New Chinese Drywall Suit Filed Against Drywall Maker and Agency

Lawyers for people who say their homes were wrecked by defective drywall made in China have filed a new lawsuit against the manufacturers and a new defendant – the Chinese Cabinet agency that oversees the country’s biggest state-owned companies.

“We’re trying to get their attention,” attorney Lenny Davis said.

The lawsuit was filed Wednesday, two weeks after U.S. District Judge Eldon Fallon held Taishan Gypsum Co. Ltd. and related defendants in contempt of court for ignoring court proceedings over harm done by the drywall. He ordered them to pay $55,000 in fines and attorneys’ fees, and to stop doing business in the United States or pay one-quarter of its profits for the year of the violation.

The new lawsuit adds to the list of defendants China’s State-Owned Assets Supervision and Administration Commission. It is being sued as a parent of China National Building Materials Group Corp., Davis said.

According to the Chinese commission’s website, it “performs investor’s responsibilities, supervises and manages the state-owned assets of the enterprises under the supervision of the Central Government” aside from financial enterprises. The Cabinet agency, also known as SASAC, supervises China’s 117 biggest state-owned energy and manufacturing companies, including China National Petroleum Corp., China Mobile Ltd., Air China Ltd., Dongfeng Motors Co. and Shanghai Automotive Industries Corp.

Taishan’s New Orleans attorney declined to comment. A query through the Chinese commission’s website was not immediately answered.

“Families in Louisiana and 45 states have been terribly affected by defective Chinese drywall, forcing them to move out of their homes and often putting their finances and health at risk. This lawsuit is an important step in the fight to get China to step up to its responsibilities to make this right to the American families harmed by their dangerous and defective products,” said Sen. Mary Landrieu, D-Louisiana.

A Consumer Product Safety Commission report showed numbers at 2,265 in Florida, 731 in Louisiana, between 100 and 250 in Virginia, Mississippi and Alabama, 57 in Texas and up to 37 in other states, with most in single digits.

It was not clear what effect Fallon’s July 17 order would have, since the court covers only one of Louisiana’s three federal judicial districts. He wrote that he was having it sent to the U.S. Commerce and Justice departments for “any appropriate action they may see fit.” Neither department responded to emails Wednesday afternoon.

Davis said he did not know whether, if the Chinese commission also avoids court hearings, Fallon might order it and the companies it supervises to stop business in the U.S.

But, he wrote in an email, “It seems to me the court was very upset about the affront and disrespect shown for the court and the United States process. I can certainly see the various companies being barred and cited by Judge Fallon. They are related subsidiaries and/or affiliates.”

Fallon has ordered the companies to pay $2.7 million to the owners of seven homes in Virginia, but has not acted on requests to make the lawsuit a class action for thousands of other homeowners, most of them along the Gulf Coast.

The new lawsuit repeats the request for class certification. It estimates that the defendants could be liable for more than $1.5 billion in damages.

Five class-action settlements approved in 2010 call for another Chinese drywall maker and four other companies to pay hundreds of millions of dollars to repair homes damaged by the product. Lawyers said it would help more than 10,000 property owners and might add up to more than $1 billion.