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Judge: Nearly 4K homeowners who sued China-owned drywall company may share any further damages

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NEW ORLEANS — A federal judge has ruled that nearly 4,000 homeowners who say Chinese drywall ruined their homes are eligible to share any further damages he may award in lawsuits against Taishan Gypsum Co. Ltd., a government-owned manufacturer that failed to show up in court.

Notices of U.S. District Judge Eldon Fallon's order were sent Friday to the homeowners in Louisiana, Mississippi, Florida, Virginia, Texas and Alabama, attorney Leonard Davis of New Orleans said Monday.

Arnold Levin of Philadelphia, another plaintiffs' attorney, said, "We're going to seek assessment of damages, which could be well in excess of a billion dollars. ... Then we're going to pursue collection, garnishment."

That hope is an illusion unless the government steps in to hold the Chinese accountable, said Colleen Stephens of Virginia Beach, Virginia, who runs a national group called The Victims of Chinese Drywall.

"The Chinese have fired their attorneys and gone home," she said. "They fired their attorneys and thumbed their noses at Judge Fallon."

She said most Virginia homeowners who had the bad drywall have gotten out of their homes, many of them taking a loss, going through foreclosure or even bankruptcy court. Stephens said she and her husband got $400,000 — less than the value of the land — for a house they'd built for $1.3 million to $1.5 million.

Chinese drywall was used in 12,000 to 20,000 homes and businesses, mainly in the South, after Hurricane Katrina and other destructive hurricanes in 2005 and before the housing bubble burst. Chemicals in the drywall stank and sometimes corroded pipes and wiring.

Another manufacturer, German-owned Knauf Plasterboard Tianjin Co., and four of the companies it supplied agreed in 2010 to pay for home repairs. That settlement is expected to total $1.1 billion, Davis said.

The judge last week certified all remaining plaintiffs in nine lawsuits as members of a class-action suit against Taishan.

He ordered Taishan and related defendants in 2010 to pay $2.7 million to owners of seven homes in Virginia. Individual awards ranged from $90,000 to $482,000, plus interest.

In July, he held Taishan and related companies in contempt of court for ignoring proceedings over harm done by the drywall.

"Since there's a default judgment the only thing left is to assess damages against the default defendants," Levin said.

Fallon's order said the plaintiffs' damages will be calculated by multiplying the total square footage of their property by the current cost per square foot of repairing and replacing defective drywall.

The judge's order does not cover the Cabinet agency that oversees China's biggest state-owned companies, which was sued as Taishan's parent in late July, after Fallon found Taishan in contempt.

The State-Owned Assets Supervision and Administration Commission supervises China's 117 biggest state-owned energy, manufacturing and other enterprises, including China National Petroleum Corp., China Mobile Ltd., Air China Ltd., Dongfeng Motors Co. and Shanghai Automotive Industries Corp.

"SASAC is still being served," Levin said.

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