Virginia Families in Chinese Drywall Case Forging Ahead

Seven Virginia families fighting for compensation over Chinese drywall that wrecked their homes have their eyes on Louisiana this week, where a federal appeals court will hear arguments over whether the manufacturer of the toxic wallboard is on the hook for millions.

On Wednesday, the New Orleans-based 5th U.S. Circuit Court of Appeals will hear oral arguments over whether Chinese drywall manufacturer Taishan Gypsum Co. Ltd. can be held accountable in American courts for its tainted products.

The seven Hampton Roads families are representing at least 300 Virginia homeowners in a class action lawsuit that was filed in 2009, but the case has implications far beyond the state’s borders. If they lose, thousands of others whose homes were destroyed by the drywall imported after Hurricane Katrina likely will receive no compensation. If they prevail, other victims are likely to take the manufacturer to court.

While there have been other cases – including multimillion-dollar settlements with Taishan subsidiaries, distributors and installers – the Virginia case is the first in the nation to take on Taishan in federal appeals court. The judges’ decision will be the benchmark when the court hears similar cases involving Louisiana and Florida residents in the coming months.

“It’s a light-switch outcome,” Richard Serpe, a Norfolk attorney representing the seven local plaintiffs, told The Virginian-Pilot. “If they win it,” he said of Taishan, “we have no jurisdiction in the United States.”

“I think this is do or die,” said Michelle Germano, an East Beach resident and the case’s namesake.

While one of those who originally sued, Germano was not among the seven Hampton Roads residents who were awarded $2.6 million. Those seven were cherry-picked from all the plaintiffs because attorneys thought they would make the most representative case for all of them.

Taishan didn’t respond to the Germano lawsuit when it was filed, nor did it get involved when a federal judge in Louisiana – where all the federal cases were consolidated – held hearings to determine how much homeowners should be paid for their losses. Only after the judge awarded the $2.6 million default judgment did Taishan file an appeal on the last day it was allowed to do so.

An attorney for the company did not return a telephone message seeking comment.

The federal appeals court’s ruling could be appealed to the U.S. Supreme Court.

Attorneys estimate the drywall, which came after Katrina and during the housing boom in 2006, damaged up to 12,000 homes and sickened thousands of homeowners in Virginia, Florida, Louisiana and other Southern states. It emitted noxious gases that corroded metals and caused major appliances, including refrigerators, televisions and air conditioning units, to fail. It also smelled like rotten eggs.

Many homeowners abandoned their homes, lost them to bankruptcy or foreclosure or sold them for deep discounts.

“If we don’t win this, not only are the homeowners in trouble, but the United States is in trouble,” Germano said, citing the growing presence of Chinese companies in the United States.