Several small Florida-based companies say they have filed a federal lawsuit in New Orleans against a German-based drywall maker, claiming the company defrauded building materials suppliers and lied to them about defective drywall it manufactured in China.
The Florida supply companies were eventually forced to pay nearly $55 million to settle the dispute, an amount that has devastated the firms, according to a news release.
Banner Supply Co. filed the cross-complaint in the U.S. District Court of the Eastern District of Louisiana, seeking more than $100 million against Knauf Gips of Germany and related entities.
“The Knauf Defendants, all arms of a sprawling German industrial giant, lied to Banner about defective drywall Knauf manufactured in China and shipped to the United States,” the lawsuit says. “Knauf then compounded its fraud by trying to evade responsibility, shifting blame entirely onto small Florida businesses, such as Banner, that relied on Knauf to tell the truth. Banner … did nothing more than distribute Knauf Drywall after receiving certifications and warranties from Knauf that it was fit for use.”
According to the lawsuit, although Knauf told Banner the smell was no more than the difference between Chinese natural gypsum plasterboard and synthetic plasterboard, the manufacturer actually knew the drywall was defective. Knauf also knew that the sulfur emitted from the drywall would corrode materials commonly used in construction.