Judge awards locals $2.6M in Chinese drywall case

A federal judge in New Orleans on Thursday awarded $2.6 million in damages to seven Hampton Roads homeowners whose properties were built with Chinese-made drywall.

U.S. District Judge Eldon E. Fallon ruled that all drywall in the homes should be removed, along with all items that have suffered corrosion as a result of the drywall as well as anything damaged in the process of removal.

Attorneys had selected seven homes in Virginia - one in Virginia Beach, two in Newport News and four in Williamsburg - to serve as a cross section of homes affected by the drywall across the country.

The ruling came against drywall manufacturer Taishan Gypsum Co. Ltd., a company owned by the Chinese government. Taishan did not respond to the lawsuit, and as a result Fallon entered a default judgment against the company last fall.

The decision Thursday referred only to the seven Virginia homes. But the judge has said the outcome will "provide some guidance for similarly situated or affected properties."

When supplies of U.S.-made drywall became scarce in 2005 during a building boom, a Norfolk construction supplier imported more than 150,000 sheets of drywall manufactured by Taishan. That's enough wallboard to build more than 300 houses. The drywall has since been found in scores of homes across the region.

In the fall, the U.S. Consumer Product Safety Commission found that the wallboard emits higher levels of volatile sulfur gases than typical U.S.-made drywall and is likely causing metal corrosion in homes. Homeowners claim the product also causes respiratory illness.

The ruling Thursday came almost a week after the commission recommended that homeowners rip out the problem wallboard, electrical wiring and natural gas piping.

However, the judge's ruling goes further, stating that all drywall should be removed, along with appliances, carpet and hardwood flooring, cabinets and trim. Fallon stated in his ruling that it is neither cost- effective nor scientifically possible to remove just the tainted wallboard in a home where both domestic and Chinese drywall was used.

The damages Fallon awarded also take into account the expense of relocating while remediation work is being done, as well as other expenses caused by the drywall, such as bankruptcy or foreclosure.

The judge also awarded the homeowners damages for the loss of use of the properties.

"The judge went right down the line in adopting the scope of remediation and loss of property," said Richard Serpe, the Norfolk attorney for the seven home-

owners. "We think it was a sober and fair decision."

The ruling is good news for local homeowners whose homes were built with the drywall. However, it will mean little in terms of actual compensation if Taishan ignores the judgment.

Bill Morgan, one of the seven homeowners, said he was pleased with the ruling. The judge awarded him and his wife, Deborah, $481,613.

"I'm just very grateful that Judge Fallon took the time and was able to make sense out it," he said.

Morgan was forced to file for Chapter 13 bankruptcy and lost his Williamsburg home in foreclosure after he learned it was built with the tainted wallboard.

"This was a much needed dose of good news," Morgan said. "I don't know where it's going to go now or how long it's going to take. I just have to have faith that things are going to work out on our behalf."

Serpe plans to ask Fallon for a judgment against Taishan for more than 80 other clients in Hampton Roads whose properties were built with Chinese-made drywall. Serpe is also representing local homeowners in Norfolk Circuit Court cases against the construction supplier, Norfolk-based Venture Supply Inc., and against multiple builders and subcontractors.

"We thought this should start appropriately with the Chinese, because they got the ball rolling by manufacturing it," Serpe said. "But there's plenty of blame to go around. We're going to proceed against everyone simultaneously until these homeowners are made whole. "