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Drywall supplier sues its producer

Florida firm says manufacturer lied

Jul. 15, 2011


Attorneys for a Florida supplier that distributed defective Chinese drywall and the parent company of the drywall manufacturer traded charges over who covered up what in a $100 million lawsuit filed Friday in federal court.

Banner Supply Company claims that it was duped into believing the drywall was fit for use by Knauf Gips of Germany, an international conglomerate that owns Knauf Plasterboard Tianjin, a major manufacturer of the defective drywall.

After lying to Banner, "Knauf then compounded its fraud by trying to evade responsibility, shifting blame entirely onto small Florida businesses, such as Banner, that relied on Knauf to tell the truth," the lawsuit states.

As a result, Banner is facing a ruined business and a ruined reputation, said Michael Peterson of Miami, Banner's attorney.

"We are trying to survive, that is the best way I can put it," Peterson said when asked if Banner was facing bankruptcy. "At this point in time we have not had to close our doors, but have been devastated" by the loss of vendors, credit and customers.

The lawsuit claims that Knauf's deception resulted in forcing Banner into a $54.5 million settlement with thousands of homeowners that Banner supplied with drywall.

A federal judge gave preliminary approval to the settlement Thursday.

The drywall was imported mainly between 2004 and 2008 and emits sulfur compounds that corrode air conditioning coils, plumbing fixtures and numerous other metal items in the home. Homeowners who have the drywall have complained of various health problems.

But Knauf's attorney, Steve Glickstein of Chicago, called Banner's lawsuit "a media event" and an attempt by Banner's insurers to recoup the $54.5 million they would have to pay out in the settlement.

Banner is based in Miami but has five other offices, including one in Fort Myers.

The company received about 100 million square feet of Chinese-manufactured drywall, primarily from Knauf.

The lawsuit addresses the fact that Banner signed a confidential agreement with Knauf in February 2007, agreeing to accept partial replacement of the foul-smelling drywall with American drywall. In return, Banner would keep quiet about the smell and possible health risks.

The lawsuit claims that Banner never would have entered into the agreement if Knauf had told them the drywall was defective.

"Basically, they covered it up," Peterson said of Knauf.

"That claim is a lie," Glickstein said. Banner only asked Knauf about the odor and possible health problems, he said. Knauf's own investigation showed there weren't any health problems, and no other entity or agency has confirmed any, he said.

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