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Florida firm agrees to settlement over toxic drywall

By Vivian Kuo, CNN
The CPSC says U.S. homeowners alleged that some drywall from China corroded metals and caused health problems.
The CPSC says U.S. homeowners alleged that some drywall from China corroded metals and caused health problems.
  • Homeowners could share in $55 million settlement
  • Banner Supply says Chinese manufacturer is at fault
  • People in 42 states claim severe health issues
  • Most claims come from Florida, then Louisiana

(CNN) -- A Florida company that was sued after thousands claimed they used toxic drywall imported from China agreed to a $55 million preliminary settlement Tuesday.

Only those plaintiffs whose homes had toxic Chinese drywall provided by Miami-based Banner Supply would be entitled to receive part of the $55 million settlement.

The U.S. Consumer Product Safety Commission received at least 3,870 reports from residents of 42 states, Puerto Rico and American Samoa who alleged the drywall contributed to severe health issues, including chronic sinus and upper respiratory problems, nosebleeds, migraines and other illnesses.

Many homeowners said the noxious material also corroded metals, appliances and fixtures throughout their homes. As many as 60,000 to 100,000 homes were built using the destructive drywall between 2004 and 2008, plaintiffs alleged.

Earlier this year, the Centers for Disease Control declined to study long-term effects of exposure to defective Chinese drywall.

That decision was made, according to the CDC, because the symptoms people are suffering from are self-reported and too general, plus exposure levels are not available -- meaning a scientific study would take many years, require enormous resources and is unlikely to yield useful results.

Banner, which bought more than 1.4 million sheets of Chinese drywall intended for U.S. distribution, is just one of several suppliers that were sued.

"This is a substantial development in Chinese drywall litigation as it enables Florida homeowners to get some relief from their ongoing Chinese drywall issues," plaintiffs' attorney Ervin Gonzalez said in a statement.

In court documents, Banner Supply said it "had no knowledge" the drywall was defective and that the Chinese-based manufacturer that provided Banner with the material is at fault.

"We have learned certain facts during the litigation that lead us to believe that certain manufacturers made misrepresentations regarding their Chinese-manufactured drywall," attorney Michael Peterson said. "Banner plans to pursue all available remedies and to seek recovery of the substantial damages Banner has suffered both to Banner's business and Banner's 58-year reputation in the construction industry from all parties who are responsible for such damages."

After devastating hurricanes forced a housing boom in several Gulf Coast states, hundreds of millions of square feet of Chinese drywall were exported to the U.S. The majority of claimants who allege adverse health problems live in Florida, with Louisiana second.

A U.S. district judge in New Orleans must now approve the agreement for it to move forward.