No end to Chinese drywall woes

Property owners have no choice but wait until lawsuits wend their way through court system

On a quiet corner in northeast Winter Park, near the corner of Goldenrod Road and N. Pine Avenue, Pinya's Philippine Cuisine sits empty. The restaurant, a family-owned affair housed in a tidy green-roofed building, closed in 2005. A couple of years ago, the owners planned to re-open it, but as they were working inside the building, they realized that something wasn't right.

There was a smell in the restaurant - "like rotten eggs," says Tim Henry, an electrical contractor whose father, Clifford Henry, is one of the restaurant's owners - and two of the building's three air-conditioning units weren't working properly. Henry called an air-conditioning specialist to take a look at the units.

"The contractor said it was probably because this was a restaurant - it was because of all the smoke and grease," Henry says. It was going to cost about $2,400 per unit to fix the air-conditioning system, but fortunately, before the family spent the money, Clifford Henry saw something on TV that made him think something else could be at the root of their problem.

"He saw something on TV about Chinese drywall and how it turns copper black," Tim Henry says. "The next day, I went back over there and pulled the covers off [the air-conditioning units] and sure enough, there it was."

All of the coils and wires inside the air conditioners were corroded and black; defective Chinese drywall, which was sold and installed in thousands of buildings across the nation, emits a sulfuric gas that can corrode metals and ruin electronics.

Henry says he'd never heard about this before, and he called the contractor who came to look at his air conditioners; the contractor had never heard of it either.

"So I was wondering what it did to the wires inside the wall," Tim Henry says, so he went back to the restaurant and found that behind the walls, the building's wires were also black and corroded. "It's even eaten the chrome of the lavatory faucets inside the restaurant and all. It's like a disease. Like a cancer. I've never seen anything like it before."

The news coverage of defective Chinese drywall has mostly focused on reports from Florida's coasts. Although it was installed in thousands of homes around the country, some areas of Florida were particularly hard hit - South Florida, for instance, and the Tampa Bay area (Lee County, in particular) - but despite a building boom in the middle of the last decade, when most of the defective Chinese drywall seems to have been in use, far fewer reports of drywall problems have come from Central Florida.

"It's probably that a lot of this has been due to hurricane rebuilding," says Marina Campbell, owner of Chinese Drywall Recovery USA, a small company in Louisiana trying to negotiate restructured mortgages ?for affected homeowners. "I don't think Central Florida has been affected by hurricanes as much as the coastal areas have been. So you might see less [Chinese drywall] there because of that."

But that doesn't mean the problem doesn't exist here at all.

Nine parties who own homes in Central Florida communities are plaintiffs in a massive multi-state Chinese-drywall lawsuit wending its way through the federal court system in Louisiana right now. Clifford and Crispina Henry, the owners of Pinyas Restaurant, are among them, as are Manuel and Judith Santos of St. Cloud; Thomas and Kelli Campbell of Christmas; Ramon and Nilda Rivas of Puerto Rico (a home they own in Kissimmee is the one involved in the suit); Ronald Manes and Mara and James D'Angelo of Winter Haven; and Aprile L. Douglas, Teresa Wilson and Mario and Ivanilda Martin of Lakeland. Aside from suing for damages or negotiating a deal with a cooperative contractor or drywall manufacturer, there is no official recourse for those whose homes have been affected.

Jessica Hammonds, press secretary for the Florida Department of Health, says that six cases of defective drywall were reported to the state as of Jan. 18 by residents of Orange County; eight were reported by residents of Brevard, nine by residents of Polk and one by a resident in Volusia County. So far, she says, the state has heard no complaints from Osceola County.

But a recent investigation by ProPublica, an independent nonprofit investigative news outlet, and the Sarasota Herald Tribune, indicates that the numbers of homes affected by tainted drywall may be seriously underreported. That's because the process for reporting suspected Chinese drywall in a home is a patchwork. (The two news organizations published a lengthy reported series on the drywall fiasco, which can be found at

The federal Consumer Product Safety Commission is leading the charge in a multi-agency investigation of the drywall problem, which now affects homes in 42 states, but homeowners can direct complaints to a number of places: county health departments, state departments of health, the CPSC itself, as well as to poison-control centers, self-proclaimed Chinese-drywall remediation specialists and lawyers who are taking out ads on TV encouraging people to call if they suspect they have problem drywall. (One of those firms taking out ads in Central Florida is Morgan & Morgan, a personal-injury firm representing multiple parties in the federal lawsuit.) The CPSC says that as of Jan. 24, it has received 3,794 complaints about defective drywall, and 2,144 of them are from Florida. The Florida Department of Health, meanwhile, says it has received 728 complaints from 33 counties in Florida.

