Breakthrough Settlement Reached In Chinese Drywall Litigation

Washington, DC: A breakthrough settlement has been reached to remediate homes affected by Chinese drywall. The agreement was reached with several key defendants including Knauf Plasterboard Tianjin (KPT), builders, drywall suppliers and their insurers including Interior/Exterior Building Supply, Banner Supply Co., the Louisiana Homebuilders Indemnity Trust, QBE Insurance Group, Chartis and State Farm Insurance, and other Knauf entities.

Knauf in partnership with builders, suppliers and insurers, will fund a demonstration remediation program, which will facilitate the removal of KPT drywall from up to 300 homes in Alabama, Mississippi, Louisiana and Florida. If successful, it is expected that this pilot program will be expanded to remediate thousands of homes with KPT drywall.

The demonstration program applies to homes which contain all, or substantially all, KPT drywall. The program will provide:

removal of the drywall;

replacement of all electrical wiring, including switches and receptacles;

replacement of fire safety and home security equipment;

replacement of fixtures damaged by the problem drywall;

restoration of the home to the same construction quality and finishes that existed prior to the start of the remediation work;

compensation to the homeowner for alternative living costs during the remediation, moving and storage and personal property damage;

the reservation of rights for bodily injury;

attorneys fees and expenses to be negotiated by the PSC and KPT and to be paid by KPT.

As outlined in the settlement, KPT will retain and supervise contractors to do the work on a cost-effective basis. The completed homes will be inspected by environmental engineers, who will certify to the homeowner that their home is free of problem drywall odors and contamination. Chinese gypsum board was used by many builders in recent years as a low-cost alternative to American-made products. Many of the damaged homes are in Florida, Virginia and throughout the Gulf region, where builders used the Chinese wallboard to construct new homes following Hurricane Katrina and other storms, and throughout the housing bubble. In the past several years more than 7,000 U.S. homeowners have filed similar suits alleging that noxious sulfuric fumes from the defective drywall have caused extensive property damage to their homes, including corrosion of plumbing, electrical wiring, and appliances. These outcomes will continue to have a huge impact on drywall litigation pending around the country.

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Published on Oct-14-10