Products Liability Law Daily Chinese drywall settlement agreement’s appeal waiver upheld
Monday, December 16, 2019

Chinese drywall settlement agreement’s appeal waiver upheld

By Georgia D. Koutouzos, J.D.

The appellants’ stance negated the entire purpose of the waiver and rendered its agreed-upon terms meaningless.

A federal appeals court ruled that it lacked jurisdiction to consider an appeal of the denial of benefits under a settlement agreement resolving certain claims for the remediation costs of replacing faulty Chinese drywall manufactured by the Chinese subsidiary of a German-based building products company. In a decision designated as not for publication, the appeals court found that the claimants clearly and unequivocally had waived their right to appeal in light of the settlement agreement’s explicit waiver and the two additional and express waivers incorporated therein (In re Chinese-Manufactured Drywall Products Liability Litigation (Asch v. Gebrueder Knauf Verwaltungsgesellschaft, KG), December 12, 2019, per curiam).

Following the resolution of a wave of similar claims through extensive discovery, several bellwether trials, and, ultimately, a class-wide settlement agreement in the ongoing products liability multidistrict litigation related to consumers’ damages arising from the installation of allegedly faulty Chinese-manufactured drywall used in the construction and refurbishing of homes in the early 2000s, the trial court overseeing the litigation approved two settlement agreements between claimants who had remediated the drywall problems themselves and the German-based building products manufacturer whose Chinese subsidiary had manufactured and sold the at-issue drywall in the United States. The first (Knauf Class Settlement Agreement) applied to all claims filed as of December 9, 2011, while the second (New Claims Settlement Agreement) applied to claims filed after December 9, 2011.

Certain claimants denied settlement benefits. The New Claims Settlement Agreement wholly incorporated the earlier Knauf Class Settlement Agreement and specified that claimants were entitled to Remediation Fund Benefits as set forth in a remediated properties protocol included in the Knauf Class Settlement Agreement. The protocol detailed a four-step process whereby the claims of individuals who self-remediated their properties were resolved. Ultimately, the trial court adopted a Special Master’s Report and recommendation that, under the terms of the New Claims Settlement Agreement, all settlement benefits should be denied to a group of plaintiffs. Those plaintiffs appealed the trial court’s decision and the German drywall defendants moved to dismiss the appeal for lack of jurisdiction.

Waiver provisions. According to the appeals court, the determinative question was whether the appellants had waived their right to appeal when they entered into the New Class Settlement Agreement and agreed to have their claims resolved as prescribed by the Already Remediated Properties Protocol and the Knauf Class Settlement Agreement.

The New Class Settlement Agreement contained three applicable waiver provisions. First, the agreement itself provided that "[a]ny disputes under this Agreement shall be presented for resolution to the MDL Court. The MDL Court’s determination shall be final with no appeal." In addition, the New Class Settlement Agreement incorporated the Already Remediated Properties Protocol, which similarly detailed that "[t]he Court’s resolution of the Remediation Claims shall be final without appeal." Finally, the New Class Settlement Agreement also incorporated the Knauf Class Settlement Agreement, which instructed that "decisions of the Special Master with respect to the Remediation fund may be appealed by Settlement Class Counsel by filing an objection with the Court. The Court’s decision on any objections will be final, with no further appeals permitted." The "Court" was defined as "The Honorable Eldon E. Fallon, who presides over In re Chinese Manufactured Drywall Products Liability Litigation, MDL No. 2047, in the Eastern District of Louisiana."

No appellate jurisdiction. In light of the New Class Settlement Agreement’s explicit waiver and the two additional and express waivers incorporated therein, the appellants clearly and unequivocally waived their right to appeal, the panel found, stating that the appellants’ position—i.e., that a disagreement with the district court’s interpretation and application of the settlement agreement invalidated the waivers—negated the entire purpose of the appeal waiver and rendered those agreed-upon terms meaningless. As such, the appellee’s motion to dismiss for lack of jurisdiction was granted and the appeal was dismissed.

The case is No. 18-31223.

Attorneys: James Victor Doyle (Doyle Law Firm, PC) for Rick Asch, Asset Portfolio Servicing Co., CDO Investments, LLC and MCF Enterprises, Inc. Kerry J. Miller (Fishman Haygood, LLP) for Gebrueder Knauf Verwaltungsgesellschaft, KG, Knauf International Gmbh, Knauf Insulation Gmbh and Knauf Do Brasil, Ltd.

Companies: Asset Portfolio Servicing Co.; CDO Investments, LLC; MCF Enterprises, Inc.; Gebrueder Knauf Verwaltungsgesellschaft, KG; Knauf International Gmbh; Knauf Insulation Gmbh; Knauf Do Brasil, Ltd.

MainStory: TopStory ClassActLitigationNews BuildingConstructionNews LouisianaNews MississippiNews TexasNews

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