October 14, 2010 / 5:39 PM / 7 years ago

Maker of Chinese drywall and others to pay to fix homes

WILMINGTON, Delaware (Reuters) - A maker of Chinese drywall, builders and State Farm Insurance will pay for hundreds of U.S. homes that were tainted with foul-smelling drywall to be renovated, an attorney for homeowners said on Thursday.

The parties agreed to remove problem drywall and rebuild up to 300 homes in Alabama, Mississippi, Louisiana and Florida.

The tainted drywall, which was imported to rebuild after several catastrophic hurricanes hit the southern United States five years ago, has added to increased concerns about the quality of goods imported from China.

The pilot program “will serve as a guide. It’s embryonic and it looks toward a birth of an eventual global resolution,” said Russ Herman of the Herman Herman Katz & Cotlar law firm.

Herman is leading the lawsuits stemming from the thousands of homes that have been rendered uninhabitable by the drywall, which has been blamed for corroding metal, foul smells and health problems.

If the agreement proves successful, it could be expanded to up to 3,000 homes with drywall made by Knauf Plasterboard (Tianjin).

Participating homeowners will provide a release to State Farm Insurance, which along with other insurers and building suppliers helped fund the pilot.

Herman said the program would be tweaked and altered along the way. It will cover removing of drywall and restoring the homes as well as compensating homeowners for moving, storage and alternate living costs.

The program, and any potential to expand it, only covers homes with drywall made by a Knauf factory in Tianjin. It excludes more than 5,000 homes tainted with drywall from other Chinese manufacturers.

Those manufacturers argue they do not belong in U.S. courts, and have not participated in the litigation that was consolidated with federal Judge Eldon Fallon in New Orleans.

The consolidated litigation is In re Chinese-Manufactured Drywall Products Liability Litigation, U.S. District Court, Eastern District of Louisiana No. MDL-2047.

Reporting by Thomas Hals, editing by Dave Zimmerman

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