A Chinese drywall town hall meeting was held in Newport News, VA last night with representatives from the CPSC.

According to Wavy.com, representative Jay Howell went over a the steps that the Consumer Product Safety Commission has taken over the last year in testing the defective drywall, as well as drafting remediation guidelines.

There were questions concerning water safety, health problems, and  foreclosure but there seemed to be no answers.

“There were no representatives from the Health Department or the Centers for Disease Control in the meeting. Del. Glenn Oder (R-Newport News) who co-hosted the event said he would reach out to those agencies for future meetings.”

Homeowners were not the only ones present last night.  Renters who signed leases in homes who have discovered that they have defective Chinese drywall also attended the meeting.  There concern seemed to be focused on getting out of the situation without ruining their credit.

In the ongoing litigation – known as “The Chinese-Manufactured Drywall Products Liability Litigation” which is taking place in the U.S. District Court in the Eastern District of Louisiana – an important decision has been handed down.  You can access it here, courtesty of chinesedrywall.com

The latest case: Hernandez v. Knauf Gips KG, et. al., case no. 09-6050 – has resulted in a victory for the plaintiff.

You may recall the plaintiff’s victory in a recently reported and related case – the Germano decision.  In that case, Taishan (Chinese manufacturer) did not participate.  Judge Eldon Fallon ruled in favor of seven Virginia homeowner plaintiffs over two and a half million dollars.

In Hernandez, the defendant participated and defended the case from start to finish.  This is an interesting point to note, in that the previous case did not involve a participating defendant.  Nonetheless, Knauf was ordered to pay one family from Louisiana a total of $164,049.64.  The cost was calculated as remediation totaling $136,940.46 ($81 per square foot) plus the cost of damages on personal property.  As we have reported on this site, the Chinese drywall lawyer, personal property items have been widely reported as susceptible to the toxic reach of defective Chinese drywall.  In Hernandez, the personal property items that sustained damages included mattresses and clothing.

While most personal property items that sustain damages contain metals (the metal corrodes from toxic compounds present in the air), clothing is now an item of concern for homeowners seeking remedies for their losses.  The reason clothing can be considered a damaged item due to defective drywall, is that the sulfuric odor in some cases can not be removed – the clothing is thus useless.

A Chinese drywall ruling was made on Thursday, April 8, by U.S. District Judge Eldon E. Fallon in New Orleans, awarding seven Virginia homeowners $2.6 million in damages. 

The seven Virginia homeowners were chosen as representatives of homes affected by the toxic Chinese drywall across the country- one Virginia Beach family, two in Newport News, and four in Williamsburg.

The Virginian Pilot reports that his ruling stated all of the drywall within the homes must be removed, including materials that were corroded due to the Chinese drywall, as well as anything damaged during the removal process.

The damages awarded also include costs to relocate the families while the remediation work is in process, and other expenses such as bankruptcy or foreclosure caused by the drywall.  Judge Fallon also awarded damages for the loss of use of the properties, according to the Virginian Pilot.

Attorney Richard Serpe of Norfolk,Virginia who represented these seven homeowners states, “The judge went right down the line in adopting the scope of remediation and loss of property.  We think it was a sober and fair decision.” 

The ruling was against the Chinese manufacturer Taishan Gypsum Co. Ltd., who did not respond to the lawsuit forcing Judge Fallon to enter into a default judgement.  Unfortunately, this ruling means little, as far as compensation, if Taishan ignores the judgement. 

“Serpe plans to ask Fallon for a judgement against Taishan for more than 80 other clients in Hampton Roads whose properties were built with Chinese-made drywall.  Serpe is also representing local homeowners in Norfolk Circuit Court cases against the construction supplier, Norfolk-based Venture Supply, Inc., and against multiple builders and subcontractors.”

The New York Times: Judge Awards Families $2.6M Over Chinese Drywall
WSJ: Judge Awards Families $2.6 Million in Chinese Drywall Case

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For those homeowners, attorneys, builders, and others who are following the Chinese drywall trials and their related developments (which are underway in the Eastern District of Louisiana), this week is expected to mark the beginning of a trial where German manufacturer Knauf Plasterboard will participate.  According to one source, the trial is expected to take a week.

Knauf is a German-owned manufacturer, and unlike the recent case against Chinese-owned Taishan Gypsum, the defendant is expected to participate.

This upcoming case, Hernandez v. Knauf, involves a Louisiana family that purchased a home in 2006.  Contrary to the recently litigated Germano v. Taishan case, this case will seek to determine damages to property.  Then, health issues involved will be inquired into at a later point in time.

