Lack of transparency is factor in opt out of Chinese drywall settlement, lawyer says

By Alejandro de los Rios | Jul 20, 2011


Florida attorney David Durkee said ambiguity in a proposed settlement among parties in Chinese drywall litigation has prevented his clients from wanting to take part in it.

Durkee says he represents some 170 Florida homeowners that were affected by defective Chinese drywall.

Last week, U.S. District Judge Eldon Fallon gave preliminary approval to the settlement in U.S. District Court for the Eastern District of Louisiana.

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

The proposed $54.5 million settlement would dismiss the approximately 3,000 claims brought against Banner Supply Co. in Miami and its insurers.

In a phone interview, Durkee said he's concerned the settlement monies would mostly come from Banner's insurers, as opposed to the supplier that actually provided the defective drywall.

"We want to see the financials from corporations who say that they can't pay," Durkee said. "They're gonna get through this Chinese drywall disaster and they're gonna get out paying a limited amount of money and that doesn't seem fair."

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

A press release distributed July 14 by Durkee's firm states that the plaintiffs opting out of the settlement "believe they each only stand to receive approximately $5,000 and will be left holding the bag for toxic homes rendered unlivable by the contaminated drywall."

Durkee said that Banner should not be allowed to walk away form its responsibility to homeowners that it sold defective drywall.

Durkee said that he and his clients "will continue to enforce our rights in the state courts," even if the settlement is approved.

"Others disagree with me, but in our firm we take the position that this is a state court matter," Durkee said. "It's a state court plaintiff, the majority is state court defendants; the builders, installers, distributors, are Florida defendants."

Durkee said going through each individual claim in state courts would be more efficient than going through the massive MDL taking place in New Orleans.

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

Only the claims against Banner would be dismissed if the settlement were to be approved. There are still thousands of cases from across the Gulf Coast pending in Fallon's court.

"If there is an MDL settlement and that is fair and has good transparency, we're not averse to that situation," Durkee said.

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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