A federal judge has delivered another legal blow to a Chinese drywall company that has defied any attempt by the U.S. justice system to make it accountable for harm believed done to homes and health by its product.
The question is whether finding Taishan Gypsum Co. in contempt for refusing to take part in court proceedings, and levying various penalties, will have any effect.
The lead plaintiffs' attorney in the multidistrict drywall litigation, presided over by Judge Eldon Fallon, says yes.
"The Chinese have to decide whether they are going to be part of this world or the Middle Ages, said Arnold Levin of the Philadelphia law firm Levin Fishbein Sedran & Berman.
Levin has said that all legal avenues would be pursued to collect any judgment against Taishan.
Florida is the state with the most drywall. Lee County was at the center of the problem, with nearly 2,000 homes and condos reported to the property appraiser's office as having the defective product. Many of them have never received remediation.
A local drywall activist isn't hopeful, based on Taishan's history of thumbing its nose at any legal liability.
"I do think it's clearly weak," said Richard Kampf, a Cape Coral homeowner who headed a grass-roots coalition of about 350 local drywall homeowners.
The Fallon ruling Friday penalized Taishan $55,000 and barred the company from doing business in the U.S. If Taishan violates the contempt order, the penalty will be 25 percent of its profits earned in the year of violation.
"This refusal to appear is a direct contemptuous act occurring in open court after actual notice of the proceedings," the judge wrote. "Such disobedience of the Court's order harms both the many other parties in this case and the decorum of the Court."
"I would have expected a fine of $55,000 fine per day," Kampf said. A 2010 court ruling that called for the company to pay $2.6 million to several Virginia homeowners was also upheld recently. If that hasn't been paid, why should Taishan pay now?, Kampf asked.
Taishan had at first refused to respond to lawsuits, then tried to get them dismissed by claiming U.S. courts had no jurisdiction and judgments could not be enforced in China. The company said those liable were further down the drywall supply chain. Taishan lost that argument in a January ruling by the 5th U.S. Circuit Court of Appeals.
The defective drywall was imported mainly between 2004 and 2008. Taishan is one of the companies that sold the product to the U.S.
The product has a foul smell and emits sulfur compounds that corrode air conditioning coils, electrical wiring, appliances, jewelry and other metal items in the home.
Levin said that estimates are about 12,000 homes were built with the drywall. Other estimates range up to 20,000. Many who live —and still live — with the drywall complain of health problems from nosebleeds to respiratory problems.
Lou Appelman, of Cape Coral, had Taishan drywall in his home and fixed it at his own expense. He called the judge's contempt ruling and penalties "a small slap."
But he has some faith. "Judge Fallon, he's the people's judge, you have to just let him do his thing," Appelman said. "It doesn't make sense when you read about it but there has to be something going on behind the scenes. We've been dealing with this thing for so long, it's like what do you say anymore?"
"Rich and I started (in) 2008," Appelman said about the push to get the problem recognized. Kampf had Knauf Tianjin drywall, and the remediation of his home was reimbursed by the manufacturer. Knauf is the only Chinese company to step up to do any remediation, reaching a 2010 settlement that could provide up to $1 billion to fix homes. The settlement was finalized in February 2013.
Frank and Gayle Cardiello also had Taishan drywall and paid $125,000 to fix it. This latest ruling is the first step Fallon's been able to make, Frank said.
"Next is to see what impact this has and what move Taishan has, if any," Cardiello said. "I'm afraid it's going to be a long battle."