U.S. District Judge Eldon Fallon has announced a settlement agreement with the German manufacturer Knauf Plasterboard Tianjin Co., which means that thousands of Gulf Coast homeowners will be able to have their homes repaired.

According to the Herald-Tribune, the settlement agreement calls for an uncapped fund to pay for the repairs of 4,500 properties mostly in Florida, Louisiana, Mississippi, and Alabama.

Their will be a separate fund set aside for $30 million which will pay for other losses which include defective drywall related health problems.

ABC News reports that homeowners will have the option of:

1. having the settlement’s appointed contractor to repair their home
2. hiring their own credible contractor or
3. taking a cash payment

A $200 million deposit will be placed into a repairs fund, which will be replenished as needed. Attorney’s fees and costs will be capped at $160 million and will not come out of the homeowners’ portion of their settlement.

The settlement will not go into effect until the deal is approved and signed by Judge Fallon.  The approval of the deal could happen as early as January, however it may still be several months before the money reaches homeowners.

A settlement between the drywall manufacturer Knauf Group and homebuilders who used defective Chinese drywall will result in 800 – 1500 homes being repaired in Gulf states, according to the WashingtonPost.   The settlement will involve reimbursements to builders for homes that have already been repaired, are currently being repaired, and those awaiting repair.

NOLA.com reports, as many as 100 homes in Louisiana could be covered under this agreement. The agreement is most likely to affect major local builders who built homes after Katrina with the ctive Chinese drywall.

The settlement will include homes built with Knauf defective Chinese drywall in Florida, Texas, Louisiana, and Mississippi.

The program will not help homes built with defective Chinese drywall by Taishan Gypsum Co.

According to an article on NOLA.com, a New Orleans company that distributed Knauf Tinjian Chinese drywall has agreed to settle.  Two of Interior/Exterior Building Supply’s  insurers, Arch Insurance Co. and Liberty Mutual Fire Insurance Co.,  will allow up to $8 million of their insurance policies to compensate homeowners.

Although the settlement is still pending approval, it would cover a share of claims by homeowners.

Interior/Exterior has said that it distributed most of the defective drywall to Alabama, Mississippi, Louisiana, Texas, and a small portion to Florida.

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Knauf Plasterboard Tinjian Pilot Program

Nola.com also reported that 49 homes in the remediation program are either undergoing repair or have been completed, about 100 more are getting ready to be repaired, and about 60 – 70 are being enrolled in the program.

Earlier this month a Lauderhill, FL Chinese drywall townhome was the first in the Knauf pilot program to begin remediation.  Currently Louisiana Chinese drywall homes selected to participate in the program will soon begin the same remediation.

According to Fox 8 News in Baton Rouge, approximately 100 homes in Louisiana will take part in the Knauf pilot remediation program.  This will include Chinese drywall homes in the communities of St. Tammany, Ascension, East Baton Rouge, and New Orleans.

The entire program is expected to remediate around 300 homes in the states of Louisiana, Alabama, Mississippi, and Florida.

These homes will be stripped down to the studs, and all building materials affected will also be removed.  Knauf will pay for the repairs, for temporary housing, and moving expenses.

U.S. District Court Judge Eldon Fallon has dismissed Louisiana homeowners’ claims against 10 insurance companies involved in the defective Chinese drywall case, according to the Sarasota Herald Tribune. 

Insurance companies continue to argue that numerous exclusions in the policies indicate that losses related to Chinese drywall are not covered.

Judge Fallon has issued what seems to be a split decision in his ruling favoring homeowners on some exclusions and insurance companies on others.

Although Judge Fallon ruled that insurance policies don’t cover damage to homes or personal property, he has ruled that Chinese drywall does cause a physical loss to a home, according to NOLA.com.  The reason being Chinese drywall corrodes wiring and electronics.

Judge Fallon did rule that Chinese drywall is a faulty material, and is excluded from coverage on insurance policies.  He also determined that the tainted drywall prompts the corrosion exclusion in the policies since corrosion is the main damage caused by the drywall.

While Judge Fallon did side with homeowners on some of the exclusions insurance companies tried to use to get out of paying damages, they only needed one condition in their favor to have the cases dismissed. 

View the Order & Reasons for the insurance ruling

According to Businessweek.com, US District Judge Eldon Fallon has said that the pilot program to repair up to 300 homes in Florida, Louisiana, Alabama, and Mississippi built with defective Chinese drywall, which was manufactured by Knauf Plasterboard Tianjin Co., seems to be going well.

One of Knauf’s lawyers, Steven Glickstein said that all parties participating in the pilot program have agreed to pay shares of the cost of fixing the homes. So far 80 homes have been inspected and chosen to undergo repair.

If the pilot program is successful, it is possible that 2000-3000 homes built with Knauf’s drywall might be fixed under this deal.

Glickstein also said that Knauf is prepared to consider compensating homeowners who have already paid to remove Knauf drywall themselves.  The homeowners would have to prove that their homes were built with Knauf drywall and ask for a “reasonable price.”

Russ Herman, a plaintiffs’ lawyer said that repairs to some homes may begin by Christmas.  Repairs are expected to take about 3 months and cost between $40 and  $60 a square foot.  This means Knauf and the participating companies are looking at $30-$45 million in repair costs for the 300 homes, which does not include temporary housing for the homeowners.

Knauf Plasterboard Tianjin, one of the manufacturers responsible for producing defective Chinese drywall, has agreed to repair up to 300 homes in several different states as part of a remediation “pilot program.”  If all goes well, this could be just the beginning.

Homeowners whose homes meet the criteria agreed upon will have the insides of their homes gutted, their families will be relocated, and attorney’s fees shall be paid for by Knauf Tianjin and several other companies who settled on the negotiation.

