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Mold Litigation Targets and Claims: Part II

Written by Steve Setliff and Matt Mazefsky on Wednesday, 30 November 2005 6:00 pm
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Mold-related lawsuits target different types of defendants. Potential targets include: contractors, insurers, construction managers, property managers, architects, construction component suppliers, real estate agents, homeowners associations, schools, and building owners. These entities face two primary categories of damages.

The first is property repair damages. Plaintiffs pursue property damages by claiming that these entities were negligent in their design or maintenance of the property and that this negligence caused mold damage to the plaintiff's property. Property damage liability includes the repair and removal of mold damage, as well as the correction of any construction defects. Thus, if mold damage is limited to a small area, damages are minimal. In the case of widespread mold, however, remediation often requires extreme measures -- such as the removal of walls.

For example, in 1997, plaintiffs sued a construction manager for negligent design and construction of a county courthouse. Centex-Recovery Const. Co., Inc. v. Martin County, 706 So. 2d 20 (Fla. Dist. Ct. App. 4th Dist. 1997). In that case, window and exterior wall leaks led to an infestation of mold. The Florida court decided that the plaintiffs successfully proved that the construction defects caused moisture and mold problems in the building. As a result, the court awarded the plaintiffs $14 million in damages to correct the structural defects. The largest number of mold-related claims have been filed against homeowners' insurance companies. Many of these suits allege that the insurance carrier acted in bad faith when denying a homeowner coverage to repair mold-related damage. The bad faith claims open the door for the recovery of punitive damages and large jury verdicts.

This is precisely the scenario that led to a $32 million verdict in Allison v. Fire Insurance Exchange. In that case, the Ballards, a Texas couple, filed suit against their insurance company because the insurance company failed to repair leaks that allegedly caused mold growth, property damage, the husband's brain damage, and the son's asthma. The jury found that the insurance company engaged in fraud and unfair or deceptive acts, including a failure to assign a competent independent claims appraiser after the Ballards made a claim for buckled wood floors caused by internal leaks. The jury returned a verdict in favor of the Ballards for $32 million (including $6 million for damage to the home; $12 million in bad faith punitive damages; $5 million for mental anguish; and $9 million in legal fees). The Judgment was eventually reduced to $4 million.

In addition to property damage, property owners may also sue based on their alleged mold-related personal injuries. Thus far, mold-related personal injury claims have not been as successful as property damage claims. The failure of personal injury suits is due in large part to the lack of science supporting the plaintiffs' allegations that mold caused the plaintiffs' injuries.

Proving Causation: The Defendant's Best Weapon
Causation is the single greatest hurdle for a claimant that seeks damages for mold-related personal injuries. Plaintiffs seeking recovery for alleged mold-related injuries must establish two causation elements -- general and specific causation. General causation requires the demonstration that toxic mold can generally cause the type of injuries that the claimant alleges. Specific causation, on the other hand, requires proof that the toxic mold in question actually caused the injuries claimed by the plaintiff.

In toxic tort cases, expert or scientific testimony is necessary to prove both prongs of causation. Without such testimony, "there is insufficient evidence of causation to create a triable issue of fact for the jury." (Cavallo v. Star Enterprise, 892 F. Supp. 756 (E.D. Va. 1995)). In federal courts, or in a jurisdiction that follows the federal rules, the court is required to preliminarily examine scientific testimony and keep out unreliable or irrelevant expert opinions. The court fulfills its duties by employing a flexible standard promulgated in the Federal Rules of Evidence that asks the trial judge to consider whether the scientific theory used to make the experts opinion can be tested; whether the scientific theory can be subjected to peer review; whether there is a known rate of error in the scientific theory; and whether the theory has attracted widespread acceptance within the scientific community.

It is generally accepted in the scientific community that mold can cause minor health problems such as allergic reactions. More serious toxic mold health effects such as memory loss or respiratory diseases are not, however, as decided. In fact, the CDC study -- which represented one of the few studies that linked toxic mold exposure with more serious health effects -- was later reversed. Therefore, a defendant has a strong argument that expert testimony regarding toxic mold-related health effects is unreliable and should be inadmissible. Because of the lack of accord in the scientific community, plaintiffs have difficulty proving that toxic mold causes serious health problems

Further, specific causation requires the plaintiff to prove that his mold exposure caused his current injuries. To prove this prong of causation, the plaintiff must identify the type of mold that allegedly caused plaintiff's injuries. The plaintiff must also prove specific facts relating to exposure, proximity, and duration. Finally, the plaintiff must illustrate that the symptoms he experiences are related to his mold exposure. It is often difficult for a plaintiff to obtain this specific, but necessary, information. Accordingly, a plaintiff's inability to prove causation is a defendant's best weapon in a toxic mold case.

