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FL Jury Finds Domestic Distributor of Chinese Drywall Negligent
On June 18, a Florida jury awarded $2.46 million to a Miami couple who claimed their house was ruined by gas emitted by imported Chinese drywall in the nation's first trial against a domestic distributor.
Jurors concluded that Miami-based Banner Supply knowingly sold defective wallboard that was installed in the Coconut Grove, FL, home of Chevron attorney Armin Seifart and Lisa Gore, who asked for $4.4 million in damages for repairs and the inconvenience of temporarily losing access to their $1.66 million home.
“It's a strong victory in favor of consumers,” said family attorney Ervin Gonzalez of Colson Hicks Eidson in Coral Gables, FL. “The American public won't tolerate companies that cheat.”
Why Chinese Drywall?
Jurors decided Banner was negligent, knowingly sold defective wallboard and violated Florida's deceptive and unfair trade law, and that its product will reduce the home's resale value. The couple's lawsuit is similar to those of thousands nationwide by homeowners with Chinese drywall installed in their homes. Homeowners complain noxious gases released by the wallboard leave homes smelling like rotten eggs and corrode metal pipes and electronics.
A Bellwether Case
The couple's case is considered a bellwether one because of the potential for recovery. Chinese companies generally are immune to U.S. court judgments, leaving U.S. companies as the only reliable financial source for plaintiff recovery. The case was strengthened by accusations of a cover-up. Banner had signed a secret deal in 2007 with Chinese drywall manufacturer Knauf Plasterboard Tianjin.
The Chinese company agreed to replace Banner's tainted supply with U.S.-made board as long as Banner kept quiet about problems. Miami-Dade Circuit Judge Joseph P. Farina unsealed the agreement shortly before the week-long trial. “It could have been avoided. It should have been avoided. And it would have been avoided if Banner had done the right thing. But they didn't,” Gonzalez said during closing arguments. “Profits over people; sales over safety,” he repeated several times. “It's good for the business to keep it quiet.”
Because of a domestic wallboard shortage, Banner switched from selling U.S.-made drywall to a Chinese brand using gypsum that was naturally high in sulfur. Banner vice president Jack Landers testified his company was “in no way in cahoots with Knauf to hide this from anybody.”
The Trial
During the trial, the company admitted responsibility and offered to pay for repairs to the couple's home, but rejected a request for additional damages. Banner was defended by Jeffrey A. Backman and Jan Douglas Atlas at Adorno & Yoss, Peter Spillis of Weinberg Wheeler Hudgins Gunn & Dial, and the managing partner of the Atlanta-based firm's Miami office, Todd Ehrenreich.
Company attorneys contended Banner was unaware that drywall problems were widespread or serious, and it had even paid extra for drywall manufactured by China's arm of Germany's Knauf. “We paid the premium because we wanted to be assured we were getting the same board,” Ehrenreich told jurors. Ehrenreich said an appeal would be considered.
During the trial, Banner acknowledged bearing some responsibility, but fought against paying the Seifarts more than their direct expenses. Company attorneys said the drywall problem in 2006 was limited to a handful of homes in Florida out of some 2,700 built, and that it took time for the extent of the damage to become clear. “That defect was hidden, latent and undetectable,” said Ehrenreich in closing arguments. “It doesn't rear its ugly head until sometimes years later.”
The jury found that Banner was 55% liable for the Seifarts' problems and that Knauf and two related entities bore the rest of the responsibility. That could reduce the Seifarts' ultimate payout because Knauf was not a defendant in their case, but Gonzalez said he will push to have Banner pay the full $2.4 million.
The Miami couple has filed a separate lawsuit against Knauf in federal court. Federal cases have been consolidated before a New Orleans judge, who heard two trials with Chinese defendants and awarded damages to Virginia and Louisiana homeowners.
Jose Pagliery is a reporter for the Daily Business Review, an ALM sister publication of this newsletter.
On June 18, a Florida jury awarded $2.46 million to a Miami couple who claimed their house was ruined by gas emitted by imported Chinese drywall in the nation's first trial against a domestic distributor.
Jurors concluded that Miami-based Banner Supply knowingly sold defective wallboard that was installed in the Coconut Grove, FL, home of
“It's a strong victory in favor of consumers,” said family attorney Ervin Gonzalez of Colson Hicks Eidson in Coral Gables, FL. “The American public won't tolerate companies that cheat.”
Why Chinese Drywall?
Jurors decided Banner was negligent, knowingly sold defective wallboard and violated Florida's deceptive and unfair trade law, and that its product will reduce the home's resale value. The couple's lawsuit is similar to those of thousands nationwide by homeowners with Chinese drywall installed in their homes. Homeowners complain noxious gases released by the wallboard leave homes smelling like rotten eggs and corrode metal pipes and electronics.
A Bellwether Case
The couple's case is considered a bellwether one because of the potential for recovery. Chinese companies generally are immune to U.S. court judgments, leaving U.S. companies as the only reliable financial source for plaintiff recovery. The case was strengthened by accusations of a cover-up. Banner had signed a secret deal in 2007 with Chinese drywall manufacturer Knauf Plasterboard Tianjin.
The Chinese company agreed to replace Banner's tainted supply with U.S.-made board as long as Banner kept quiet about problems. Miami-Dade Circuit Judge Joseph P. Farina unsealed the agreement shortly before the week-long trial. “It could have been avoided. It should have been avoided. And it would have been avoided if Banner had done the right thing. But they didn't,” Gonzalez said during closing arguments. “Profits over people; sales over safety,” he repeated several times. “It's good for the business to keep it quiet.”
Because of a domestic wallboard shortage, Banner switched from selling U.S.-made drywall to a Chinese brand using gypsum that was naturally high in sulfur. Banner vice president Jack Landers testified his company was “in no way in cahoots with Knauf to hide this from anybody.”
The Trial
During the trial, the company admitted responsibility and offered to pay for repairs to the couple's home, but rejected a request for additional damages. Banner was defended by Jeffrey A. Backman and Jan Douglas Atlas at
Company attorneys contended Banner was unaware that drywall problems were widespread or serious, and it had even paid extra for drywall manufactured by China's arm of Germany's Knauf. “We paid the premium because we wanted to be assured we were getting the same board,” Ehrenreich told jurors. Ehrenreich said an appeal would be considered.
During the trial, Banner acknowledged bearing some responsibility, but fought against paying the Seifarts more than their direct expenses. Company attorneys said the drywall problem in 2006 was limited to a handful of homes in Florida out of some 2,700 built, and that it took time for the extent of the damage to become clear. “That defect was hidden, latent and undetectable,” said Ehrenreich in closing arguments. “It doesn't rear its ugly head until sometimes years later.”
The jury found that Banner was 55% liable for the Seifarts' problems and that Knauf and two related entities bore the rest of the responsibility. That could reduce the Seifarts' ultimate payout because Knauf was not a defendant in their case, but Gonzalez said he will push to have Banner pay the full $2.4 million.
The Miami couple has filed a separate lawsuit against Knauf in federal court. Federal cases have been consolidated before a New Orleans judge, who heard two trials with Chinese defendants and awarded damages to
Jose Pagliery is a reporter for the Daily Business Review, an ALM sister publication of this newsletter.
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