The homes will be repaired according to the protocol developed by the U.S. District Court under Judge Eldon E. Fallon.  Essentially, all of the drywall, wiring, air conditioning system components, and other components will be removed and replaced.

 Eligible homes:

• Must contain “substantially all”, defined as 95% or more, of Knauf Plasterboard Tianjin (KPT)
• Must be located in Florida, Louisiana, Alabama, or Mississippi
• And must NOT contain any other type of contaminated Chinese drywall

Some Attorney’s are hesitant to take the agreement because homeowners in South Florida, specifically Miami-Dade County, may have difficulty meeting the 95%+ KPT drywall eligibility requirements due to the way drywall was distributed.

According to the Herald Tribune, the federal court has determined the remediation cost to be more than $80 per square foot for an average-size home.  They hope to get a better idea of this cost once the remediation protocol has been implemented.

This settlement gives hope to many homeowners who thought their lawsuits would take years before they received any type of help.  Knauf Plasterboard Tianjin is the only defective Chinese drywall manufacturer who has responded to U.S. court proceedings, reports the MiamiHerald.

Resources

1. View the actual “Settlement Agreement for the Demonstration Remediation of Homes with Knauf Plasterboad Tianjin Drywall“
2. HUD and CPSC Issue Guidance on Repairing Homes With Problem Drywall
3. ChineseDrywallClaims.com
4. Free 5 Step Guide to Determining if your home contains defective Chinese drywall

According to CBS News, an estimated 120 homes built by Habitat for Humanity in New Orleans for Hurricane Katrina victims contain defective Chinese drywall and will be gutted and rebuilt.

Among those homes at least 40 located in Musician’s Village, homes donated by Harry Connick, Jr. and Branford Marsalis, where built with defective Chinese drywall.

Those living in the homes will be moved into rental apartments for at least two months while their homes are being gutted and repaired. CBS reported, “All electrical wiring, carpet, plumbing components, duct work, hot water heaters, insulation, smoke detectors and drywall, as well as some appliances, will need to be removed and replaced.”

The Habitat for Humanity is a non-profit organization, that built 280 homes between August 2005 and October 2009. The organization will be doing the work and covering all costs, while families seek reimbursement from the manufacturers of the defective drywall.

A majority of the homes were built with one type of drywall that was bought in bulk. The manufacturer, Taishan Gypsum Co., a known manufacturer to have importer the defective Chinese drywall into the United States during this time.

According to the Consumer Product Safety Commission (CPSC), as of July 2010, they have received over 3,482 defective drywall related complaints from 37 different states, DC, Puerto Rico, and American Samoa. In a status update released by the CPSC, combining information gathered by federal and state authorities, approximately 6,300 households have registered complaints.

Resources:

• ProPublica.org: Habitat Changes Its Tune on Defective Drywall; Must Gut at lease 70 New Orleans Homes
• CBS News: Bad Drywall Hits NOLA, Habitat Homes to be Gutted
• CPSC Drywall Information Center
• Chinese Drywall Claims

Louisiana homeowners how are facing dire economic times, in light of the Chinese drywall crisis (following the heels of Hurricane Katrina, and in the wake of the ongoing oil disaster, mind you) and many hope for relief in the insurance arena, from the Louisiana House of Representatives.

A bill that would prevent insurance companies from failing to renew or canceling clients who file Chinese drywall-related claims has progressed to the full House.

As reported by ifawebnews, (read source article here), The Louisiana Senate approved the original bill last month.  (SB 595).  The House Insurance Committee then rewrote it.  Thus, the bill will go back to the Senate if the above-mentioned House of Representatives approves it.  While complicated as it may seem, the process is underway and the bill is looking good.

The article cites the New Orleans Times-Picayune as reporting that some insurers have tried to amend the bill.  One such amendment sought to strike a portion of the bill that would require reinstatement of dropped policyholders within 30 days at the same level of service, or “condition,” as existed before the client faced termination.

At the present time, the bill would prevent insurers from canceling or failing to renew with regard to one factor: the presence of drywall from China, installed before December 31, 2009.  Insurance companies should not fret or panic, as the bill would not cause them financial ruin.  The current bill’s terms would expire in mid-2013; thus the bill is seemingly designed to remedy the problems homeowners are currently facing, as opposed to focusing its aim on Chinese drywall broadly (as in, Chinese drywall installed at any date).

It can be said that Louisiana has seen its share of issues, upon reflecting on the last decade.  First it was Hurricane Katrina that devastated New Orleans, then the Chinese drywall crisis became apparent, as its cumulative effect has affected thousands of homeowners across the country.  Now with the BP oil spill, the region’s economy, homeowners, and residents are suffering.

The Chinese drywall crisis – while stemming from the Hurricane season of 2004 and 2005 (and primarily causing a drywall shortage from the massive Hurricane Katrina) – has affected homeowners across the country.  Florida has also been a state where much concern has been raised about toxic drywall from China, and recently a Miami-Dade Circuit Judge approved class-action status for a case brought by a couple who purchased their home in 2008.

The first class action lawsuit regarding Chinese drywall is reported by the Miami Herald (click here for source article), to include up to 152 families, from three (3) Homestead neighborhoods.  The class-action status decision.

Class-action status is significant legally, in that plaintiffs (those who suffered harm) can benefit by being considered a “class” or a group rather than having to file a lawsuit for each home affected.  This “class-action” status obviously alleviates administrative burdens on the court system as well.

Homeowners will receive a notice in the mail, pursuant to the rules of the court system, regarding whether they would like to join the suit.

Still other communities exist across the country where neighborhoods may deserve class-action status.  How those situations play out, and how the judges will rule in those scenarios, will be reported on as soon as developments are available.