For example, in Roche v. Lincoln Property Company, tenants sued the owners of an apartment complex for damages resulting from alleged toxic mold contamination in their apartment. Plaintiffs stated that they discovered evidence of toxic mold in their Fairfax County apartment and notified the property management office. An inspection was ordered and mold was found. Specifically, plaintiffs claimed that their apartment was poorly maintained, that there were water leaks, holes in the wall, and mold growing within the apartment. The plaintiffs contended that as a result of being exposed to toxic levels of mold, they suffered respiratory and other medical problems. Accordingly, plaintiffs brought suit alleging breach of the implied warranty of habitability, negligence, and violations of Virginia's landlord-tenant laws.

Subsequent to leaving the apartment and after filing their lawsuit, plaintiffs sought treatment from Dr. Bernstein, an allergist. The plaintiffs' complaints included memory loss, chronic headaches, sinus problems, mild hypersensitivity to smells, and chronic nasal stuffiness. After examining the plaintiffs, Dr. Bernstein stated that he believed that the plaintiffs suffered from allergenic effects from the molds and from sick-building symptoms which Dr. Bernstein thought were probably secondary to the mycotoxic effects of Stachbotrys present in the home.

Prior to trial, Lincoln property sought to bar the testimony of Dr. Bernstein and obtain summary judgment on all of plaintiffs' personal injury claims. Subsequently, the District Court considered whether Dr. Bernstein's testimony regarding the proximate cause of the plaintiffs' personal injuries satisfied the standards of admissibility under the Federal rules. The Court ultimately decided that Dr. Bernstein's testimony did not satisfy the Federal standard for admissible expert testimony.

First, the Court found that Dr. Bernstein failed to adhere to the established methodology of differential diagnosis by not ruling in the suspected causes of plaintiffs' injuries and by not ruling out other possible causes of plaintiffs' injuries. Next, the court found that Dr. Bernstein failed to establish why various reports and studies that show some correlation between mold and allergic reactions supported his ultimate conclusion that mold in the apartment caused plaintiffs' injuries. Finally, the court decided that Dr. Bernstein relied solely on temporal relationships to arrive at his conclusions.

Despite the causation hurdles, not all mold-related personal injury claims fail. For example, a Delaware court recently awarded a plaintiff $1 million based on his mold-related personal injuries. New Haven Partnership v. Stroot, 772 A.2d 792 (2001); see also Stevens v. Pirates Lane Condominium Trust, Superior Court, Essex County, Mass., Nov. 25 2003 (awarding $285,000 to plaintiff for her flu-like symptoms allegedly caused by mold exposure). Plaintiffs' attorneys "mold is gold" philosophy combined with verdicts like that handed down by the Delaware court promise plaintiffs' continued attempts to recover for mold-related personal injuries.

Suggestions for Potential Targets
As the above cases illustrate, improper handling of a toxic mold suit can result in large plaintiff's verdicts or settlements. The cases further illustrate, that the risk of liability increases for potential mold defendants if they conceal mold contamination, oversee a haphazard mold remediation, or involve themselves in what the court may consider a misrepresentation of a mold problem. For this reason, it is important that potential toxic mold defendants implement protocols to deal with toxic mold claims.

The protocols should involve the potential mold litigant taking action up front by initiating an inspection, and employing a remediation strategy. This, in turn, reduces a plaintiff's ability to claim that a mold-defendant misrepresented himself or acted with the bad faith that may open the door to a large punitive damage award.

To help in a conservative remediation approach, the real estate professional should look to sources like the EPA and the residential mold remediation guidelines published by the New York Department of Health. (See Epa.gov  see also NYC.gov .)

As another illustration of a liability-limiting protocol, consider a property manager who knows of a mold infestation. Before selling the property, the property manager should put the mold problem in writing and provide it to the homeowner. He or she should also test the area and put the extent of the damage in writing. This way, the property manager limits a plaintiffs' potential claim that the property manager tried to conceal knowledge of mold in bad faith.

Next, consider a situation where a real estate professional, such as a building owner or contractor, notices signs of possible water damage. That real estate professional can protect his liability by recommending an expert evaluation of the water damage. The real estate professional should not act as an expert themselves or give expert-like advice concerning the mold.

Instead, they should direct the prospective homeowner to an expert in the field (such as an industrial hygienist) who can then fully disclose to the homeowner any potential mold problems. This way, the real estate professional reduces the homeowner's ability to claim that water damage was purposefully concealed. Finally, in the interest of full disclosure, potential mold defendants should encourage prospective mold plaintiffs to educate themselves on mold in homes through sources such as the Environmental Protection Agency or OSHA.

In conclusion, mold-related claims are on the rise. Such claims will likely continue to multiply in the future. Potential mold defendants can, however, protect themselves by implementing mitigating protocols and seeking legal advice as soon as a potential mold claim surfaces.

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