"Nobody did anything wrong or could have foreseen what happened," he said.
But the company decided to settle the claims because it wanted to "stand behind its product," Mayesh added.
"Rather than stand on all of its defenses that this peculiar situation offered it, it decided to do the right thing," he said.
Attorneys' fees and costs paid by Knauf are capped at $160 million and will not be deducted from homeowners' shares of the settlement money.
Fallon, who presides over more than 10,000 claims involving Chinese drywall, refused in September to dismiss property owners' claims against a different Chinese drywall maker, Taishan Gypsum Co. Ltd.
Taishan, which argues that U.S. courts don't have jurisdiction over claims against it, appealed Fallon's ruling.