Chinese Drywall Company May Face Seizure of Ships for Ignoring U.S. Courts

A federal judge is considering leveling a judgment against a foreign company which has refused to answer to a Chinese drywall lawsuit filed in the United States. The ruling could give plaintiffs the right to seize any assets of Taishan Gypsum Co. that touch U.S. soil.

In the first lawsuit to go before a judge involving claims that defective Chinese drywall filled homes with sulfuric odors, corroded electrical equipment and caused other property damage, there was something missing: the defendant. Taishan Gypsum Co., the manufacturer of some of the Chinese drywall blamed for damages in thousands of homes across the country, has never answered the lawsuit against it and did not send legal representation to the trial last week before U.S. District Judge Eldon Fallon in New Orleans.

Fallon is currently considering plaintiffs’ demands that a ruling be issued against Taishan that would allow them to go after any assets the company has on U.S. soil and, potentially, allow them to seize the company’s shipments as well. The case was brought by a group of Virginia homeowners, who are seeking $2.5 million in damages, and a ruling is expected in the near future. While any decision will be limited to this one group of plaintiffs, it could have an impact on hundreds of Chinese drywall lawsuits filed by other homeowners in various states.

According to the U.S. Consumer Product Safety Commission (CPSC), federal investigators have received nearly 3,000 complaints from across the United States from homeowners who say that toxic wallboard from China releases sulfuric odors, causes health problems, and corrodes wiring and appliances. Many of the problems with the Chinese drywall have been confirmed by laboratory testing.

Millions of sheets of toxic drywall were imported from China into the United States between 2004 and 2007, due to a domestic shortage caused by a housing boom and construction following a serious of hurricanes that struck the southeastern United States. The CPSC has confirmed more than 6 million sheets were imported into the country in 2006, and additional temporary support personnel are being brought in to verify more shipments.

A number of homeowners throughout the United States have filed contaminated Chinese drywall lawsuits against manufacturers and distributors. In June 2009, all of the federal drywall litigation was consolidated and centralized in an MDL, or Multidistrict Litigation. The cases were assigned to Judge Fallon, who has put the litigation on a “fast track.”