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7 Share $2.6M Chinese Drywall Payoff

Thursday, April 16, 2015

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NEW ORLEANS—In an about-face, a Chinese manufacturer of contaminated drywall has paid more than $3 million in a suit by seven Virginia families whose homes were damaged by the material.

A federal judge in New Orleans ordered the government-controlled Taishan Gypsum Co. to pay the families five years ago. However, Taishan or its representatives have failed to appear in court since then and have otherwise ignored the judgment, according to reports.

U.S. Consumer Product Safety Commission

Thousands of U.S. homeowners say Chinese-made drywall has caused metal corrosion and sulfur odors in their homes.

Last summer, U.S. District Judge Eldon E. Fallon found the Chinese company in contempt of court and barred it from doing further business in the United States.

Making an Appearance

In mid-March, however, new U.S. attorneys for Taishan appeared before Fallon and offered to pay the company's $2.6 million default judgment as well as attorney’s fees, interest and other costs, according to court documents.

The attorneys, from Atlanta-based Alston & Bird LLP, told the judge that “fear of the American court system kept the company from appearing during the past five years,” according to the Virginian-Pilot.

“Our client had dug a deep hole, a deep ditch, but our client is prepared to walk out of that ditch and back into this litigation,” said attorney Bernard Taylor.

Taishan also paid a $40,000 penalty to the court for the company's failure to appear, according to the court documents.

Taishan, headquartered in Tai’an Shandong province, is just one of the manufacturers of imported drywall involved in the ongoing class-action lawsuit, represented by the seven Virginia families.

Another manufacturer, Knauf Plasterboard Tianjin, settled in 2012 with 4,500 property owners for damages reaching $1 billion.

Hope for Class?

Taishan’s payment, totaling $3.2 million, has given hope to some 4,000 other families from the southeastern U.S. whose homes were also affected by tainted Taishan products, according to reports.

A hearing has been scheduled for April 28 to discuss resolution for the rest of the class, court documents state.

Wikimedia Commons

Previously, Taishan argued that U.S. courts had no jurisdiction over the company.

A judgment of $1.3 billion or more is expected, some reports say.

Fallon says he is eager to resolve the case, as the plaintiffs have been waiting years for restitution, the Virginian-Pilot reports, citing a hearing transcript.

"Some of these individuals have been and, as far as I know, still are living in tents in their backyard because they can't abandon the house," he said.

"If they abandon the house, their insurers have told them that they are going to cancel their fire insurance. So they live in the backyard and run in and out of the house to use the bathroom facilities."

Taishan’s new legal team has not commented on the company’s views or intentions with respect to the other plaintiffs, according to another report by the Virginian-Pilot.

Tainted Drywall

Chinese-imported drywall has been used in as many as 20,000 properties throughout Louisiana, Alabama, Florida, Mississippi, Texas and Virginia. The materials were said to have been contaminated with high levels of hydrogen sulfide and other sulfide compounds.

Many of these products were used during rebuilding after hurricanes Katrina and Rita, reports said.

Hurrican damage Katrina
Marvin Nauman / FEMA

Chinese drywall was widely used for rebuilding after hurricanes Katrina and Rita, reports said.

Owners of the affected homes have complained of sulfur odors; rashes, headaches and other health problems; and corrosion and blackening of fixtures, air conditioner coils, plumbing and other metal components in the home.

Case documents in the ongoing litigation are available for review here.


Tagged categories: Chinese drywall; Drywall; Good Technical Practice; Health and safety; Laws and litigation; Lawsuits; North America; Residential Construction

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