Last week was a busy week for those following the Chinese drywall news. Friday afternoon, Knauf Plasterboard settled two cases in New Orleans, agreeing to comprehensive repairs of two Louisiana homes, including ripping out all the drywall, the entire electrical system, and other components. Knauf states that settling in this instance is just for testing purposes to show other components in the home were not damaged, so the evidence can be used in future cases. The settlement is good news for the homeowners who are seeking immediate recourse.
Back in Washington, members of Congress last week heard a retired police officer, William Morgan, testify about losing his home to foreclosure after being forced to move out because defective Chinese-made drywall contaminated his home, essentially rendering the home unsafe and worthless.
Morgan testified before the House Energy and Commerce’s Subcommittee on Commerce, Trade and Consumer Protection about the difficulty holding the foreign manufacturer of the drywall, Taishan Gypsum, accountable in the U. S. court system, and why we need the Foreign Manufacturers Legal Accountability Act (S. 1606 / H.R. 4678).
Because Taishan Gypsum – the manufacturer of the drywall – is owned and operated in China, to hold them responsible for their defective product in the U.S. legal system required translating legal papers into Mandarin and then obtaining special process servers to fly to China to serve the papers. This added extra time and expense to the legal process. Even then, Taishan failed to respond and was later ruled in default. Only two weeks ago did Taishan acknowledge the legal proceedings against them and appeal the ruling.
According to a recent analysis by AAJ, 83 percent (312) of the 377 recalls announced by the Consumer Product Safety Commission (CPSC) in 2009 were from foreign manufacturers. The 2008 CPSC data is similar, when 84 percent (329) of recalls were from foreign manufacturers out of 392 total recalls for the year.
The Foreign Manufacturers Legal Accountability Act (S. 1606 / H.R. 4678) would require manufacturers to have an “agent” located in at least one state where the company does business that would accept service of process, and thereby for any civil or regulatory claims. Companies would then consent to state and federal jurisdiction, making it easier to hold foreign manufacturers accountable in our courts. Hopefully, Congress will act on this legislation in short order.
Some good news for the Morgan family, although a bit late – this week, Fannie Mae and Freddie Mac agreed to help homeowners affected by Chinese drywall by allowing delayed mortgage payments for homeowners that can prove they have the defective Chinese drywall.