Another aspect of the case worth noting is that the trial will not involve a jury (referred to as a bench trial).  Knauf is expected to actively defend the case – in fact, it agrees that tainted drywall needs to be removed.  The point of contention, however, is whether components such as plumbing and electrical wiring should be “gutted” and removed as well.

The outcome of this upcoming Knauf case won’t bind the company as far as other litigants (families) are concerned, but what it is expected to do, is to present a categorization of damages.  Similar to Germano, this case will form the protocol of remediation for future cases.  Thus, anyone interested in the Chinese drywall issue at large would be smart to pay close attention to this case and its developments.

Brief Update on the Chinese Drywall Trials

*Trial scheduled to start February 19, 2010*

Chinese-controlled “Taishan Gypsum” never responded to the lawsuit filed in the Eastern District of Louisiana last year.  Judge Eldon Fallon entered “default judgment” against the company, meaning that that there will not be future arguments regarding whether Taishan did something “wrong.”

What does this imply? – Judge Fallon and the Court must still assess damage amounts, but can move forward in the case since China didn’t show up or respond.   Currently, evidentiary hearings are in progress and the trial is nearing its scheduled beginning (2/19).

Want to brush up on your legal vocabulary or terminology knowledge?  Wikipedia provides a nice article containing definitions, comparisons, and examples of default judgments.

The trial starting Feb. 19, 2010, will be focused on Taishan Gypsum and will not bind other defendants in the case.  The trial, however, will be of great importance as it may create a standard for remediation.  Hopefully this will serve to save time in future trials against other manufacturers.

In product liability cases, defendants often include suppliers, distributors, and manufacturers among others.  In the context of Chinese goods, the products are manufactured by non-U.S. entities.  The rest of the supply chain can be addressed by the American legal system with relative ease compared to having hail into court a business controlled, and in most cases, owned by the Chinese government.  The above example of Taishan Gypsum’s failure to appear or respond to the lawsuit is indicative of this point.

Yesterday, I wrote a post on Chinese drywall victims losing home insurance coverage. The largest home insurance company in Florida, Citizens Property Insurance Corp., is refusing to renew some policies if the homeowner does not get their Chinese drywall taken care of. While it is bad enough that the largest insurer in the state is doing this, now another one is cracking down.

The Miami Herald has a great story on this: 2nd Florida insurer drops policy over Chinese drywall. Universal North America is the second insurance company in the state to begin to let customers go who are living in homes with Chinese drywall. These companies feel that Chinese drywall is a fire and water damage hazard. In turn, they don’t want to have anything to do with them.

Universal currently provides home insurance to roughly 105,000 Floridians. It will be interesting to see how many policies they cut due to Chinese drywall related issues.

ABC News reported to avoid the risk of further damages caused by Chinese drywall some insurance companies, such as Universal Insurance and Citizens Property Insurance, have chosen to cancel policies. Citizens Property Insurance says, “If there is damage in residence we will send out a nonrenewal notice six months prior to the end of the policy. This is no different thatn if there was a hole in the roof. We would require repair be completed before we renewed the policy” in a statement to Good Morning America.

Micheal Barry, with the Insurance Information Institute, says “In everyone’s home policy it says the insurer does not have to pay in the event of a faulty construction or materials or poor workmanship.”

Toxic Drywall Ruins Homes and Health

Newport News homeowners, desperate for answers as they discover their homes are contaminated by Chinese drywall, met with building officials Tuesday.  Officials say that they are still trying to understand problems caused by the defective Chinese drywall and Director Harold Roach of Code and Compliance for the city acknowledged to Hollymead Village residents that, “we may not be able to answer every question.” (See the entire WAVY.com Report)

Atlantic Homes President, Ken Allen, told WAVY.com that the company “has limited resources. This is an upsetting situation for the buyers and the company.”

In September some homeowners received a letter that reported, “We recently learned that the subcontractor we used for the installation of drywall in your homes, Porter Blaine, had used drywall from China.” Samuel Porter who owns Porter Blain and Venture Supply has acknowledged that they imported roughly 150,000 drywall boards from China.

City Assessor Chuck Young proposed a 50% tax reduction to homeowners who have confirmed Chinese drywall in their homes, but many homeowners say it isn’t enough because their homes, in effect, have no value.

Attorney Richard Serpe who has held several meetings in Newport News for homeowners also attended Tuesday night.  Some of them are being represented by Mr. Serpe in lawsuits against the Chinese manufacturer, builders, and developers.