Miami-based construction material supplier Banner Supply Co. agreed to pay roughly $54.5 million to Florida homeowners to settle Chinese drywall disputes. The plaintiffs, handled in District Court for the Eastern District of Louisiana in New Orleans, alleged Banner provided defective drywall manufactured in China to between 500 and 700 homeowners throughout the Sunshine State, according to a spokeswoman for the plaintiffs' attorney. Banner denied liability for any involvement in the purchase or distribution of the Chinese drywall and decided to settle the claims "in good faith," according to court documents. "We are settling this matter to bring a resolution for our customers and to allow the homeowners to fix their homes," said Michael Peterson, Banner's counsel from Peterson and Espino of Miami. "We regret that this could not have been achieved sooner, but Banner recognizes that prolonged litigation would not have accomplished this goal." Federal Judge Eldon Fallon still must approve the settlement. Banner's insurers Chartis, FCCI Insurance Company, Hanover American Insurance Co. and Maryland Casualty Co. will fund the settlement. As of Jan. 7, there were 3,770 incidents reported of defective drywall, according to the Consumer Product Safety Commission. Florida leads the ranks with 2,137 cases, followed Louisiana with 704 cases and Alabama with 215 cases. Chinese drywall was a primary resource used to build homes in the South during the housing boom and when rebuilding after several hurricanes. Defective drywall emits corrosive chemicals known to damage electrical wiring, metals pipes and households appliances. Chinese drywall may also cause health issues for people exposed to it for long periods of time. Banner purchased 1.4 million sheets of Chinese drywall manufactured primarily by German company Knauf Group. Banner received first complaints in 2006, which it brought up with the Chinese manufacturer, according to court documents. Knuaf Group sent a company representative to inspect and test the drywall. "These alleged 'independent' test results reported to Banner and others that there was no reason for concern about complaints regarding the odor because the odor was normal for drywall manufactured in China; and the drywall was completely safe and would cause no harm," the case summary said. Knauf later admitted these assertions were false, according to the document. Counsel for the plaintiffs believe the case is a substantial development in Chinese drywall litigation and definitely a win for Florida homeowners. A New Orleans lawyer representing one of the plaintiffs said he continues to engage in negotiations with other responsible parties and expects another settlement in about 60 days. "This is an ongoing process to secure complete relief for affected homeowners," attorney Russ Herman said in a statement. Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.