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Source of funds leads to non-participation in federal products liability settlement

The source of funds for a federal products liability settlement based in the U.S. District Court for the Eastern District of Louisiana has led to non-participation by some plaintiffs' attorneys. The subject of the federal product liability lawsuit is defective Chinese drywall. At least one attorney involved in representing 170 homeowners from Florida says he will not participate in the proposed settlement because the source of the funds is from the drywall supplier's insurance companies rather than from the drywall supplier.

The Florida lawyer says the 170 homeowners he represents will not participate in the federal settlement because of the settlement's lack of details. The lawyer's concern surrounds the source of the settlement's funds which would come from the supplier's insurance companies rather than from the company that supplied the defective drywall. The lawyer says he would like to see financial information from the supplier company who argues they cannot pay. The attorney believes the supplier company's reliance on insurers to foot the bill seems unfair, and he believes representing his Florida clients in Florida state court is a more efficient avenue than the enormous multi-district litigation based in federal court in Louisiana. The federal court is handling over 10,000 claims.

The amount of the proposed federal settlement regarding defective Chinese drywall is $54.5 million. The settlement would dismiss as many as 3,000 claims by homeowners who brought the suit against Banner Supply Co. based in Miami and the supply company's insurers. The current settlement is not a finalized agreement. Instead, the settlement creates additional hearings and deadlines to reach a final legal conclusion.

Homeowners across the Gulf affected by Hurricane Katrina bought and installed Chinese drywall in their homes. The homeowners participating in the suit claim the Chinese drywall is defective and contains toxic chemicals that corrode electrical wiring and pipes. The breakdown of the drywall is also alleged to smell like rotten eggs and has made many homes uninhabitable.

Source: The Louisiana Record, "Lack of transparency is factor in opt out of Chinese drywall settlement, lawyer says," Alejandro de los Rios, 7/20/11

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