U.S. China drywall supplier may face more lawsuits

Reuters News
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Posted: Sep 12, 2011 7:58 PM
U.S. China drywall supplier may face more lawsuits

By Manuel Rueda

MIAMI (Reuters) - An importer of allegedly defective Chinese drywall could be hit with a flood of new lawsuits from Florida homeowners after a court ruling opened the door to additional litigation, a lawyer for the homeowners said on Monday.

Attorney Mark Milstein said the new lawsuits were possible because of a ruling by a Broward County Circuit Court judge on Friday that essentially freed homeowners from the terms of a $55 million settlement reached in June with Banner Supply Co.

Banner was a supplier of Chinese-made drywall that lawsuits have said was defective and emitted sulfur gases that corroded wiring, contaminated fabrics and wrecked air conditioners and other appliances.

Before Friday's ruling by Judge Charles Greene, Broward homeowners were barred from pursuing individual claims against Banner by a temporary court order issued by a judge in New Orleans, Milstein said.

"Upon exercising (the settlement's) 'Opt Out' process any Broward County Plaintiff will be able to pursue redress in the Broward County court" Greene said in his ruling.

Milstein said he could not predict if the Broward County ruling would influence judges in neighboring counties or states. But if Greene's ruling set a precedent in the case, as many as 1,500 previously filed lawsuits against Banner in Florida could now go forward, he added.

The $55 million settlement was intended to compensate the owners of some 3,000 homes across Florida.

Banner is one of several U.S.-based drywall suppliers that have faced lawsuits since 2009 because of Chinese plasterboard units. The defective drywall was the latest in a series of product safety scandals linked to China, which have included milk formula, toothpaste, drugs, toys, seafood and pet food in recent years.

Most of the defective drywall panels were manufactured in China by a subsidiary of German drywall maker Knauf Group.

Banner filed a $100 million lawsuit against Knauf in July seeking compensation for damage to its reputation and business from the drywall scandal. The Miami-based company said Knauf deceived it by selling it defective drywall products.