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Drywall settlement talks begin

Manufacturer talks with builders; homeowners' attorney cries foul

May 9, 2010


• What: Those who missed the previous deadline have another chance to join the ongoing federal drywall litigation in New Orleans.
• Who: The plaintiffs’ steering committee has submitted new omnibus class-action suits and homeowners with Knauf drywall, drywall manufactured by another foreign company or unidentified drywall.
• When: Can join the cases through May 21.

More Drywall Developments

• Louisiana passed a bill that would ban insurance companies from canceling homeowner policies due to the presence of Chinese drywall.
• The Consumer Product Safety Commission held a video conference Tuesday with the Chinese consumer product safety regulator known as AQSIQ. The commission hasn’t released results of the conference.
• The Chinese government has been informed that the United States plans to discuss defective drywall at the upcoming Strategic and Economic Dialogue meeting in China May 24-25.


1:10 A.M.Plug in: Get expanded coverage and weigh in on Lee County drywall problems.

One manufacturer that has lost lawsuits over Chinese drywall is discussing settling with several builders.

Knauf Plasterboard Tianjin Ltd. has approached builders in the wake of a second ruling in New Orleans by federal Judge Eldon Fallon, who is hearing hundreds of consolidated drywall lawsuits from across the country.

Many of those lawsuits were filed by residents of Lee County, which has at least 2,500 homes with defective drywall.

Fallon found Knauf liable for damages to a Mandeville, La., home and awarded the homeowners $164,000. That comes to $81 per square foot to fix the 1,688-square–foot home. The repair includes removing and replacing the electrical system, some plumbing fixtures, heat and air conditioning system and appliances.

Knauf argued only the drywall had to be removed. Other items, such as copper wiring, would be fixed by scrubbing off the corrosion with steel wool pads. It offered up to $58,564 for the repair.

Knauf is considering appealing Fallon’s ruling, Terry Miller, a Knauf attorney and defense liaison for the consolidated litigation, said in an e-mail sent through a spokeswoman.

Miller said several builders “across multiple states” are talking settlement, but he won’t say how many, who and what is being offered.

Knauf is offering $18 or $19 per square foot, said Allison Grant, a Boca Raton attorney who represents numerous drywall cases in Cape Coral and about 500 drywall homeowners across Florida.

“Knauf is trying to squeeze out the homeowner and go straight to the builder,” Grant said. One reason may be that the builders’ cost to fix the drywall will be less than a homeowner’s after hiring a contractor.

“Still, according to our calculations, the builders, they can’t do it for $19 or $20,” she said.

Some builders who have been paying for the repairs out of their own pockets, such as Lennar Homes, might find the offer attractive, Grant said.

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Rather than getting nothing in return for what they’ve spent, “it may make sense to take a reduced amount,” she said.

Eventually, Knauf may approach homeowners as well as builders if judgments against it keep coming, Grant said.

“The company is going to say, ‘enough,’” she said.

In other developments, a bill passed by the Florida Legislature will create a uniform standard for county property appraisers to assess homes built with defective drywall and allow them to adjust the value.

The bill, sponsored by Rep. Seth McKeel, R-Lakeland, will adjust the assessment to zero “if the building cannot be used for its intended purpose without remediation or repair.”

“I don’t have a problem with that,” Lee County Property Appraiser Ken Wilkinson. But if the home “cannot be used for its intended purpose without remediation or repair” in order to qualify, he asked if the bill would apply to homeowners who choose to remain in their homes for economic or other reasons.

The bill gives county appraisers the statutory authority to reduce the value to zero, McKeel said.

The appraiser has the final say.

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