Settlement by Chinese Drywall Supplier Results in $55M for Homeowners

A preliminary $55 million settlement has been reached between Florida homeowners and a company that supplied many of them with defective drywall imported from China, which has been found to emit fumes that may corrode wiring throughout the home, damage appliances and cause other problems. 

The Chinese drywall settlement was reached between plaintiffs who owned homes in Florida and Banner Supply Company, which has agreed to pay for damage done to homes by the drywall.

The settlement is limited to Florida homes and still must be approved by U.S. District Court Judge Eldon E. Fallon, who is presiding over the federal Chinese drywall litigation. The agreement was announced to Judge Fallon on Tuesday.

The money will come from Banner’s four insurers, Chartis, FCCI Insurance Company, Hanover American Insurance Company and Maryland Casualty Company, and will be placed into an escrow account for repairs for homes damaged by Chinese drywall. It is expected to aid in the repair of about 700 homes that were supplied with tainted drywall by Banner.

The U.S. Consumer Products Safety Commission (CPSC) has received thousands of complaints from across the United States from homeowners who say that the Chinese drywall releases strong sulfuric odors, and releases gases that corrode wiring throughout the home, damage appliances and may cause various health problems. Many of the problems with the Chinese drywall have been confirmed by laboratory testing.

Millions of sheets of the toxic drywall were imported into the United States from China over the last decade due to a domestic shortage caused by a housing boom and construction following a serious of hurricanes that struck the southeastern United States. Most of the complaints have come from Florida and Louisiana, but the CPSC reports that complaints have come in from 42 different states and two U.S. territories.

Hundreds 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.

This is just the latest in what may be a number of settlements in Chinese drywall litigation. Banner follows a number of other companies, including German-owned Knauf Plasterboard Tianjin Co. and Interior/Exterior Building Supply Ltd. who have reached settlements with homeowners over the issue. Chinese companies have refused to participate in the legal process, in most cases simply ignoring U.S. courts, which have few tools to actually force a foreign-held company to participate in the U.S. justice system.