Two major Charlotte-area companies — home improvement retailer Lowe’s and drywall supplier National Gypsum — have been caught up in the Chinese drywall controversy.
The drywall has been blamed for a host of problems cited by homeowners, from breathing difficulties and corroded wiring to damaged air conditioners and an odor of rotten eggs.
Both companies continue to say they are not at fault, although Lowe’s is proposing an improved settlement offer after initially offering drywall customers gift cards.
Customers who claim they bought defective drywall from Lowe’s will find out this month if a judge will accept a $100,000 settlement agreement offered by the Mooresville-based company.
Some homeowners claim to have purchased the defective drywall from Lowe’s. Many of the homes containing Chinese drywall were built after Hurricane Katrina struck the Gulf Coast in 2005.
Some homeowners have also claimed defective wallboard came from Mount Holly based-National Gypsum, the second-largest manufacturer of gypsum drywall in the United States.
Lowe’s spokeswoman Karen Cobb declined to comment on the pending settlement agreement but said Lowe’s has not sold Chinese drywall.
Nancy Spurlock, a spokeswoman for National Gypsum, said the drywall the company produces is manufactured exclusively in the United States.
She said the U.S. Consumer Product Safety Commission has tested National Gypsum’s drywall and has not found any problems.
“It was extremely intensive testing and there is no problem with our wallboard,” Spurlock said. “We’ve never had a problem that is similar to the defective Chinese drywall. We’ve been in business for 85 years with no problem.”
Spurlock said elemental sulfur is the “marker” for defective drywall. She said National Gypsum’s drywall does not have elemental sulfur, but the drywall made from gypsum taken from one quarry in China does.
National Gypsum created a website, www.ngc-info.com, to address customer concerns about its drywall. In a Jan. 14 press release, the company said “there is no valid scientific evidence linking its wallboard to the problems associated with defective Chinese drywall.”
Lowe’s initially offered a maximum of $2,500 in cash and a $2,000 Lowe’s gift card if customers could prove they purchased drywall from Lowe’s. An independent inspector had to verify a homeowner had more than $2,000 in damage to their home or more than $2,000 in medical bills caused by the defective drywall.
Lowe’s customers can now receive $100,000 in cash if they can show through an independent contractor that they have at least $4,500 in property damage or medical bills related to the defective drywall.
“We have been working on Lowe’s, and we’ve gotten them to step up and they have stepped up greatly,” said Don Barrett, the Lexington, Miss.-based lead counsel for plaintiffs in the class action lawsuit against Lowe’s.
Barrett said Lowe’s did not initially believe that there were any legitimate claims and the company didn’t want to attract fraudulent claims. Barrett said attorneys were able to change the company’s thinking.
He said Lowe’s still does not believe there will be any claims. But Lowe’s will pay a claim if someone is able to show damage caused by drywall purchased at Lowe’s, he said.
“We don’t think there are going to be very many people who have real drywall problems if the drywall came from Lowe’s, but they still get to sue,” he said.
One part of the settlement offer remains unchanged from the original. Customers can receive a $50 gift card to Lowe’s if they claim to have bought drywall from the store but have no proof, or a $250 gift card if they purchased the drywall from Lowe’s but have no documentation of damage caused by drywall.
“I have to give credit to Lowe’s,” Barrett said. “They care about their customers apparently and they don’t want those customers to think they got anything bad. We’re very excited about the settlement offer. I cannot remember a better settlement for a case like this.”
Thousands of claims
There have been 14,000 claims made against Lowe’s already, Barrett said. The list of class action plaintiffs is managed by an independent company and is not available.
Barrett and Mark Baldwin, executive vice president of the Homebuilders Association of Charlotte, said they don’t know of any claims made in North Carolina.
While $100,000 seems like a hefty sum, homeowners who have suffered from defective drywall will have to remove cabinets, take down drywall, replace copper plumbing and all electrical wiring, remove door and wall trim and in some cases rip up the carpet, Baldwin said.
“You have to take it down to the studs,” he said. “It’s a huge project.”
Baldwin said $100,000 would probably be enough to repair the damage in a 2,000-square-foot home.
“You could almost rebuild a 2,000-square-foot house for that,” he said.
Barrett said the money would be enough to repair some houses but for other homes it might not. He said homeowners who settle with Lowe’s will also be able to sue the manufacturer of the product.
“Those people have a wonderful claim against the manufacturer, whoever it is,” he said. “The fact they get $100,000 thrown in by Lowe’s is gravy.”
Tara Ramsey can be reached at [email protected].