Chinese Drywall MDL Judge Decides Damages In First Contested Trial

NEW ORLEANS - (Mealey's) A pair of homeowner plaintiffs in the first contested Chinese drywall trial in the federal multidistrict litigation court in Louisiana are entitled to $164,049.64 to restore their home and property to its pre-drywall condition, the judge overseeing the cases held April 27; while the amount is less than they had sought, it is significantly closer to their estimate than that of the drywall manufacturer (Tatum B. Hernandez, et al. v. Knauf Plasterboard [Tianjin] Co. Ltd., et al., No. 2:09cv06050, E.D. La.).

U.S. Judge Eldon E. Fallon of the Eastern District of Louisiana designated the suit of Tatum and Charlene Hernandez against Chinese drywall manufacturer Knauf Plasterboard (Tianjin) Co. Ltd. (KPT) as a bellwether cases and conducted a four-day bench trial in March on only the redhibition and fitness for ordinary use claims.

At the conclusion of the trial, Judge Fallon ordered the parties to submit proposed findings of fact and conclusions of law; the Hernandezes proposed a total cost of remediation of $247,699.37, including attorney fees, costs and living expenses, while KPT asserted that the appropriate measure of damages is for costs of repair in the amount of $58,564.93 and compensation for rental during repairs in the amount of $3,600 to $5,400.

In his findings of fact and conclusions of law, Judge Fallon noted that the parties had already stipulated to the necessity for removal and replacement of all drywall, whether Chinese or domestic, as well as all insulation, flexible duct work, switches, receptacles, molding and countertops.  In addition to these, Judge Fallon determined that the entire electrical system, all copper and silver plumbing components, the entire heating and cooling system (HVAC), affected appliances and consumer electronic goods must be removed and replaced.

The judge also said certain nonelectronic property damaged by the drywall - clothing, rugs, mattresses and other items that have absorbed odor or sustained corrosion - must also be replaced.  After remediation, the home must undergo comprehensive cleaning, and an independent environmental consultant must certify that the remediation is complete and successful, he ordered.

As to the appropriate cost of remediation, Judge Fallon reached a figure of $136,940.46 based on estimates provided by the Hernandezes' experts as modified by local contractors' estimates.  He added damages to personal property of $5,357.33, recurring alternative living expenses for four months of $9,507.24, non-recurring alternative living expenses of $9,562, pretrial repair costs of $2,682.29 and post-trial repair costs of $1,500.  Total damages awarded were $164,049.64 plus reasonable attorney fees (to be determined at a later date), court costs and interest.

"It is well-settled . . . that the measure of property damage is the cost of restoring the property to its former condition," Judge Fallon said.  "Generally, Louisiana courts consider the cost of restoration to be the proper measure of damage where the thing damaged can be adequately repaired.  . . .  Consistent with this precedent, the Court finds that the remediation protocol discussed above will adequately restore the property to its former condition.  Plaintiffs purchased a new home and are entitled to have it restored to a new condition (i.e., without any corrosion, tarnishing, residue, or other damage to wiring and other components)."

[Editor's Note:  Full coverage will be in the May issue of Mealey's Litigation Report: Construction Defects.  In the meantime, the findings of fact and conclusions of law are available at www.mealeysonline.com or by calling the Customer Support Department at 1-800-833-9844. Document #09-100507-013Z.  For all of your legal news needs, please visit www.lexisnexis.com/mealeys.]

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