Florida homeowners with tainted drywall get $55 million

Reuters News
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Posted: Jun 14, 2011 2:48 PM
Florida homeowners with tainted drywall get $55 million

By Tom Hals

WILMINGTON, Delaware (Reuters) - Hundreds of Florida homeowners suffering with tainted Chinese drywall will share $55 million in a deal that also accuses a global drywall maker of lying about the product's safety, according to court documents.

The settlement will be funded by Banner Supply Co, its affiliates and their insurers, which agreed to set aside the money under a preliminary settlement. A spokeswoman for the plaintiffs' attorney said the deal covers between 500 and 800 homes which were supplied with drywall by Banner.

The settlement must be approved by a federal judge in New Orleans who is overseeing lawsuits related to the drywall.

Drywall is used to construct walls and ceilings. The tainted product has been blamed for emitting a stench and for producing fumes that damage air conditioning, fixtures and wiring.

The tainted drywall was imported for rebuilding after a series of devastating hurricanes in the middle of the last decade. Plaintiffs' attorneys have said as many as 100,000 homes are affected.

Banner said in court documents that it has denied liability for the tainted drywall and merely distributed products made primarily by Knauf Group, one of the world's largest makers of building materials. The German company employs 23,000 worldwide and had 2008 sales of 5.6 billion euros, according to its website.

Homeowners began to complain to Banner in 2006 of problems with drywall, and Banner notified Knauf, according to court documents. Tests were performed and Knauf assured Banner the drywall was completely safe, the documents said.

As a result of those tests, Banner signed an agreement releasing Knauf from all liability associated with the drywall.

However, since then Banner said it has learned that Knauf knew the claims of safety were false and tests actually showed the drywall was contaminated, according to court documents.

"Knauf knew that the impurities in Knauf Drywall would cause and were causing serious and widespread property damage," said court documents.

Michael Peterson, an attorney with Peterson and Espino of Miami, which represents Banner, said in a statement that Banner would pursue "all available remedies" to recover the damage done to its business.

Joey Viselli, a spokesman for U.S.-based Knauf Insulation, did not return a call for comment.

The insurers helping fund the settlement are American International Group Inc unit Chartis, FCCI Insurance Co, Hanover Insurance Group Inc's Hanover American Insurance and Maryland Casualty Co, which is part of Zurich Financial Services.

Russ Herman, an attorney for the plaintiffs, said in a statement he expects further settlements with other responsible parties in the coming months.

The consolidated cases are In Re: Chinese-Manufactured Drywall Products Liability Litigation, U.S. District Court for the Eastern District of Louisiana, No. 09-md-2047.

(Reporting by Tom Hals, editing by Gerald E. McCormick)