Construction Defect News: Judge Fallon Approves Global Settlement in Chinese Drywall MDL

Judge Fallon granted final approval of all pending settlements in the Chinese drywall multi-district litigation (MDL2047).

The order and judgment relates to the Payton, Wiltz, Gross, Rogers, Abreau, Block, Arndt, Cassidy, Vickers, Silva v. InEx, Silva v. Arch, Amato, Abel, Hernandez and Haya cases. Five settlement classes are certified and the settlements for those classes are approved with finality. Those classes and settlements are:
1. Interior Exterior Building Supply, LLP (InEx) and its insurers
•$8M in primary insurance coverage tendered
2. The Banner entities and their insurers
•$54,475,558 in settlement funds
3. L&W Supply Corporation and USG Corporation
•The order does not reveal the financial details of this settlement and only says it is a component of the plan for global resolution of the Knauf/KPT supply chain
4. The Knauf defendants
•Knauf agreed to an uncapped fund for remediation. They will fund all settlements and get a credit against any funds recovered from downstream entities or their insurers. This deal has an estimated value in excess of one billion dollars.
5. The Global Settlement (including more than 700 additional participating builders, suppliers and installers and their participating insurers)
•Provides for a total payment of $70,570,000 for class members regardless of the type or brand of Chinese drywall in their properties and regardless of whether they filed their claims in the MDL or another forum.
The defendants who participated in the global settlement will also be global class members to the extent that they remediated or repurchased affected properties.
The Taishan entities (Taishan Gypsum Co., Ltd. And Taian Taishan Plasterboard Co., Ltd among others) are not settling entities and continue to argue that the court has no personal jurisdiction over them. Additionally, the settlement does not include any properties located in Virginia.
The global settlement does not constitute a waiver of any coverage defense opposition taken by any participating defendant or its insurers. Insurers will not be estopped from raising any coverage issue or defense.
The approval of the settlements ends the Chinese drywall litigation with a few exceptions as follows.
1. Opt outs
2. Settlement fund allocation
3. Potential claims under Amato against defendants and insurers
Overall, there were 404 opt outs. 184 of those were rescinded, restoring them to the class. Two were filed late, four had no participating defendant, three opted out of cases other than the global settlement and one was on a case where the defendant withdrew from the global settlement and did not contribute.
While this won’t put an absolute end to the Chinese drywall matters, it does significantly reduce the scope of ongoing cases. Significantly, the order specifically addresses personal injury claims and says, “The Global Settlement provides for personal injuries in a manner that is fair, reasonable and adequate.”