Court denies calls for partial disbursement of attorneys’ fees in Chinese drywall case

By Payton Kuhn | May 28, 2019

NEW ORLEANS – The U.S. District Court for the Eastern District of Louisiana recently denied multiple parties’ motions seeking attorneys’ fees and other miscellaneous fees in litigation involving the use of Chinese drywall to renovate homes damaged by Hurricanes Rita and Katrina.

According to the May 16 filing, numerous lawsuits were filed against Knauf, a German-based manufacturer of building products, claiming the drywall that had been sold and used in the homes was defective. During the course of litigation, Knauf entered a pilot program in which homes were remediated using a protocol established in a previous case.

As part of that settlement, Knauf agreed to “pay reasonable costs," including the cost of administering the program and an additional amount for attorneys’ fees for all parties, court filings said. 

While the process of disbursement was stayed until the U.S. Court of Appeals for the Fifth Circuit confirms the disbursal order, claimants Krupnick Campbell, Parker Waichman LLP, McCallum LLP and Gentle Turner all motioned in district court for partial disbursement of the fees, citing the unfairness of having to wait any longer to receive fee awards.

In the May 16 filing, U.S. District Judge Eldon E. Fallon rejected the motions, sending the issue of fee disbursement to the appeals court.

In his ruling, Fallon cited that considering “there are a significant number of attorneys and firms in this case, and in the event the Fifth Circuit reverses or alters this court’s fee disbursal order, a clawback of the distributed funds would prove disastrous, highly time consuming and in some cases infeasible.” Although he said he was aware of the court’s ability to grant such a motion, it could lead to a “potential catastrophe.”

The parties’ had originally moved for a disbursement of 80 percent of the available fees, leaving the remaining 20 percent to be decided by the appeals court.

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