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The $54M Chinese drywall question

The $54M Chinese drywall question

Published: Tuesday, Jul. 19, 2011

A $54 million pie awaits people whose homes were built with noxious Chinese drywall. What they don’t know -- in fact, what no one knows -- is how big a slice they will get.

A federal judge hearing the massive class-action lawsuit approved the preliminary settlement against drywall distributor Banner Supply last week. There are more than 10,000 claims in the case, but only homeowners who got their drywall from Banner are eligible.

And no one knows just how many that is, say both attorneys and engineers deeply involved in the drywall mess.

At least 80 Manatee County homes are known to be affected, among thousands across Florida.

On Monday, Michael Foreman, a Sarasota construction consultant who has tracked the issue for years, did some math while overseeing a drywall remediation in North Venice.

In the settlement, Banner cites some 1.4 million tainted drywall boards. The typical house has a little under 200 boards, which comes to 7,000 affected houses. With some boards used in renovations, the number of homeowners could rise to 9,000, Foreman said.

After attorneys’ fees and other costs, Foreman said, homeowners taking the deal might get only about $4,000 each.

“We’re telling our clients, skip the settlement,” Foreman said. The amount represents all $61 million available from Banner’s insurers, minus some prior settlements, which he sees as suspicious.

“Why would the insurance companies roll over for $61 million without going to court?” he said, speculating that the total liability probably is much higher. But attorneys involved in the settlement said that figure is why homeowners should take the deal.

“Banner Supply is not a company with a lot of assets,” said Jordan L. Chaikin, the attorney in charge of drywall cases for Parker Waichman LLP in Bonita Springs.

The insurance money is about all the homeowners may be able to get, he said.

“Going after them for any assets is going to be an extended battle. Any judgment may only be worth the paper it’s printed on.”

Another firm in the case, Miami-based Roberts and Durkee, which opposes the settlement, estimates some 3,000 homeowners could have a claim against Banner.

Chaikin’s firm represents about 1,000 homeowners, with at least 800 in Florida, he said. But he was unsure how many had claims against Banner, and said the number could well grow.

The settlement is still subject to revision after more hearings and filings, and other defendants in the case have yet to settle, which means the affected homeowners could get more than just the Banner money.

“This isn’t it for the homeowners,” Chaikin said. “This is just Banner.”

Drywall FYI

Thousands of Florida homes have reported problems that have been traced to impurities in drywall, most of it imported from China.

Reports of odors, health problems, and corroded electrical devices in Florida homes began surfacing in summer 2008. A year later, laboratory tests found the Chinese drywall emitted sulfur-compound gases when exposed to heat and moisture.

In 2009, thousands of lawsuits were consolidated into a class action, still under way in federal court in Louisiana. For information on the court case, including how to participate, visit the court website:

In March, the Consumer Product Safety Commission issued guidelines for dealing with tainted drywall. It recommends removing, not sealing or treating, the drywall, and replacing electrical components like plugs, switches and circuit breakers.

For information on cleanup, health effects and more, visit the Florida Department of Health website:

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