Today began what is scheduled to be a two week trial in the Chinese Drywall Multi-District Litigation, Case 2:09-md-02047 before Judge Eldon Fallon in the United States District Court for the Eastern District of Louisiana located in New Orleans. The trial involves the sole question of whether Interior/Exterior Building Supply, a supplier of Chinese drywall in Louisiana, is a “good faith” or a “bad faith” seller under Louisiana redhibition laws. Redhibition is Louisiana’s version of an implied warranty, meaning that you get what you paid for and if you don’t get what you paid for, you get your money back. If a seller knew or should have known that the product they sold you was defective at the time they sold it to you, then the seller is in “bad faith” and is also responsible for reimbursing you for not only the money you paid for the product, but also for any damages caused by that product. The trial against Interior/Exterior is limited to answer only that question.
Some people might be wondering why there is a trial going forward when there were just a bunch of settlement fairness hearings being heard a couple weeks ago in the same court for some of the same defendants. Well, although Interior/Exterior and two of its primary coverage insurers have settled, their excess coverage carriers have not. This trial is meant to help the remaining Interior/Exterior insurers determine the level of their exposure and, consequently, how much they should contribute to the overall settlement, if anything. If Interior/Exterior is found by the jury to be a “good faith” seller, then it would only be responsible for reimbursing the cost of the defective drywall. If Interior/Exterior is found by the jury to be a “bad faith” seller, it would arguably be responsible for reimbursing not only the price of the defective drywall, but also the costs of remediating the home. This directly affects the amount its insurers would have to pay and is the reason the trial is so important.
If you have any questions about Chinese drywall or any possible product liability or redhibition claims, please give us a call.