A settlement has been reached with Interior/Exterior Building Supply LP,
the New Orleans company that distributed the Knauf-brand imported Chinese
drywall from Texas to Alabama, and its insurers, potentially putting money
in the hands of beleaguered homeowners.
Under the deal, which is still subject to court approval, Interior/Exterior's
two primary insurers will put up the $8 million limit of their insurance
policies to compensate homeowners. Later this year, the plaintiffs will
proceed to trial against Interior/Exterior's excess insurers, who have
another $72 million in coverage.
Drywall was imported from China from 2004 to 2008 because the domestic
drywall industry couldn't keep up with the demands of the housing boom
and massive rebuilding efforts in the Gulf South after the 2004 and 2005
hurricane season. The drywall releases sulfuric gases that corrode metal
appliances and components in homes, and residents of homes with problem
drywall complain that it gives them headaches and respiratory ailments.
They have been stuck living in houses they can't afford to fix and are
unable to sell because many of the foreign manufacturers are beyond the
reach of the law, insurers won't cover it, and home builders
say they're victims, too.
The settlement builds upon a deal that was reached in October with Knauf
Plasterboard Tianjin, a Chinese manufacturing unit of the German company
Knauf Gips. Knauf and other entities that dealt with the problem drywall,
including Interior/Exterior, agreed to pay for a pilot program to remediate
300 homes with Knauf-brand drywall in Louisiana, Mississippi, Alabama and
Florida. The program launched in February with homes in Florida, and in
March with homes in Louisiana. Moss & Associates, the Florida contractor
hired to run the program, has said that all 300 homes should be enrolled
in the program by the end of June, and all work should be completed by
the end of the year.
The goal of the program was to get a more realistic sense of what it costs
to repair a home with bad drywall, and use it to confect a larger settlement.
But it only touches 300 homes in four states, while the U.S. Consumer Product
Safety Commission has received complaints from about 6,300 homeowners in 38
states, and some estimates say tens of thousands of homes are affected.
Louisiana has the second highest number of complaints on file at the CPSC,
Although there are scores of companies that manufactured bad drywall, Knauf is
believed to be the largest player, and it is the only manufacturer that has
voluntarily stepped up to try to resolve problems. Interior/Exterior, based
on South Cortez Street in Mid-City, is Knauf's primary distributor in the region.
No details are available yet on how and when money could be distributed
to eligible homeowners.
Rebecca Mowbray can be reached at
Times Picayune- New Orleans, La.
April 26, 2011