Federal Judge in New Orleans Awards $2.6M in Chinese Drywall Case

A federal judge in New Orleans has awarded seven plaintiffs from Virginia more than $2.6 million in a consolidated case involving damage to the plaintiff’s homes as a result of the installation of substandard drywall from China.

In an opinion published on April 8, United States District Judge Eldon E. Fallon concluded that proper remediation for the damaged homes would be “to remove all drywall in their homes, all items which have suffered corrosion as a result of the Chinese drywall, and all items which will be materially damaged in the process of removal.”

The judge’s decision comes just days after the U.S. Department of Housing and Urban Development (HUD) and the U.S. Consumer Product Safety Commission (CPSC) released a report advising homeowners with Chinese drywall to completely remove the tainted product and replace all electrical components and wiring, gas service piping, fire suppression sprinkler systems, smoke alarms and carbon monoxide alarms.

In Re: Chinese Manufactured Drywall: Products Liability Litigation : Section: L and Germano, et al. v. Taishan Gypsum Co. Ltd., et al., case no. 09-6687 represent the consolidation of numerous cases in which “homeowners began to file suit in various state and federal courts against homebuilders, developers, installers, realtors, brokers, suppliers, importers, exporters, distributors, and manufacturers who were involved with the Chinese drywall,” the Court explained.

Because of the commonality of facts in the various cases, in June 2009 all federal cases involving Chinese drywall were transferred and consolidated for pretrial proceedings in the U.S. District Court, Eastern District of Louisiana.

The class action suit in this instance originally was brought against defendants Taishan Gypsum Co. Ltd., f/k/a Shandong Taihe Dongxin Co. Ltd. (“Taishan”); Tobin Trading Inc.; Venture Supply Inc.; Harbor Walk Development LLC; and The Porter-Blaine Corp. Plaintiffs filed their initial complaint in the Eastern District of Virginia on May 1, 2009.

The Chinese drywall in the present case was manufactured by Shandong Taihe Dongxin Co. Ltd., which on September 10, 2007, changed its name to Taishan Gypsum Co. Ltd.

After the federal drywall suits were transfered to the federal court in Louisiana, the plaintiffs in this case – Virginia homeowners William and Deborah Morgan, Preston and Rachael McKellar, Frederick and Vanessa Michaux, J. Jerry and Inez Baldwin, Joseph and Kathy Leach, Robert and Lea Orlando, and Steven and Elizabeth Heischober – moved to assert a national class action against Taishan.

The matter was heard without a jury between Feb. 19 and Feb. 22, 2010.

According to court documents, evidence presented to the court showed that the “level of corrosive sulfur gases emitted by Chinese drywall in the … homes exceed the safe level established by recognized standards, peer reviewed literature, and expert opinions and this corrosive environment has had a significant impact on the exposed property.”

In addition, the court said, the “evidence supports the conclusion that the appropriate remediation for the affected homes includes the removal of all drywall, all electrical wiring, the entire HVAC system, and many other items such as appliances, carpet, cabinetry, trim work and flooring.”

The remediation process was estimated to take four to six months to complete.

In determining the award amount for property remediation, the court used an average cost per square foot of $86, which does not include a cost for replaciang windows, exterior doors, structural members, exterior siding, roof trusses, the roof, concrete and nails.

Even with remediation, the homes are expected to experience a drop in value to varying degrees as a result of the contaminated drywall, the court said.

Fallon awarded the individual plaintiffs as follows:

• William and Deborah Morgan: $481,613.29 — $381,613.29 for property damages, personal property damages and other forms of compensable damages and $100,000.00 for loss of use and enjoyment damages.
• Jerry and Inez Baldwin: $441,699.11 — $341,699.11 for property damages, personal property damages and other forms of compensable damages, and $100,000.00 for loss of use and enjoyment damages.
• Joseph and Cathy Leach: $89,676.86 — $59,676.86 for property damages, personal property damages and other forms of compensable damages, and $30,000.00 for loss of use and enjoyment damages.
• Bob and Lisa Orlando: $407,905.44 — $307,905.44 for property damages, personal property damages and other forms of compensable damages and $100,000.00 for loss of use and enjoyment damages in the amount of.
• J. Frederick and Vannessa Michaux: $355,607.80 — $255,607.80 for property damages, personal property damages and other forms of compensable damages, and $100,000.00 for loss of use and enjoyment damages.
• Preston and Rachel McKeller: $351,741.22 — $251,741.22 for property damages, personal property damages and other forms of compensable damages, and $100,000.00 for loss of use and enjoyment damages.
• Steven and Elizabeth Heischober: $480,886.27 — $380,886.27 for property damages, personal property damages and other forms of compensable damages, and $100,000.00 for loss of use and enjoyment damages.

Other cases on drywall claims are winding through the courts, from Florida to California. Last week, a Louisiana court rebuffed an insurance company’s use of the pollution exclusion and two other exclusions in an “all risk” homeowners insurance policy to deny claims resulting from so-called Chinese drywall.

Source: U.S. District Court for the Eastern District of Louisiana