Papers: Drywall supplier agreed not to talk of risks

MIAMI - A South Florida construction supplier that bought faulty Chinese drywall made an agreement with the manufacturer not to make any statements regarding the plasterboard's possible smell or health risks, according to court documents released in a class-action lawsuit Friday.

The documents, unsealed Friday and provided to the Associated Press by lawyer Victor Diaz, include a settlement agreement between Banner Supply Co. Inc. and manufacturer Knauf Plasterboard Tianjin Co. Ltd.

In the agreement, signed in December 2006, Knauf agreed to provide Banner Supply with thousands of pieces of U.S.-produced plasterboard and to pay the company $7,300 per month to store the Chinese product.

Banner agreed to keep the terms of the agreement confidential and not make any statements "regarding any perceived or actual smell or health risks" relating to the Knauf boards to the media or any person or corporation.

Breaching the provision "could cause irreparable harm to Knauf Tianjin," the settlement states.

"My clients who bought their homes in 2008 would have loved to have known what Banner knew in 2006," said Diaz, who represents more than 150 Miami-Dade homeowners in the lawsuit.

"Clearly this agreement was meant to buy the silence of Banner," Diaz said. "It not only victimized consumers, it also victimized other consumers and installers who were not advised of this sweetheart deal."

Michael Peterson, an attorney for Banner Supply, said the company did not hide anything. When the agreement was made, Banner knew of only one complaint regarding five homes where there was a smell associated with the board, Peterson said. Scientific tests paid for by Knauf established that the board was not defective or a health risk, Peterson said.

"Banner empathizes and sympathizes with the people that own homes that have this drywall," he said. "But just as people that own homes and have the drywall are looking to Banner to recover their losses, Banner is looking to the manufacturers of the board to step up and to take responsibility for the product."

Chinese drywall has been linked to possible health problems along with corrosion of wiring, air-conditioning units, computers, doorknobs, and jewelry. Homes often have to be gutted to fix the problem.

Previously released court documents show several home builders, suppliers, distributors, and Knauf were aware of issues with the Chinese drywall dating to 2006.

About 3,000 homeowners - mostly in Florida, Virginia, Mississippi, Alabama, and Louisiana - have reported problems with the drywall, which was imported in large quantities during the housing boom of the late 1990s and early 2000s and again after a string of Gulf Coast hurricanes.