Caldwell: Drywall settlement doesn't cover La. claims

Jessica M. Karmasek Dec. 16, 2011, 10:44am


BATON ROUGE, La. (Legal Newsline) - Louisiana Attorney General James "Buddy" Caldwell said a Chinese drywall settlement announced Thursday does not cover separate claims made by the State.

Caldwell said he intends to "actively pursue" and hold German company Knauf accountable for its bad faith efforts.

"Hurricane Katrina was a natural disaster, but the bad faith actions of Knauf were entirely man-made and victimized citizens yet another time," the attorney general said in a statement. "We intend to fully pursue claims on behalf of Louisiana's taxpayers for the losses in tax revenue and property value."

The tainted Chinese drywall, used in the construction of homes following a series of hurricanes in 2005, has been connected to the corrosion of house wiring, pipes and air conditioning units, in addition to some health problems.

On Thursday, Judge Eldon Fallon of the U.S. District Court for the Eastern District of Louisiana announced a settlement agreement was reached between a group of Gulf Coast property owners and Knauf Plasterboard Tianjin Co.

Fallon currently presides over the thousands of claims involving the drywall.

The settlement creates two funds: one uncapped to pay for repairing thousands of homes in the region, and another capped at $30 million to pay for other losses, like health problems.

Caldwell agreed that Thursday's settlement would benefit homeowners from Louisiana and other states.

"We've been a force, but the case is ongoing," he said.

In January 2010, the attorney general filed a suit on behalf of the State against Knauf and other defendants who manufactured, distributed, sold and installed the drywall in Louisiana during the rebuilding efforts following Hurricanes Katrina and Rita.

Caldwell's suit alleges that Louisiana has and will continue to suffer economic loss as a result of the toxic drywall.

More than 1.1 million sheets of the drywall were imported through the Port of New Orleans by the defendants and used in the construction, repair or rebuilding of homes and buildings after Katrina and Rita.

Since 2005, new construction also utilized the drywall.

Research has shown that the defective drywall emits sulfur and sulfur compounds, which are especially high during hot and humid weather -- a constant in Louisiana.

The sulfur compounds then corrode the copper and silver used in home air conditioning vents, copper outlets, and wiring and silver contacts in electronic equipment.

"Our investigation has shown that the bulk of Chinese drywall entering Louisiana was manufactured by the Knauf entities, whose parent companies are based in Germany," Caldwell said Thursday.

"The State's lawsuit seeks penalties and recovery for damages, losses and injuries. As part of the discovery process, our attorneys have participated in depositions in New Orleans, New York, Frankfurt, London and Hong Kong."

The attorney general said he also is monitoring a pilot remediation program expected to remediate about 300 homes in Louisiana, Alabama, Mississippi and Florida at no cost to homeowners.

In Louisiana, about 109 homes located primarily in the parishes of St. Tammany, Ascension, East Baton Rouge and Orleans are included in the pilot program. Many of the homes in the state have already been completed, he said.

Caldwell said preliminary settlements with drywall suppliers Interior/Exterior Building Supply Ltd. and Banner Supply Co. -- two of the main distributors of the drywall -- have been approved with hearings set for early February.

He said the discovery process is "progressing" against the entities controlled by the Chinese government, with additional depositions scheduled for next month in Hong Kong.

From Legal Newsline: Reach Jessica Karmasek by email at

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