With a hearing scheduled to decide how much money thousands of people are owed for Chinese drywall damage to their homes, the manufacturer has made payments required to participate, including $3.2 million to seven homeowners in Virginia.
The April 28 hearing will determine damages to as many as 4,000 homes built or repaired in Virginia, Florida, Alabama, Mississippi, Louisiana and Texas with drywall made by Taishan Gypsum Co. Ltd.
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"I never thought the Chinese would come to the table. This is a significant event," said Eric Bailey, one of those remaining plaintiffs. He sold his $240,000 house for $80,000 after learning fumes from chemicals in the drywall were causing his continual problems with electrical wiring and appliances.
"The first two years I lived there, I thought it was haunted because so many electrical things broke, from cable boxes to televisions to air-conditioning units," he said. In those two years, he said, he spent $10,000 just on flat-screen televisions.
He said he's happy for the "Virginia Seven," who include two of his former neighbors, but was recently told that it could be several years before the case winds up for him and the other thousands.
Attorneys for Taishan did not immediately respond to an emailed request for comment.
U.S. District Judge Eldon Fallon had held Taishan and related companies in contempt in July and ordered them to stop all U.S. business for failing to show up for the "bellwether" trial in 2010 and subsequent hearings. At the trial's end, he ordered Taishan to pay $2.7 million in damages and interest, which added up to $500,000 by the time the company paid last week.
Fallon said Taishan could not participate in the later damages hearings unless it cleared itself of contempt. To do that, it would have to pay the judgment, a $40,000 fine for contempt, $15,000 in associated attorneys' fees and — if it violated the order against further U.S. business — pay a fine of 25 percent of any profits.
Taishan has paid the three set amounts. But Fallon said in a March 18 order that he cannot yet tell whether to assess fines for continued U.S. business against Taishan or related companies — China National Building Materials Group Corp., China National Building Materials Co. Ltd., Beijing New Building Materials Public Limited Co. and Beijing New Building Material (Group) Co. Ltd.
Herman said he expects Fallon will soon release the $3.2 million for payments to the seven people, six of whom had damages calculated at $351,700 to $418,600. The seventh was for $89,700.
Taishan's payments are a good sign for remaining plaintiffs and "a triumph for the rule of law," he said.
Now, he said, "it appears it's just a matter of proving damages against Taishan." The total is likely to be well above $1 billion, he said.
Another manufacturer, German-owned Knauf Plasterboard Tianjin Co., and four of the companies it supplied agreed in 2010 to pay for home repairs. That settlement is expected to total $1.1 billion, attorneys have said.
Herman said he doesn't know how many houses will be part of the next decision. "At this juncture, some people have been foreclosed upon, some evicted, some have had short sales. But it's going to be between 2,500 and 4,000 homes. And the minimum amount would be in the range of $90 per square foot."
He said a suit against the Cabinet-level agency that oversees China's biggest state-owned companies, which was sued as Taishan's parent in late July, has not moved forward because the Chinese minister of justice has refused to accept service of the lawsuit. Plaintiffs are trying another route, he said.