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Chinese drywall hits the fan in ruling against manufacturer

Fri Feb 28th, 2014 on     Insurance Claims,    

The Chinese drywall debacle should be well behind us, but homeowners in Florida and a couple of other states are still waiting for their day in court. Their wait should not last much longer, though, now that the Fifth U.S. Circuit Court of Appeals has ruled that the second manufacturer of the defective drywall cannot remove the litigation to China and must pay damages to a handful of plaintiffs.

Just for review: The company sold about 200,000 sheets of drywall to a supplier in Virginia. The supplier then shipped the product to Florida, Louisiana and other states where homeowners were rebuilding following the 2005 hurricane season or builders were caught up in the housing boom.

When Florida homeowners started to complain of a smell of rotten-eggs, lingering headaches and sore throats and failing electronic devices, the Consumer Product Safety Commission and the state Department of Health got involved. When CNN reported on the issue in 2009, the health department had received 140 complaints from homeowners, and officials feared there could be thousands more.

Class action lawsuits followed, and the courts consolidated those cases and assigned them to the federal district court in New Orleans. Lawsuits against another company settled fairly quickly, but this company has been less than cooperative.

So uncooperative, in fact, that it failed to show up in court. After the district court ruled against the company, its attorneys filed an appeal. It was that appeal that the Fifth Circuit rejected in late January.

The company made some interesting arguments, but the court was not convinced. We’ll get into more detail in our next post.

Source: Insurance Journal, “Federal Appeals Court: U.S. Has Jurisdiction in Chinese Drywall Suits,” Janet McConnaughey, Feb. 13, 2014

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