Chinese Drywall Settlement Possible as Judge Awards Additional Damages

A major Chinese drywall manufacturer has started settlement negotiations with U.S. homebuilders suing it for supplying them with toxic wallboard.  The discussions come as a federal judge has awarded repair costs to another family whose home was built with the toxic drywall.

U.S. builders say they have received offers of for a Chinese drywall settlement from Knauf Plasterboard Tianjin Co. Ltd. (KPT), a German company with Chinese drywall subsidiaries. While some builders say that the offers are far too low, it has started negotiations that could potentially result in a resolution of the claims. KPT officials say that some settlements may be finalized with builders in the near future.

The offers were disclosed the same week as U.S. District Judge Eldon Fallon announced another verdict against manufacturers of the drywall imported from China, awarding $164,000 to a Louisiana family that filed a Chinese drywall lawsuit against KPT to recover the construction costs of removing toxic drywall from their home. The judgment, in favor of plaintiffs Tatum and Charlene Hernandez, comes out to about $81 per square foot.

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 Chinese wallboard imported into the United States between 2004 and 2007 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 the toxic drywall were imported from China into the United States 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 alone.

A number of homeowners throughout the United States have filed lawsuits over Chinese drywall, naming manufacturers, distributors and builders. In June 2009, all of the federal drywall litigation was consolidated and centralized in an MDL, or Multidistrict Litigation, in New Orleans under Judge Fallon.

To date, KPT is the only drywall manufacturer who has responded to the lawsuits. Last month, Judge Fallon awarded $2.6 million to seven Virginia families who filed a lawsuit against Taishan Gypsum Co. over imported drywall problems. However, it is unclear how the families will collect, since China does not acknowledge civil lawsuit judgments in the U.S., and the company did not even bother to send a representative to court to answer the charges.