Chinese company to fix 300 homes ruined by drywall

AP News
Posted: Oct 14, 2010 4:38 PM
Chinese company to fix 300 homes ruined by drywall

A Chinese drywall manufacturer, along with suppliers, builders and insurers, agreed Thursday to repair up to 300 homes in four states and possibly thousands more damaged by corrosive drywall.

In this pilot program, up to 300 homeowners in Florida, Louisiana, Alabama and Mississippi whose homes had drywall manufactured by Knauf Plasterboard Tianjin Co. will get their homes fixed, lawyers said. Homeowners in Texas, North Carolina and Virginia could be added soon.

Knauf and the other companies have agreed to replace drywall, wiring, fire and alarm systems, and fixtures in damaged homes. Many more of the 2,000 to 3,000 homes built with Knauf drywall might be fixed under similar terms if the pilot program is successful.

"We think this program can grow," said Kerry Miller, a lawyer for Knauf.

Russ Herman, a lead lawyer for plaintiffs, said repairs would take about three months and cost between $40 and $60 a square foot. Knauf and the other companies face paying a total of $30 million to $45 million to fix the 300 homes, not including the cost of temporary housing for the homeowners.

The pilot program was formally announced Thursday, a day after an attorney for a Louisiana-based drywall supplier told The Associated Press a deal had been reached.

U.S. District Judge Eldon Fallon said he was optimistic Thursday's deal could resolve most property damage claims against Knauf.

"We got that first step in global resolution today," the judge said.

Still, Thursday's announcement does nothing for thousands of other homeowners with drywall made by other Chinese companies. Levin said there could be as many as 10,000 other homeowners whose homes contain drywall made by other companies that have largely ignored lawsuits filed in U.S. courts.

Fallon, who is presiding over the consolidated claims, already has ruled in favor of plaintiffs and ordered extensive remediation in Chinese-drywall tainted homes.

In April, Fallon awarded more than $164,000 to a Louisiana family whose home was ruined by drywall made by Knauf Plasterboard and said the home needed to be gutted. Knauf argued the family's home could be repaired for less than $59,000.

Earlier that month, he awarded $2.6 million to seven Virginia families whose homes had been ruined by drywall made by another Chinese manufacturer.

So far, Fallon's rulings only have covered property damage and haven't considered possible health problems. The first cases with medical claims won't be considered by the court until later this year or early next year.

Thousands of homeowners, mostly in Florida, Virginia, Mississippi, Alabama and Louisiana, have reported problems with the Chinese-made drywall, which was imported in large quantities during the housing boom and after a string of Gulf Coast hurricanes.

The Consumer Product Safety Commission says that homes tainted by Chinese drywall should be gutted and that electrical wiring, outlets, circuit breakers, fire alarm systems, carbon monoxide alarms, fire sprinklers, gas pipes and drywall need to be removed.

The drywall has been linked to corrosion of wiring, air conditioning units, computers, doorknobs and jewelry, along with possible health effects. Preliminary studies have found a possible link between throat, nose and lung irritation and high levels of hydrogen sulfide gas emitted from the wallboard, coupled with formaldehyde, which is commonly found in new houses, the commission said.