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Florida Condominium Developer Settles with Homeowners for $4.8 Million Over Chinese Drywall Claims

A Florida real estate developer on Monday agreed to pay $4.8 million to a class of condominium owners who claim that Chinese-manufactured drywall used in the construction of the homes caused property damage.

RCR Holdings II, LLC will set up a fund for 182 named plaintiffs and the other owners of condominium residences in the Villa Lago complex in Boynton Beach, Fla., as part of the proposed settlement. If approved by U.S. District Judge Eldon E. Fallon, the deal will settle all of the claims against RCR in a suit that is part of a sprawling multidistrict litigation that includes more than 10,000 Chinese drywall cases.

The plaintiffs still have outstanding claims in the suit against builder Coastal Construction of South Florida Inc., contractor Precision Drywall Inc., importer La Suprema Enterprise Inc. and supplier Banner Supply Co. Inc.

“It's our view that the amount of the settlement is commensurate with the exposure of RCR in this case,” plaintiffs’ attorney Gary E. Mason of Whitfield Bryson & Mason LLP said. “The money is fair and reasonable and will help to get the building remediated.”

After moving into the condominiums, the Villa Largo homeowners noticed noxious odors, corrosion of pipes and wiring and experienced television and computer failures, according to the suit.

Through investigation and testing, the plaintiffs discovered that the drywall used in their homes was manufactured in China and emits several sulfur compounds known to cause the problems the homeowners experienced, according to a 2009 U.S. Consumer Product Safety Commission report cited in the complaint.
“Not only did we think this is an appropriate amount given RCR's liability, there was also a risk that the insurance carrier may not have to put in any money at all,” Mason said. “We have the participation of RCR's insurance carrier, which is critical to getting this done.”

As part of the proposed settlement, the $4.8 million will be given to the plaintiffs as part of a distribution plan to be submitted at the completion of the case. An unspecified amount of attorneys' fees and expenses, not exceeding one-third of the total settlement amount, will also come from the fund.

The plaintiffs are represented by Gary E. Mason, Daniel K. Bryson and Donna F. Solen of Whitfield Bryson & Mason LLP, Adam C. Linkhorst of Linkhorst & Hockin PA, Joel Rhine of Rhine Law Firm, Chris Coffin of Pendley Baudin & Coffin LLP, and Stephen Mullins of Luckey & Mullins.
RCR is represented by Gregory S. Weiss of Leopold Law PA and Lysa M. Friedlieb of Luks Santaniello Petrillo & Jones.

The case is Hobbie, et al. v. RCR Holdings II, LLC, et al., No. 10-1113 in the larger MDL titled In re: Chinese-Manufactured Drywall Products Liability Litigation, case number 2:09-md-02047, in the U.S. District Court for the Eastern District of Louisiana.   More information on the settlement will be posted on the court's website at http://www.laed.uscourts.gov/Drywall/Settlements.htm.