June 14 (Bloomberg) -- Banner Supply Co. agreed to pay about $55 million to settle some claims by homeowners over allegedly defective Chinese drywall products.
Under the federal court settlement in New Orleans, Banner Supply will deposit the money into an escrow account to resolve nationwide claims that drywall the company imported from China contained toxins that corroded electrical wiring and fixtures and sickened residents.
“It is not enough to compensate anybody for damages and wrongs that have been done to them, but it is a step in the right direction,” Arnold Levin, a lawyer for homeowners who sued Banner Supply and other companies that sold tainted drywall, said today in an interview.
“We are settling this matter to bring a resolution for our customers and to allow the homeowners to fix their homes,” Michael Peterson, a lawyer for closely held Banner Supply, said in a statement.
The accord was announced today before U.S. District Judge Eldon Fallon in New Orleans, who is overseeing thousands of suits filed over the contaminated drywall that have been consolidated for pre-trial evidence gathering.
More than 1.1 million sheets of harmful Chinese drywall were used in Louisiana rebuilding projects after hurricanes Katrina and Rita struck in 2005, state Attorney General James Caldwell has said.
The toxins in homes with the drywall may include sulfur dioxide, formaldehyde and hydrogen sulfide, lawyers for homeowners have said.
Other drywall suppliers, such as Knauf Group and Interior/Exterior Building Supply Ltd. have agreed to resolve some homeowners’ claims over the faulty building materials during the past year.
Knauf Plasterboard Tianjin Co., one of the company’s units, agreed to help repair 300 homes in Alabama, Florida, Louisiana and Mississippi while Interior/Exterior Building Supply officials agreed to pay $8 million in cash and assign $72 million in insurance rights to consumers who allege the defective drywall ruined their homes.
Russ Herman, a lawyer for homeowners covered by the Knauf settlement in October, estimated repairs to a 2,500 square foot home would cost $60 a foot. With $8.50 per square foot paid to plaintiffs for temporary relocation, the cost for each home might be $171,000, he said in court in October.
Lawyers for consumers and Banner Supply said today that four insurers would be paying the settlement of the drywall cases, which covers as many as 700 Florida homeowners.
Fallon said today’s settlement is part of an effort to resolve all the drywall cases gathered before him.
“As I have said before, the way you eat an elephant is one bite at a time,” the judge said at the hearing, according to a transcript.
The consolidated case is In re Chinese-Manufactured Drywall Products Liability Litigation, 2:09-md-02047, U.S. District Court, Eastern District of Louisiana (New Orleans).
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