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Supplier of defective Chinese drywall agrees to settlement

The supplier of defective Chinese drywall has settled a products liability suit for $55 million, but the preliminary settlement must still be approved by a federal judge in New Orleans, Louisiana. The products liability case stems from defective drywall sheets that were used in hundreds of Florida homes. The settlement accuses the supplier of the defective Chinese drywall of lying about the safety of the product.

The $55 million products liability settlement will be funded by Banner Supply Co. and hundreds of Florida homeowners will share the settlement amount to repair their homes. The defective drywall has been associated with toxins such as sulfur dioxide, formaldehyde and hydrogen sulfur that corrode electrical wiring, fixtures and air conditioning. The defective drywall also sickened homeowners. Drywall is used to build walls, and the drywall was imported from China to repair hurricane damaged houses in the middle 2000's.

Banner has denied any liability for the defective drywall and said in court documents it merely supplied materials made by Knauf Group. Knauf Group is a German company and is one of the world's largest suppliers of homebuilding materials. In 2006 homeowners began to complain to Banner about problems with the drywall. Knauf performed tests on the drywall, and Knauf assured Banner the drywall was safe. According to court documents, Banner later learned that Knauf's claims of safety were false.

The federal court in New Orleans is hearing thousands of cases involving defective drywall. Defective Chinese drywall was also used in rebuilding efforts in Louisiana after hurricanes Katrina and Rita. It is estimated over 1 million sheets of harmful drywall were used in Louisiana.

Source: Bloomberg, "Chinese drywall supplier to pay $54 million to settle homeowners' claims," Phil Milford and Allen Johnson Jr., 6/14/11

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