Judge gives preliminary approval of settlement in Chinese Drywall litigation

By Alejandro de los Rios | Jul 15, 2011


U.S. District Judge Eldon Fallon has given preliminary approval to a $55 million settlement between plaintiffs and a Florida-based Chinese drywall supplier.

The announcement came Thursday through the U.S. District Court for the Eastern District of Louisiana.

The approval of the settlement doesn't finalize the agreement, but rather establishes more hearing and filing dates and deadlines.

The settlement pertains to thousands of claims against Banner Supply Co. in Miami and its insurers.

Fallon is overseeing the massive multidistrict litigation (MDL) brought on by more than 10,000 claims against Chinese drywall manufactures and distributors.

The plaintiffs claim that Chinese drywall they bought and installed in their homes was defective, were made from toxic chemicals and led to corroding pipes and a 'rotten egg' smell in their homes.

In May, Fallon approved a settlement between Chinese drywall distributor Interior/Exterior Supply and its insurers.

In a statement, plaintiff lawyer Russ Herman confirmed that this "is the first Chinese drywall settlement with a major supplier."

Arch Insurance and Liberty Mutual Fire Insurance are the Interior/Exterior primary insurers and have agreed to pay $4 million for the claims.

The settlement states that plaintiffs have been assigned the right to pursue up to $72 million in additional insurance coverage from North River Insurance Co.

Last year, Louisiana Attorney General Buddy Caldwell stated that 1.1 million sheets of Chinese drywall distributed by Interior/Exterior were installed in homes undergoing repairs following hurricanes Katrina and Rita.

In October 2010, Fallon oversaw and enacted an order in which Knauf paid to repair 300 homes that were affected by Chinese drywall.

Federal MDL 2:09-md-02047

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