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Maker of tainted drywall settles homebuilder's suit


ATLANTA—Knauf Plasterboard Tianjin Co. Ltd., the manufacturer of tainted Chinese drywall at the center of litigation in the U.S. Southeast, has reached a settlement with a builder on costs to replace the drywall.

Germany-based Knauf said Monday that it had reached a settlement in a lawsuit brought by Atlanta-based Beazer Homes USA Inc., for which terms were not disclosed. The drywall maker also is engaged in settlement talks with several other homebuilders, said Don Hayden, Miami-based principal for Baker & McKenzie L.L.P., which is representing Knauf in the litigation.

“The settlement with Beazer is part of KPT’s effort to get this issue behind them and move forward,” Mr. Hayden said in a statement. “It shows that a solution is possible when there is agreement on reasonable repair costs.”

Knauf said it imported drywall into the United States during a 10-month period in 2006, but only 20% of the total was from China. In the statement, Knauf said it has made reasonable settlement offers to affected homebuilders that “meet residents’ expectations to live comfortably in their houses.”

To date, Beazer said it identified fewer than 50 homes it had built nationwide that used the Chinese drywall, and all were in two communities in southwest Florida.

Kevin Buster, an Atlanta-based partner at King & Spalding L.L.P. who represents Beazer, said the homebuilder has “proactively developed and implemented a comprehensive repair protocol, has offered that protocol to each of its homeowners where Chinese drywall has been found and has been repairing the affected homes for some time now.”

More than 3,000 lawsuits affecting nearly 100,000 homes have been filed in U.S. courts on the issue. More than 500 million pounds of tainted drywall was imported into the United States between 2004 and 2007, with most of it traced to Chinese subsidiaries of Knauf.

According to the U.S. Consumer Product Safety Commission, Chinese drywall contains materials that release hydrogen sulfide gas, which corrodes copper and silver. CPSC research shows the gas may be released due to exposure to heat and humidity.