ProPublica did its own research, compiling reports from various sources, including the federal lawsuit, various tax assessment offices and the CPSC, and came up with a much higher figure: It counted 6,900 reports of tainted drywall across the nation, with 5,139 of them coming from Florida. According to ProPublica's calculations, a total of 14 complaints originating from Orange County were reported to the CPSC (per ProPublica, the CPSC would only reveal city and state for each complaint and would not provide actual addresses, so only three of the 14 addresses are contained in the organization's database). It found two reports from Osceola, one from Seminole, seven from Lake and 33 from Polk County.

In mid 2010, former Gov. Charlie Crist signed a bill that would temporarily devalue homes confirmed to have toxic drywall so owners wouldn't have to pay the property taxes on affected properties. According to ProPublica's examination of property tax estimates, at least $650 million worth of homes and condos "can now be valued at nearly zero under the state's tax-relief program for drywall victims."


Two companies tested the drywall in the Henrys' restaurant; the first test was not positive for the compounds found in toxic Chinese drywall; the second test showed some of the sulfuric compounds but not in high concentrations. Tim Henry thinks that's because the brand of drywall installed in the restaurant was "remanufactured" - that is, it's a composite made of old drywall that's ground up and recycled, then turned into sheets of new drywall.

"So if you went into a building and had the Knauf [Chinese-manufactured] drywall in it, and you ground that up and recycled it and remanufactured it, then you have it in it, no matter what the label says," according to Henry. "So when it came back, it said there was a percentage of sulfur in the drywall. Sure, it's not going to be 100 percent, because it's mixed in with other particles. But ?it's in there."

So now the Henrys have put the reopening of their restaurant on hold indefinitely, and they're paying taxes on a vacant building. And it will have to remain vacant, Henry says, because the only way to remediate the problem properly would be to gut the building down to its concrete-block walls then rebuild - a project he thinks could easily cost a couple of hundred thousand dollars. He says he'd be wary of trying to do a quick-fix remediation in case it didn't completely eliminate the issue.

"When we found out, I said my god, there's no way we can open now," Henry says. "What if somebody gets sick? Then they find out we got Chinese drywall problems, and here comes a lawsuit."

The Centers for Disease Control and Prevention warns that short-term exposure to fumes released from defective Chinese drywall could result in a series of minor symptoms, such as eye irritation, coughing, nausea, headaches, shortness of breath and/or chest pain; long-term exposure, it says, could result in fatigue, loss of appetite, irritability, memory loss, insomnia and dizziness. But last week the agency announced that it would not conduct a long-term study of how exposure to Chinese drywall could impact human health because so far the levels of sulfur gases found in environmental samples have been low. The announcement infuriated homeowners who are concerned that no one really even knows the scope or extent of the problem. It also concerns consumer advocates who worry that people and banks and property flippers are passing on Chinese-drywall tainted homes to others because they don't consider it a serious enough problem.

"Banks are now foreclosing on the second cycle of homes," says Chinese Drywall Recovery's Campbell. "It's crazy. In a couple of years, I think we're really going to see this problem mushroom before it's done."

The defective products have not been recalled - the CPSC's line on a recall is that it "cannot order someone to conduct a recall without a trial," per a statement on its Drywall Information Center website, because its efforts must be driven by "scientific proof" that the drywall causes health or safety issues - and there is no rule requiring people to remediate drywall-affected properties before selling them. Instead, Campbell says, lenders may have purchasers sign disclosure forms indicating that they've been made aware that tainted drywall could exist in the property they've purchased. Some of these properties have been foreclosed upon due to drywall problems in the first place.

Campbell, who says she learned of Chinese drywall when several homes she and her husband own in Slidell, La., were found to contain it, is trying to get banks and legislators to work with her company to broker forbearance deals for mortgagees whose homes are affected by the tainted product. Since homes found to have it require complete gutting - Housing and Urban Development remediation guidelines call for replacement of all drywall, electrical wiring and components, gas piping and fire-safety equipment, not to mention appliances or metals corroded by the sulfuric gases the drywall emits - experts say it can cost $100,000 to properly remediate the average home. And Campbell and others say that quick fixes don't do the trick because the gases penetrate porous surfaces and corrode metallic ones; any gases that have settled in the home can continue to create problems. Because they can't afford to repair the homes and they can't live in them, some people go into foreclosure or walk away from affected homes. Since the homes are worth little due to the cost of remediation, banks then sell them cheap.

