Knauf Ordered to Pay $164,000 Over Defective Drywall in Louisiana Home

Knauf Plasterboard Tianjin Co. was ordered to pay $164,000 to a family that claimed their Louisiana home was ruined by defective drywall made in China.

U.S. District Judge Eldon Fallon, who is overseeing federal lawsuits filed against Chinese drywall makers throughout the U.S., ruled that homeowners Tatum and Charlene Hernandez are entitled to have their home restored to its original condition. He also granted damages to replace personal property and cover the couple’s living expenses.

“Plaintiffs purchased a new home and are entitled to have it restored to a new condition,” Fallon wrote in a 47-page decision in the case.

Fallon’s ruling comes after a trial in March, where he presided without a jury. The case, part of coordinated multidistrict litigation over defective drywall, is intended as a bellwether to help determine property damage issues in other cases against manufacturers.

More than 2,100 homeowners in the U.S. have filed federal suits claiming their homes were damaged or ruined by defective drywall that gives off noxious odors and chemicals that can corrode wiring, plumbing and heating equipment.

Knauf Reaction

Knauf said it may appeal the Hernandez decision. Evidence introduced by Knauf at trial “showed that a home impacted by Chinese drywall could be repaired for a much more reasonable amount than what was awarded by the court,” Don Hayden, a lawyer for the company, said in a statement.

The company is “prepared to work broadly and cooperatively with U.S. homeowners and homebuilders” to repair homes with defective Knauf drywall, he said.

Knauf is the first Chinese drywall manufacturer to defend itself in a U.S. trial. On April 8, Fallon awarded $2.6 million to the owners of seven Virginia homes that he determined had been ruined by drywall made by Taishan Gypsum Co., which didn’t participate in the case.

On April 2, U.S. regulators recommended that homeowners remove all defective drywall and replace gas-service piping, smoke alarms and carbon monoxide alarms and other electrical components and wiring that may have been damaged.

In the trial, both sides agreed that Knauf should pay to remove all 180 drywall panels in the house, which was built in 2006 at a cost of $175,000. Knauf claimed a remediation plan put forward by the Hernandezes was too expensive. Knauf also disputed claims that gases from the drywall ruined wiring, appliances and personal property in the home.

In his decision, Fallon said that Knauf must pay to replace the drywall and the home’s electrical, heating and air- conditioning systems.

The case is In re Chinese-Manufactured Drywall Products Liability Litigation, 2:09-md-02047, U.S. District Court, Eastern District of Louisiana (New Orleans).

To contact the reporters on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net; Allen Johnson Jr. in federal court in New Orleans at allenmct@gmail.com.

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