Firm's motion for attorneys' fees denied in post-Katrina Chinese drywall case

By Charmaine Little | May 8, 2019

NEW ORLEANS – Attorneys’ fees for interest earned following a case linked to a Chinese drywall issue during the aftermath of Hurricanes Rita and Katrina were denied in the U.S. District Court for the Eastern District of Louisiana on April 26.

U.S. District Judge Eldon Fallon ruled on the case.

Drywall manufactured in China became a staple in the Gulf Coast region from 2004 to 2006 during efforts to rebuild after the natural disasters. There was not enough construction material in the U.S., so builders relied on drywall from China to complete projects and home repairs. 

Eventually, homeowners started saying they could smell gases and were experiencing corrosion and electrical wiring issues as a result of the drywall. Lawsuits sparked all around the state to the point where it had its own multi-district litigation. Two manufacturers were the common denominators where problems were occurring: Knauf entities and Taishan entities. Taishan challenged jurisdiction so the court had to separate the cases, causing Knauf to have the first track.

Yance Law Firm filed the motion for attorneys’ fees after a court green-lighted a program, the Common Benefit Fund, that would give claimants attorneys’ fees. But after the court did additional research, it was denied.

“As Yance readily admits, it ‘has not done work on behalf of any claimants in many years,’” according to the court. “The fund was not established to compensate work that did not confer a common benefit to the litigants in this case.” 

It was noted that the judgment that allocated the common benefit fees were for the firm's amounts plus interest. “Thus, Yance’s contention that the court need not disturb the court’s prior order disbursing the fund is inaccurate,” said the court.

It also called out Yance for asking the court to reconsider in "a timely manner." Even with interest rates fluctuating over time, it said the notion that Yance filed a motion asking to transfer funds does not equate to a fee that should be reimbursed.

Knauf, which is actually based in Germany, manufactures drywall and is a parent company of Knauf Plasterboard Co (KPT). Knauf indicated that KPT Chinese drywall “emits certain reduced sulfur gases and the drywall emits an odor,” which was said to be an explanation for what the homeowners were experiencing.

Still, a court also determined that KPT Drywall was a defective product and distributed a Findings of Fact and Conclusions of Law in favor of a plaintiff. It also entered a judgment of $164,049.64 for damages, which was only the beginning of the issues. 

After that, the court recommended that some of the homes should be remediated, so both sides worked together to create a program for more plaintiffs. KPT reached a settlement, and under those terms the defendants said they would pay costs for the program plus attorneys’ fees. The payment would provide relief for the claimants when it comes to contingency fees and the costs for counsel. After the claimants received their funds, the court would allocate attorneys’ fees to contracted counsel via a multi-step process.

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