A global settlement has been reached between Knauf Plasterboard Tianjin and thousands of homeowners who filed a lawsuit who claimed that the company's tainted Chinese drywall product was used to construct their properties and severely damaged their homes.
Under the terms of the settlement, KPT will pay between $800 million to $1 billion to assist homeowners in fixing their homes.
“We are pleased to have reached a settlement with Knauf in order to bring some relief to those who have had to deal with so much for so long as a result of this defective product,” said Ervin Gonzalez, a partner at Coral Gables, Fla.-based Colson Hicks Eidson. “This product should have never made it to the consumer and we are working diligently to secure complete relief for all homeowners from other responsible parties, including the Chinese manufacturer Taishan Gypsum.”
Approximately 5,200 plaintiffs have alleged that their homes contain KPT drywall, a product that has 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.
Of the overall number of alleged plaintiffs, approximately 2,700 have submitted evidence of the presence of KPT drywall in their home. These plaintiffs include homeowners, commercial owners and tenants, as well as multi-unit properties and prior owners of foreclosed properties or those who have engaged in short sales because the product was in their property.
The agreement creates two types of funds from which plaintiffs may recover money: the remediation fund and the other loss fund.
The remediation fund, which is uncapped, has three options that homeowners can utilize to fix their properties. The first is the program contractor remediation option that allows a homeowner to use Moss & Associates, the contractor who was approved by the plaintiffs in October 2010, to conduct the home repairs.
Another option is self-remediation where a homeowner chooses their own contractor to improve their property. The final choice is a cash-out option in which the homeowner can elect to receive a cash payment with no obligation to remediate the property. However, the amount of cash will be less than the amount that would be expended using the other types of remediation options. In the cash-out option, homeowner must also take steps to assure notice to future homebuyers that the property contained KPT drywall.
As part of the other loss fund, plaintiffs will be reimbursed for any economic loss that occurred, whether it was a short sale or losing a home to foreclosure, because of the presence of KPT drywall. This fund will also provide a resolution to dispute personal injury claims.
The remediation will consist of removing all affected drywall from the home and replacing this with domestic drywall. Also, electrical wiring, smoke alarms, fire alarms and other safety systems will be replaced. The parties have also agreed to replace built-in appliances such as refrigerators and microwaves.
Besides destroying appliances, the defective drywall also causes health problems including burning eyes, sore throats, bloody noses, insomnia and respiratory problems. Additionally, the product 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.
“We are delighted that thousands of homeowners will have an opportunity to have these Chinese drywall complaints addressed,” said Arnold Levin, lead counsel for the plaintiffs during this case. “They will now be able to repair their property, receive compensation and move forward after suffering the effects of Chinese drywall.”
