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Chinese drywall deal a dilemma

Victims decide whether to accept settlement

May 17, 2010

About Knauf

• Knauf Gips is an international corporation based in Germany with about 150 facilities and offices around the world, including manufacturing sites that produce and supply building materials.

• The company has three drywall manufacturing sites in China, including Knauf Plasterboard Tianjin Co. Ltd.

• The plasterboard, or drywall, was imported to the United States from Tianjin and other Chinese companies during the building boom launched by the ravages of Hurricanes Wilma and Katrina in 2005.

About Beazer

• Beazer Homes USA, Inc. with headquarters in Atlanta, Ga., is one of the country’s 10 largest single-family homebuilders.

• Beazer builds in more than 40 markets in 16 states in the Southeast, Mid-Atlantic, Midwest, West and Central United States.

• Locally, Beazer builds single-family homes in Fort Myers, Naples, Cape Coral, Estero and Calusa Creek.


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1:10 A.M. — While the details of a defective drywall settlement between a Chinese drywall manufacturer and Beazer Homes remain under wraps, speculation has begun about the fairness of the settlement to both builders and homeowners.

Knauf Plasterboard Tianjin Ltd. announced the settlement Monday with a statement that hinted at more settlements to come.

This is part of Knauf's effort "to get this issue behind them and move forward," said attorney Don Hayden, principal for Baker & McKenzie, which represents Knauf.

"It shows that a solution is possible when there is agreement on reasonable repair costs."

But that depends on interpretations of a solution and reasonable repair costs.

This first settlement with Beazer may afford some resolution for the builder, but not a solution, said Ervin Gonzalez, a Coral Gables attorney who represents about 25 Beazer homeowners among his clients in two class-action suits and several individual suits.

"I can't say that is a fair settlement so far. I haven't seen anything that makes them whole," Gonzalez said of his clients.

That means restoring their homes, and their lives, to what they were before the discovery of Chinese drywall damaged both.

"If it covers all the clients' losses, I will be very happy," Gonzalez said. "But I doubt it will be the case."

Beazer has been remediating homes by gutting them at its own cost, replacing wiring and appliances.

The builder is following a protocol set by federal Judge Eldon Fallon, who is hearing drywall cases from across the country consolidated in New Orleans, and the guidance of the Consumer Product Safety Commission.

Beazer is not paying for loss of use and enjoyment, and any settlement from Knauf is not likely to compensate for the dollars Beazer spent in the remediation, Gonzalez said.

"Knauf's trying to get away with paying a small percentage of the responsibility that they actually have, and that's not right. They're quite culpable in this mess," Gonzalez said.

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It's clear there's a wide gap between what Knauf considers reasonable repair costs and those set by Fallon.

On April 27, Fallon ruled that Knauf must pay about $164,000 - or $81 per square foot - to fix a Mandeville, La. home. Knauf offered up to $58,564.

In settlement talks, Knauf is offering about $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.

The settlement also does not bring any resolution for those who opted not to take Beazer's offer to fix their homes and, in return, sign over their rights to future litigation against the builder.

Steve Attard said he believes he is the only homeowner in the Magnolia Lakes community in Gateway who did not accept Beazer's offer.

"They weren't offering anything more than a 12-month warranty. We weren't comfortable with that," he said. "They would perform the work themselves, not covering any personal contents ... Hopefully, we made the right choice."

Meanwhile, Knauf is continuing negotiations with about six to 10 builders, said Kerry Miller, a Knauf attorney and defense liaison.

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