Ruling: U.S. courts can handle Chinese drywall suits

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NEW ORLEANS (AP) — U.S. courts have jurisdiction over
claims that a Chinese drywall company’s defective product wrecked homes,
and a company that failed to show up in court must pay $2.7 million for
damage to seven Virginia couples, a federal appeals court in New
Orleans has ruled.
The 5th U.S. Circuit Court of Appeals upheld a
district judge’s ruling that Taishan Gypsum Co. Ltd must pay the
couples, who were chosen as representative of about 300 Virginia
families.
The case and appeal were heard in New Orleans, where all federal cases involving Chinese drywall have
been consolidated.
Attorneys for Taishan, one of two major manufacturers of sulfur-emitting drywall, could not immediately
be reached for comment.
"This
is a great ruling for the people we represent: homeowners in Louisiana,
Florida and Virginia," Arnold Levin, an attorney representing the
plaintiffs, said late Tuesday. "It means that we now have judgments for
several property owners and can now pursue that company … with regard
to the homeowners similarly situated in Louisiana and Florida."
The
other manufacturer, Knauf Plasterboard Tianjin Co., and some of the
companies it supplied agreed a year ago to settlements that attorneys
said would add up to more than $1 billion.
The defective drywall
was installed in an estimated 12,000 to 20,000 homes and businesses,
mostly in the South, between the devastating hurricanes of late 2005 and
the housing crash in 2008.
Taishan lost its chance for defense by
failing to deal with plaintiffs’ attorneys or the court until it was
ordered to pay, the 5th Circuit ruled Jan. 28.
The appeals court
also rejected an argument that Taishan Gypsum didn’t understand
implications of the lawsuit, which was translated into Chinese. "If TG
did not fully understand the significance … it should have sought
legal advice," Judge Jennifer Walker Elrod wrote for the three-judge
panel.
Taishan Gypsum sold 100,000 sheets of drywall to Venture
Supply Inc. of Virginia in November 2005 and another 100,000 the
following month, for a total of $724,800, according to the court. It
said Venture shipped and sold Taishan’s drywall to customers in New
York, Georgia and Florida, and possibly in Alabama.
The company
argued that its contracts with Venture called for arbitrating any
disputes in China, so "it was not reasonably foreseeable that it would
be hauled into court in Virginia," Elrod wrote.
The ruling upheld
U.S. District Judge Eldon Fallon’s decision that, under Virginia law,
Taishan could be sued in Virginia because the company made a
considerable amount of money there.
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