Meanwhile, the cases have been consolidated into one proceeding with U.S. District Judge Eldon Fallon, explained Bradenton.com. Judge Fallon has already ruled for homeowners in two prior test cases, ordering KPT and another manufacturer to remediate the homes, which involves a gutting of the structures and a rebuild of the interiors, said Bradenton.com.

The manufacturers are appealing and the moves led to KPT to seek settlements with the builders, with one deal being publicized, to date: $800,000 with Beazer Homes USA involving some 50 homes in Southwest Florida, noted Bradenton.com.

According to court papers filed by the homeowners’ attorneys, increased disclosure is needed since they allege that settlement attempts are seeking to avert and bypass Judge Fallon’s rulings as the core for larger, nationwide remediation criterion, added Bradenton.com.


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