"The banks don't have any direct recourse because they are not the homeowner and they can't sue anybody," Campbell says. "They have to sit there and wait for the homeowner to recoup something, or it's a straight-out loss for them. So what they're doing is ignoring the problem and putting homes back on the market."

If a homebuyer is lucky, he or she may receive a disclosure letting them know that toxic drywall may be present and need remediation. If not, they may find out the hard way and start the cycle all over again. Some real estate investors are purchasing the properties in some states, fixing them up on the cheap, then renting or reselling them.

"There's a website of a guy who is specifically looking for homes with Chinese drywall to fix and resell," she says. "It's not good, and I don't understand why politicians aren't a bit more on the ball with this."

She says lenders ought to give homeowners involved in drywall-related lawsuits temporary forbearance on loans until those suits settle. The mortgages could be renegotiated, and then hopefully, when affected homeowners receive some compensation for their problems, they can go about repairing their homes and repaying their mortgages. Campbell says she's especially interested in working with Fannie Mae, since it's a provider of so many mortgages - and currently has properties up for sale that may contain Chinese drywall.

When asked what its policy is on reselling properties affected by tainted drywall, a representative for Fannie Mae says "all issues that are known to Fannie Mae are disclosed in accordance with applicable state and?local laws."

"Fannie Mae does not inspect REO [real estate owned] properties for problem drywall, and prospective buyers must sign a standard contract that includes a provision acknowledging that homes are sold `as is,'" says Janis Smith, a media and external relations representative for Fannie Mae. "That being said, the prospective buyer may have his/her own inspection done, and if problem drywall is found, they may cancel the contract without penalty."

But that's not good enough, Campbell says: "These homes should not be sold, period."

Campbell and her husband are meeting with politicians and banks to propose that a restructuring plan be put in place for mortgages on homes proven to contain the defective product. This is not an entirely altruistic effort - Chinese Drywall Recovery is a for-profit entity, and if banks and politicians choose to work with it as a consultant, the company would recoup a small fee from the banks as compensation. Ultimately, Campbell says, her plan would save the banks money because they would eventually be able to collect on the mortgage once a drywall case is resolved.

"These lawsuits are going to resolve eventually," she says. "But a lot of people can't wait. They can't live in the house, it's destroying all their stuff, the fumes get into the electronics and appliances. People are getting sick, even though the CDC says they aren't . so they walk away."

So far, Campbell says, Chinese Drywall Recovery has met with Sen. Bill Nelson (D-Florida) and politicians in Mississippi and asked them to put pressure on lenders to cooperate. (A representative from Nelson's office was not able to provide more information by press time.)

In the meantime, affected property owners, like the Henrys, must wait. According to Pete Albanis, an attorney for Morgan & Morgan who's working with plaintiffs in the federal suit, "There are constantly ongoing settlement discussions with the manufacturers and suppliers of the board," so it's tough to say how or when things will settle. One of the companies that sold defective board, Knauf, has actually moved forward on settling with some of the plaintiffs. So far, it has agreed to remediate 300 homes as part of a pilot program; if it goes well, Albanis says, there's hope the program could be expanded to cover all of the homes that contained Knauf board. As each individual home is remediated, he says, homeowners drop out of the case. For now, though, the case is still open and going through the discovery process. "We've exchanged tens of thousand, if not hundreds of thousands, of documents. We've taken depositions, and the next status hearing before the judge is Feb. 23."

For the time being, Albanis says, plaintiffs who suspect they may have toxic board may still be added to the suit.

"At some point in time, though, I would suspect that the door is going to close," he says. "At this time we don't know when, but I would definitely recommend that if someone thinks they have defective board that they contact a lawyer as soon as possible because they might be pushing up against statutes of limitation."

Which worries some people because new complaints about problem drywall seem to be cropping up all the time. Many people, says Allison Grant, another attorney representing plaintiffs in the federal lawsuit, live with the problems for a long time before they realize they could have Chinese drywall issues.

"I have Chinese drywall [in my home], so I can attest to this," she says. "You don't think about it: But first the AC goes, then the TV goes, and you think it's just dumb luck. People should be on notice now - if you find something funky is happening in your home, something should tell you it's not a coincidence."

And many people who find out they have Chinese drywall, she points out, discover it in the course of investigating other problems.

Like the Henrys, who invested thousands in a building they don't know when they will be able to occupy again. "When they put everything together inside, all the murals and everything," Tim Henry says of Pinya's decor, "it was beautiful. You'd think you were in the Philippines. Dad and I drive past it every day on the way to work. You just have to put your blinders on. We just have to let it sit and see what happens."

To read ProPublica and the Sarasota Tribune-Herald's detailed investigation of the Chinese drywall debacle, visit


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