Judge Announces Breakthrough in Chinese Drywall

NEW ORLEANS, OCTOBER 14, 2010 – The Plaintiffs’ Steering Committee in the Chinese Drywall multi-district litigation and Knauf Plasterboard Tianjin (KPT) today announced a breakthrough settlement to remediate homes impacted by KPT’s drywall. The agreement establishes a demonstration remediation program, funded by KPT and a number of builders, drywall suppliers and their insurers. The program includes the removal of the problem drywall from up to 300 homes in Alabama, Mississippi, Louisiana and Florida.

Among the participating builders, suppliers and insurers are Interior/Exterior Building Supply, the Louisiana Homebuilders Indemnity Trust, QBE Insurance Group and State Farm Insurance. The Louisiana-based supplier Interior/Exterior Building Supply was an integral component in reaching this agreement and the company has agreed to help fund this pilot program. Other Knauf entities are signatories to and participants in the agreement.

The demonstration program, involving the remediation of homes containing all or substantially all KPT drywall, will include:

• Removal of the drywall;
• Replacement of all electrical wiring, including switches and receptacles;
• Replacement of fire safety and home security equipment;
• Replacement of fixtures damaged by the problem drywall;
• Restoration of the home to the same construction quality and finishes that existed prior to the start of the remediation work;
• Compensation to the homeowner for alternative living costs during the remediation, moving and storage and personal property damage;
• The reservation of rights for bodily injury;
• Attorneys fees and expenses to be negotiated by the PSC and KPT and to be paid by KPT.

Under the agreement, KPT will retain and supervise contractors to do the work on a cost-effective basis. The completed homes will be inspected by environmental engineers, who will certify to the homeowner that their home is free of problem drywall odors and contamination.

The members of the Plaintiffs’ Steering Committee involved in negotiating the agreement were HH&K partner, Russ M. Herman, Arnold Levin of Levin Fishbein Sedran & Berman, and Christopher A. Seeger of Seeger Weiss, L.L.P.

“We especially acknowledge the coordination of MDL Judge Eldon E. Fallon of the United States District Court in New Orleans and for his direction to the parties, after trials in his courtroom, to negotiate a demonstration program,” said the PSC negotiators.

KPT is standing behind its product and is working with homeowners, builders, suppliers and their insurers to repair homes containing its drywall. “The purpose of the demonstration remediation project is to establish a model for the resolution of the KPT drywall issue,” said Gregory J. Wallance of Kaye Scholer LLP, who represented KPT with Kerry J. Miller of Frilot, LLC. “Ultimately the drywall problem should not be solved in the courtroom. It should be solved by a collaborative effort involving KPT, the homeowners, their attorneys, and the various suppliers, builders, and their insurance carriers. This is a very positive first step towards a solution.”

Both sides acknowledged “the contribution of the Consumer Product Safety Commission, whose remediation and inspection guidance, were invaluable in creating the remediation program.”

For a copy of the settlement, copy and paste the following link: http://www.laed.uscourts.gov/Drywall/DemonstrationRemediationAgreement.pdf