For the first time, homeowners are taking a building supply distributor to trial for damage blamed on Chinese drywall.
Jury selection started Monday before Miami-Dade Circuit Judge Joseph P. Farina in a case pitting a Miami couple against Banner Supply, which imported Chinese drywall for their home in 2006. Armin Seifart and Lisa Gore blame Banner Supply for drywall that allegedly released odorous sulfide gases and damaged their Coconut Grove home.
The couple received a fraction of the estimated 550 million pounds of Chinese drywall that was imported from 2004 to 2007 — enough to finish nearly 60,000 homes. Some cases ended up in federal court and others in state courts with defendants ranging from Chinese manufacturers to foreign and domestic distributors and home-builders.
All federal cases have been consolidated in multidistrict litigation before U.S. District Judge Eldon Fallon in New Orleans. He has presided over two trials that produced awards for families against Chinese drywall makers.
In Miami, Armin Seifart and Lisa Gore blame Banner Supply for not informing them about the problems with Chinese drywall, which they say released sulfide gases that ate away at metal wiring, damaged electronics and left a rotten smell that remains today.
Executives with Miami-based Banner Supply blame the German-Chinese company that supplied the drywall, Knauf Plasterboard Tianjin and accuse several corporations they trusted of failing to sell a safe product.
The attorney representing the couple, Ervin A. Gonzalez, asserts that Banner shares responsibility.
“The documents we’ve uncovered show Banner was involved early on with a smell problem. They replaced drywall for some developers, but they did not ring the bell. They didn’t test it. They didn’t make attempts to take it back. They had the opportunity to be a hero, but instead they chose to say nothing,” he said.
Gonzalez, a partner with Colson Hicks Eidson in Coral Gables, is handling several similar lawsuits in Miami and elsewhere. The New Orleans judge supervising the federal MDL case appointed him to the plaintiff steering committee, where he coordinates pretrial issues.
He said thousands of cases are appearing throughout the country, with more than half concentrated in Florida.
“The world has not seen a problem like this before. You’re being attacked by your own walls in your house. It’s destroying your investment and stealing your peace,” he said.
Fallon already has found Chinese drywall has a “significantly higher concentration of strontium and significantly more detectable levels of elemental sulfur” than domestically produced drywall.
Colson Hicks attorneys Gonzalez and Patrick Montoya accused several Miami companies of being liable for the defective Seifart-Gore home. Having reached confidential settlements with Miami-based Certain Homes and Mandy’s Drywall & Stucco that helped build the home, the attorneys set their sights on Banner, which supplied contractors with foreign-made drywall in 2006.
Banner’s in-house attorney, Michael P. Peterson, said the company didn’t know it was defective — and at the time didn’t have a choice but to seek drywall outside the U.S.
TIGHT SUPPLY CHAIN
Like many other construction suppliers, Banner was caught in a bind during the height of the housing boom in 2006. That year, as is done every six or seven years, most U.S. drywall manufacturers temporarily shut down operations to conduct mandatory maintenance. U.S. wallboard producers such as National Gypsum couldn’t keep up with demand, so distributors looked afar.
Banner contacted several import-export specialists, such as La Suprema Enterprise in Miami, which supplied Banner with drywall from Mexico and Brazil. But with the quickly rising demand from U.S. construction companies, those supplies dried up, too.
Banner turned to China’s Rothchilt International, which could deliver Chinese drywall from Knauf Tianjin. Peterson said the Chinese-made drywall immediately concerned Banner executives.
At the behest of executives worried about the product’s quality, Knauf provided testing data to show the drywall met regulatory standards.
When shipments arrived in Miami, they weren’t bundled and strapped onto pallets as is normally done. They came in 40-foot-long containers, forcing Banner employees to handle each board by hand.
“Our people were in contact with this board on a daily basis. None of the people on our yards ever complained of any smell or burning or itching of the eyes,” Peterson said.
But in late 2006, Banner received complaints from a Fort Lauderdale contractor, who said the drywall in five homes emitted a nasty smell. The company hired the North Little Rock, Arkansas-based Center for Toxicology and Environmental Health to conduct air quality tests and asked Knauf Tianjin to send researchers to check out the complaints.
Peterson said test results showed concentrations of sulfur were not at levels high enough to present a danger or health concerns.
Later that year, domestic drywall makers revved up production again, and Banner increased U.S. wallboard purchases.
In January 2007, Banner entered into a secret agreement with Knauf Tianjin, got rid of its inventory of Chinese drywall and kept silent about any odor or health problems. The agreement stipulated the Chinese manufacturer would take back all of Banner’s unsold drywall, pay Banner for holding it and replace it with 47,956 sheets of U.S.-made wallboard.
On Friday, Farina unsealed the confidential settlement.
But the company never alerted contractors who already had used Chinese drywall, and no one was made aware of the sulfurous smell coming from the five Fort Lauderdale homes.
“We didn’t really have too many concerns going forward because of our agreement with Knauf,” Peterson said.
Gonzalez said Banner should be held liable for “saving their own skin.”
“They returned the smelly defective drywall back to Knauf, tens of thousands of sheets of it, over 2 million square feet of it. But they didn’t bother to tell anybody else who they sold to from the same, smelly lot,” he said. “How could you only save your own skin when you have the opportunity to protect all your customers and your customers’ customers?”
Banner Supply remains the only defendant in the case brought by Seifart and Gore, who moved into their five-bedroom home in 2008. They are seeking damages on claims of a private nuisance and violations of the Florida Deceptive and Unfair Trade Practices Act.
The company is represented by Fort Lauderdale attorney Jeffrey A. Backman with Adorno & Yoss.
Peterson said company attorneys sought to sue Knauf Tianjin and pull the manufacturer into the case — an extensive process because of jurisdictional complications — but the couple’s attorneys successfully opposed that to speed up trial.
“It means we don’t have the key player sitting at the defense table with us in the trial — and the party that we believe is ultimately responsible for this,” Peterson said.
The couple has filed a separate lawsuit against a Knauf entity, Knauf Gips KG, in federal court.
Peterson said in the Miami case, unlike typical product liability cases in which the manufacturer takes up the defense for other companies in the supply chain, Knauf Tianjin won’t step up to the plate.
Two federal trials in New Orleans ended earlier this year with a $2.6 million award for seven Virginia homes and $164,000 for one Louisiana family.
The Miami trial moves away for the first time from manufacturing to determine whether a supplier can be held liable for its role in the drywall muddle.
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