Chinese government agency added to drywall defendants

Attorneys for homeowners seeking compensation from a Chinese drywall manufacturer may go so far as seize property of the company and its co-defendants, including a Chinese government agency.

If Taishan Gypsum Co. and its related defendants keep defying federal court rulings that say they must pay, "we will take the full judgments against them, follow them all over the United States and all over the world to collect for our people," Arnold Levin, lead attorney for the plaintiffs, said Friday. "They can run, but they can't hide."

Levin is including the newest defendant added to the case, China's state-owned Assets Supervision and Administration Commission. The commission oversees Taishan and about 116 other companies in China.

Levin filed a new class-action lawsuit July 30 for about 5,000-6,000 plaintiffs, including some from Southwest Florida, he said. By adding a Chinese commission to other defendants, the attorneys have gone to the top of the food chain in trying to force Taishan to be accountable for the defective drywall used to build plaintiffs' homes.

The defective drywall was imported mainly between 2004 and 2008. Taishan is one of the companies that sold the product to the U.S. The drywall has been reported in 44 states, the District of Columbia, American Samoa and Puerto Rico.

The product has a foul smell and emits sulfur compounds that corrode air conditioning coils, electrical wiring, appliances, jewelry and other metal items in the home.

Levin said estimates are about 12,000 homes were built with the drywall. Other estimates range up to 20,000. Many who live with the drywall complain of health problems from nosebleeds to respiratory problems.

Florida is the state with the most tainted drywall. Lee County was at the center of the problem, with nearly 2,000 homes and condos reported to the property appraiser's office as having the defective product. Many of them have never received remediation.

Lou Appelman, of Cape Coral, had Taishan drywall in his home and fixed it in 2010 at his own expense. "I'm really, at this point I'm all for anything that could be done," Appelman said. "I mentioned the last time they probably have a lot more going on behind the scenes that we know of, and I hope it comes true," he said. "I guess nobody's going to know until they really give in."

The history

Taishan had at first refused to respond at all to lawsuits. Default judgments were entered against Taishan and its subsidiary groups, called Taishan Entities. They include China National Building Materials Group Corp.; Beijing New Building Materials Co. Ltd; China National Building Material Co. Ltd; Beijing New Building Materials Group Co. Ltd..

Then Taishan tried to get the judgments dismissed by claiming U.S. courts had no jurisdiction and judgments could not be enforced in China. The company said those liable were further down the drywall supply chain.

Taishan lost the argument over jurisdiction in a series of appeals and court rulings in January and May, involving a total of seven judges.

U.S. District Judge Eldon Fallon, who presides over multidistrict drywall litigation in New Orleans, on July 17 found Taishan and its related entities in contempt for its continued defiance of U.S. courts. Fallon fined them $55,000 in penalties and attorney fees, and forbade them from doing business in the United States until they decide to comply with the courts.

Meanwhile, Taishan fired all its attorneys, Levin said.

The latest, class-action lawsuit has not been formally served to the Chinese commission, since it is being translated into Mandarin, said Levin, of the Philadelphia law firm Levin Fishbein Sedran & Berman. But all other parties have received copies.

If the plaintiffs prevail, the defendants could be liable for more than $1.5 billion, Levin said.

Richard Kampf, a Cape Coral homeowner who headed a grass-roots coalition of about 350 local drywall homeowners, lauded Fallon for trying his best to make homeowners solvent. The problem is there appears to be no sanctions the U.S. could apply to China that would make it pay, he said.

If property is seized and Taishan and its entities are not allowed to do business in the United States, that may hurt them economically, he said. "I don't know if it's good enough to put money in the pocket of the homeowners."

Kampf also questioned how it would work politically. China owns much U.S. debt, he said. So the U.S. owes the Chinese government "certainly a lot more money than it costs to fix all of these homes. That's the down side of it," he said.