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Settlement reached in drywall supplier lawsuit

Settlement reached in Chinese drywall supplier lawsuit in Florida

Published: Wednesday, Jun. 15, 2011

A class action lawsuit against a Chinese drywall supplier reached a tentative settlement Tuesday with $54.5 million pledged to repair tainted Florida homes.

Banner Supply, a Miami company that sold 1.4 million sheets of Chinese drywall to builders in Florida, agreed to pay $54.5 million to homeowners whose properties are tainted with the corrosive material.

The settlement covers 2,000 to 3,000 homes in Florida, after a class action lawsuit claimed that Banner misled consumers about the product’s safety.

“This is a substantial development in Chinese drywall litigation," said Ervin Gonzalez, a Miami attorney representing the plaintiffs in the case, in a statement. "It enables Florida homeowners to get some relief from their ongoing Chinese drywall issues."

Chinese drywall was imported into the United States in large batches after Hurricanes Katrina and Rita in 2005, in response to a need for the reconstruction of homes. In areas in South Florida like Homestead, Miami and Kendall, new single-family homes were being built, occasionally with drywall from China.

That drywall was later discovered to contain toxins that corroded pipes and electrical wiring, emitted foul odors and allegedly caused headaches and breathing problems.

The discovery led to thousands of lawsuits against manufacturers, distributors and installers of Chinese drywall, including Banner.

Banner claims that it bought the drywall from a German-based manufacturer that lied about the quality of the product. "We are settling this matter to bring a resolution for our customers and to allow the homeowners to fix their homes," said Michael Peterson, Banner's counsel, in a statement.

Banner Supply Co. provided most of the drywall used in Florida construction, it's likely that many Manatee County residents will be affected by the preliminary settlement reached today, said Jordan Chaikin, a partner with one of the dozen law firms representing plaintiffs in the class action suit.

"Unfortunately, Manatee County and all the way down to where we are, in Lee County, are the epicenter of the Chinese drywall epidemic," said Chaikin, a partner with the law firm Parker, Waichman, LLP, which is based in New York City but has a Florida office in Bonita Springs, Ft. Myers and Naples.

That's because Southwest Florida had one of the highest appreciating real estate markets between 2004 and 2006, and was also hard-hit by a string of destructive hurricanes generating lots of construction. Those two factors meant lots of construction -- and lots of contaminated drywall installed in new and renovated homes, Chaikin said. "Domestic manufacturers didn't have the capability to keep up with demand," he said.

The Parker Waichman LLP personal injury law firm represents more than 1,000 Florida plaintiffs in the class-action suit, which will likely involve more than 10,000 people nationwide. A process for distributing proceeds of the $54.5 million settlement is still in negotiation, Chaikin said.

"If somebody suspects or has confirmed through their builder that they have Chinese drywall and have not retained an attorney to represent them, it's imperative that they do that immediately," Chaikin said.

Banner expressed plans to seek damages against manufacturers that sold defective drywall, the company said.

The $54.5 million settlement will be paid out by Banner's insurers, and it equals the total amount available to the company for drywall related insurance claims, Tuesday's court filing said.

Those eligible for the most recent settlement will be notified by mail and in various media outlets within 35 days if the settlement is approved by a federal judge in New Orleans.

Bradenton Herald reporter Chris Hawes contributed to this report.

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