By way of background, from 2004 through 2007, there was a shortage of available drywall materials which resulted from the housing boom, as well as extensive reconstruction in the South due to Hurricane Katrina.  During that time, due to the shortage, builders imported millions of pounds of drywall from China, much of which was not pure gypsum.  Drywall is generally made from gypsum, which is a mineral, but manufacturers will also make synthetic gypsum by processing residues produced by coal-burning power plants.  Normally, drywall does not have an odor.  However, owners of relatively new homes, mostly in South Florida and some in Virginia, have reported an odor of rotten eggs which is indicative of sulfur content.

Four separate class-action lawsuits have recently been filed in Florida.  As an indication of what may come, one of the suits filed on behalf of affected homeowners claims that the Defendants negligently manufactured and sold the defective drywall, and that the drywall was “unreasonably dangerous” in normal use because it causes corrosion, as well as physical ailments such as coughing, irritation of sinuses, eyes and throats.  According to the suit, the drywall was made with waste material from scrubbers on coal-fired power plants, which is also known as “fly ash”.  It is alleged that these materials can leak into the air, and emit one of several sulfur compounds, including sulfur dioxide and hydrogen sulfide.  When the sulfur compounds are contacted with  moisture in the air, they allegedly combine to create sulfuric acid.  The compound corrodes wiring, air conditioning coils, and other metals, and in some cases may result in health problems if there is chronic exposure.

Approximately 140 Complaints have been submitted to the Florida Department of Health, generally on the west coast of Florida near Fort Myers. The complaints have made their way to the federal level, where the Consumer Products Safety Commission has ramped up its investigation into this issue due to a petition from Sen. Bill Nelson (D-FL).  In addition, other suits have been filed in Louisiana, Mississippi, and California.

The law suits are not limited to homeowners.  Another Florida suit has been filed by Banner Supply, which insists that it “stands alongside its homeowners as a victim.”  According to its attorney, the Alabama-based homebuilder filed suit because it believes that the builders “will be the ones with the initial loss.”

The Defendants which have been named in the suits to date include, but are not limited to, Knauf Plasterboard Tianjin, a Chinese drywall manufacturer; The Knauf Group, German parent company of Knauf Plasterboard Tianjin; Banner Supply, a Miami building supplies company; and Rothchilt International Ltd., which is believed to be a China-based exporter.  Knauf is one of the leading building materials companies, with 150 production sites worldwide.

Many U.S. drywall manufacturers could also be affected because Knauf Plasterboard sold the material to U.S. companies through a "private label" program.  Under such an agreement, Knauf would have supplied drywall which would be re-labeled and distributed under the U.S. manufacturer's name. It appears that 5/8 inch drywall may not be effected as it requires a certification by Underwriters Laboratory.  Instead, ½ inch drywall has been implicated, which does not require certification.  No conclusive evidence has been provided to date.

Representatives of Knauf have countered the claims in the lawsuits by stating that, according to the Center for Toxicology and Environmental Health LLC, toxicology testing data regarding environmental air concentrations indicate that the measured concentrations of sulfur-containing compounds in homes is not a public health concern.  Similarly, the Florida Department of Health has said that preliminary tests show no immediate health threat, but further tests are being conducted.

While at this point the complaints, and more importantly the lawsuits, have been limited to the South, the potential scale and geographic breadth of lawsuits related to this issue is immense.  Indeed, one plaintiffs’ attorney has stated that as the case moves forward, he is certain that more builders will be identified.  As media coverage grows, so do the number of lawsuits.  The attorneys filing suit have stated that they believe shipping records indicate tens of thousands of residences in the United States may have drywall from the named manufacturers.  A large portion of the residences are in Florida but there have been reports in Alabama and Louisiana as well.  Another attorney indicated that he expects there to be up to 65,000 plaintiffs around the country, with approximately one half emanating from Florida.

A consumer advocacy group called “America’s Watchdog” has said that 250 million feet of the drywall came into the United States from China.  Based on toxicology testing, this group is claiming that potentially defective Chinese drywall has been found in 41 states.  According to America’s Watchdog, a majority of the drywall appears to have entered into ports located along the West Coast, but some of the drywall has also reportedly entered into ports in New York, New Jersey, and Florida.

This issue has the potential to implicate numerous construction companies throughout the Tri-State Area.  One plaintiffs’ firm located in Pennsylvania which is investigating this issue has indicated that homes in Arizona, Colorado, Georgia, Florida, Louisiana, Maryland, Nevada, New Jersey, New Mexico, North and South Carolina, Virginia, and Texas have already been reported as being affected.  These homes were built by Lennar Corp., Taylor Morrison, WCI Communities, Meritage Homes, Ryland Homes, Standard Pacific Homes, and Aubuchon Homes.

Warning signs to be aware of include: homeowners complaining of electronic devices inexplicably breaking down; any kind of corrosion or failure of copper or metal wiring and coils; a strong odor of rotting eggs; and unexplained complaints of respiratory problems, burning or itchy eyes, sore throats, or headaches.  The sulfur smell is usually present, along with black deposits in bare copper wires, black deposits on any HVAC copper, changes to finishes on mirrors, or pitting in

chrome objects.  In addition, if you or any of your subcontractors have had any dealings with Knauf, or any of its subsidiaries, you may be at risk.  The Chinese drywall was allegedly imported from 2004 through 2007, so any homes built after 2004 which incorporate drywall from China may be affected.
If you or your company provide construction services, and you would like to discuss the potential impact of this issue to your business, please do not hesitate to contact Golden, Rothschild, Spagnola, Lundell, Levitt & Boylan, P.C.  We have a number of attorneys with significant hands-on experience in complex construction litigation, and would be glad to further discuss these issues with you.  We will continue to keep you advised of any developments on this topic by way of future e-bulletins.

Philip A. Garubo, Jr. Esq. & Christopher H. Westrick, Esq. are shareholders at Golden, Rothschild, Spagnola, Lundell, Levitt & Boylan, P.C. in the Construction Litigation Practice.