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From 2004 to 2006, during South Florida’s new home construction boom, homebuilders ran out of drywall.  As a result, homebuilders had to import drywall from Chinese suppliers, who have been accused of using inferior ingredients, such as contaminated gypsum. When exposed to Florida humidity and ocean salt air during the trip overseas, the Chinese drywall reacts negatively, releasing compounds that can make people extremely ill.

On June 18, 2010, a Florida couple who fled their dream home because of foul-smelling, ruinous Chinese drywall was awarded $2.4 million in damages, in the nation’s first jury trial over the defective wallboard that could have legal ramifications for thousands of similar cases, according to a recent Associated Press news report.

The six-person jury ruled that plaintiffs should receive more than just the costs of gutting and renovating their home: they were also awarded damages for loss of enjoyment of the $1.6 million house and for the drywall stigma that might reduce its resale value.

The defendant, drywall distributor Banner Supply Co., is named in thousands of other lawsuits. Attorneys in those cases, as well as many others pending nationwide against other companies, will look to the plaintiff’s damage award as a guide for what kinds of damages they seek.

Defective, sulfur-emitting Chinese drywall has been linked to possible health problems along with a noxious odor, corrosion of wiring, plumbing, computers, plumbing and jewelry. The majority of the problems have arisen in Florida, Virginia, Mississippi, Alabama and Louisiana in homes built during the housing boom and some damaged during the busy 2005 hurricane season.

The plaintiff’s accused Banner of concealing knowledge it had as early as 2006 that Chinese drywall was defective, including recommendations from manufacturer Knauf Plasterboard Tianjian that the wallboards should not be used. Many of those details emerged in this trial after a confidential agreement between Banner and Knauf was unsealed.

During the trial, Banner acknowledged bearing some responsibility but fought against paying the Seifarts more than their direct expenses. Company attorneys said the drywall problem in 2006 was limited to a handful of homes in Florida out of some 2,700 built and that it took time for the extent of the damage to become clear.

The Miami case follows a Louisiana federal judge’s decision in April to award $2.6 million in damages to seven families in Virginia for bad Chinese drywall. In that case, the Chinese entities who were sued never responded in U.S. court, leaving in limbo how the damages might be collected.

The Consumer Product Safety Commission has recommended removing any tainted drywall and affected wiring, fire alarm systems and gas pipes.

On November 23, 2009, the federal government said that it has found a “strong association” between problematic imported Chinese drywall and corrosion of pipes and wires, a conclusion that supports complaints by thousands of homeowners over the last year. In its second report on the potentially defective building materials, the U.S. Consumer Product Safety Commission said its investigation also has found a “possible” link between health problems reported by homeowners and higher-than-normal levels of hydrogen sulfide gas emitted from the wallboard coupled with formaldehyde, which is commonly found in new houses.

The commission, along with the Environmental Protection Agency and the Centers for Disease Control and Prevention, continues to study the potential health effects, and the long-term implications of the corrosion.

“We can say that we believe that there’s a number of different chemicals that when brought together can be related to some of these irritant health effects that we’ve been getting reports of,” said CPSC spokesman Scott Wolfson. “But we’re still working toward that exact nexus.”

The commission said it can now move forward with additional studies to identify effective remediation of the problem and potential assistance from the federal government. However, Warren Friedman of the U.S. Department of Housing and Urban Development said it’s too soon to discuss specifics of any financial assistance homeowners could get.

The CPSC has spent more than $3.5 million on the studies, and has received more than 2,000 homeowner complaints from 32 states, Washington, D.C., and Puerto Rico, in what is now the largest consumer product investigation in U.S. history. Most of the complaints have come from Florida, Louisiana, and Virginia. Wolfson said the CPSC has committed nearly 15 percent of its staff to the issue.

However, officials cautioned that not all Chinese drywall is necessarily problematic and that homes with American-made drywall also are being studied.

“Not all drywall is alike,” said Jack McCarthy, president of Environmental Health & Engineering Inc., the firm hired by the government to perform the air quality tests. “It depends on what it’s made of, not necessarily the country where it came from.”

Added Wolfson: “We are not limited in the scope of our investigation to just Chinese drywall.”

The commission released its first report on the drywall last month, noting further studies were needed before it could consider a recall, ban or other action.

Thousands of homeowners who bought new houses built with the imported Chinese building product are finding their lives in limbo as hundreds of lawsuits against builders, contractors, suppliers and manufacturers wind through the courts.

During the height of the U.S. housing boom, with building materials in short supply, American construction companies imported millions of pounds of Chinese-made drywall because it was abundant and cheap. An Associated Press analysis of shipping records found that more than 500 million pounds of Chinese gypsum board was imported between 2004 and 2008 enough to have built tens of thousands of homes.

They are heavily concentrated in the Southeast, especially Florida and areas of Louisiana and Mississippi hit hard by Hurricane Katrina.

The suspect building materials have previously been found by state and federal agencies to emit “volatile sulfur compounds” and produce a rotten-egg odor. Homeowners complain the fumes are corroding copper pipes, destroying TVs and air conditioners, blackening jewelry and silverware, and making them sick.

The federal government says China is assisting with the investigation.

During the week of October 5, 2009, United States Senator Bill Nelson, D-Florida, along with three other senators sent a letter to the Federal Emergency Management Agency (FEMA) asking the agency to review whether it has the power to provide aid to homeowners displaced by defective Chinese drywall.

The senators sent the letter to Administrator Craig Fugate, asking him to determine whether FEMA upon request from a state governor who has declared a disaster or emergency can offer rental or other emergency assistance to homeowners or businesses who have sustained uninsured losses because of the tainted drywall.

Some Chinese drywall, imported between 2000 and 2008, has been found to give off a sulfuric gas thought to corrode metal components in homes and blamed by a growing number of people on such health issues as trouble breathing, nosebleeds and headaches.

The Consumer Product Safety Commission (CPSC) has collected more than 1,500 complaints about the defective drywall in 27 states and the District of Columbia.

“Families in our states are watching their dream homes turn into nightmares,” the senators wrote. “We believe it is important to marshal all appropriate Federal resources that may assist these families.”

Nelson worked with Senators Mary Landrieu, D-Louisiana, Jim Webb, D-Virginia, and Mark Warner, D-Virginia, to write the letter, which asks that FEMA reply by Nov. 7, 2009.

In April, U.S. Rep. Robert Wexler, D-Boca Raton, sent a letter to Florida governor Charlie Crist, asking him to declare a state of emergency “to make Florida citizens whose homes are affected by Chinese drywall eligible for immediate relief through the Federal Emergency Management Agency.”

At the time, Sterling Ivey, a spokesman for Crist, said he was not sure if it was even possible to declare a state of emergency for something of this nature.