Florida Homeowners Win Chinese Drywall Settlement

A preliminary settlement has been reached between Florida-based suppliers, insurers and homeowners in which tainted Chinese drywall was used to construct various homes within the state.

Under the terms of the proposed settlement, which still must receive approval from U.S. District Court Judge Eldon Fallon before it can be considered final, Banner Supply Co. and its four insurers including Chartis, FCCI Insurance Co., Hanover American Insurance Co. and Maryland Casualty Co., will pay approximately $55 million to affected homeowners in Florida.

“This is a substantial development in Chinese drywall litigation,” said Ervin Gonzalez, an attorney of Colson Hicks Edison defending the homeowners in this case. “This settlement enables Florida homeowners to get some relief from their ongoing Chinese drywall issues.”

Gonzalez claimed that since 2006, Banner Supply, Miami, knew that their Chinese drywall was defective and continued to sell the product to homeowners after entering into a confidential agreement with manufacturer Knauf Plasterboard Tianjian to not disclose the defect to others.

Chinese drywall is the term for drywall with an abnormal composition that causes it in humid climates to emit gases that damage home components such as ground wires for electrical outlets and air conditioning units, as well as personal property like microwaves and computers.

The defective drywall causes health problems including burning eyes, sore throats, bloody noses, insomnia and respiratory problems. The product also causes homes to smell because of the sulfur gases that are emitted, basically making them uninhabitable.

According to the Port Import Export Reporting Service, more than 550 million pounds of drywall was imported into the United States from China since 2006.

Between 2004 and 2008, anywhere from 60,000 to 100,000 homes were built nationwide using this defective drywall.

In June 2010, a Miami couple was awarded $2.5 million in damages against Banner for using the product. The company was also liable for knowingly selling the drywall used in another home valued at $1.6 million, as well as hundreds of others throughout the Sunshine State.

The faulty drywall has been used in the rebuilding efforts of storm-ravaged coastal communities such as the Gulf Coast and Florida due to the inability of domestic suppliers to meet growing demands for the product.

Attorneys representing the homeowners said they are continuing to engage in negotiations in the upcoming months to find other suppliers and manufacturers who used this type of drywall to build homes and also reach settlements with these companies.

“This settlement is a first step in bringing some relief to Florida homeowners who have had to deal with so much as a result of this defective product,” Gonzalez said. “But it’s far from over. We are working diligently to secure complete relief for all homeowners from other responsible parties, including Knauf, the manufacturer of the drywall.”

Banner said the settlement occurred because continuing the hearings in court would not be good for either side in this case.

“Our business has thrived for over 58 years because our customers have trusted us. We are settling this matter to bring a resolution for our customers and to allow the homeowners to fix their homes,” said Michael Peterson, Banner’s counsel of the Miami-based firm Peterson and Espino. “We regret that this could not have been achieved sooner, but Banner recognizes that prolonged litigation would not have accomplished this goal.”