Favorable Ruling in Chinese Drywall Case Announced

Filed in Home Building, Legal by on January 29, 2014 0 Comments

In a big win for builders and home owners, the 5th Circuit Court of Appeals upheld the decision of a lower court that a foreign company that made a product that caused harm in the United States can be held liable in American courts.

The case, Germano, et al v. Taishan Gypsum Company, Limited, involved a Chinese drywall manufacturer whose product was used in many Virginia homes and caused severe property damage. The home owners sued the Chinese company and NAHB filed an amicus brief in support of the home owners in the case.

As a general rule, a foreign manufacturer may be subject to the jurisdiction of a U.S. court only if that company “purposefully avails itself of the privilege of conducting activities within the forum state.”

NAHB argued that the court may exercise personal jurisdiction over Taishan because it purposefully sold its drywall products to customers in the United States with the expectation that these products would be delivered to Virginia, Florida, Louisiana, and other states.

This is significant to the industry because many building materials and products used in the construction of a home, including lumber, plywood, cement, copper, iron and steel, and gypsum are imported from foreign countries — a trend likely to continue as global commerce expands, and home builders and home owners alike in this country will suffer substantial harm if foreign manufacturers of defective building products cannot be held accountable in U.S. courts.

The Chinese drywall manufacturer is expected to appeal this case to the U.S. Supreme Court.

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