AUSTIN, TX -- Farmers Insurance Group must pay more than $32 million to a Dripping Springs family because the insurer mishandled the homeowners' claim for a water leak that caused sickening black mold damage.

The landmark June 1 Travis County District Court jury ruling concluded that a Farmers subsidiary, Farmers Insurance Exchange, committed fraud when it failed to cover repairs for a water leak before the leak spawned the toxic mold stachybotrys.

Mold spread throughout Melinda Ballard's and Ron Allison's 22-room mansion and, the couple say, caused severe health problems, including neurological damage that forced Allison to leave his career as an investment banker.

The couple originally sought $100 million.

"I hope all of you understand just how important this verdict is to all of us. I believe the heroes here are the jury members and I know you will agree," said Ballard.

Attorneys for Farmers agreed the home was contaminated, but said the family was due only $1.8 million to cover the cost of getting rid of the mold. Farmers argued the couple exacerbated to the problem by refusing to make repairs when the insurance benefit checks arrived.

Farmers likely will appeal the case if Judge John Dietz does not significantly reduce the award when he enters the judgment.

The jury agreed 11-1 to award the family $6.2 million in actual damages to decontaminate, demolish and rebuild the property. Jurors also awarded $12 million in punitive damages, $5 million for mental anguish and $8.9 million in lawyers' fees.

Toxic mold contamination, often caused by excessive moisture, has spawned a growing number of complains and lawsuits from Delaware to California. A growing number of claims target home builders. Poor construction and bad material choices can create an ideal breeding ground for mold.

Erin Brockovich says mold in her newly built Agoura Hills, CA home has cost her her health and most of the after-tax $2 million bonus she received for her role in the landmark chromium-6 water contamination legal suit against Pacific Gas & Electric.

"I'm not here today because I'm looking for a new cause. I wasn't looking for mold -- mold found me," Brockovich testified before California's Senate Committee on Health and Human Services earlier this year.

The committee was conducting hearings on new legislation, SB 732, the "Toxic Mold Protection Act" which, if passed into law, would set standards for unhealthful levels of mold and require the California Department of Health Services to oversee remedies for toxic mold infestations. At least two other similar bills are pending in California's Legislature.

The Ballard-Allison victory may not be a precedent-setting legal landmark, but it does offer symbolic importance for others who have shared similar headaches addressing fungus problems in their home.

Consumer grassroots activists lament, however, that such a legal battle isn't always possible without the financial capabilities of Ballard and Allison.

"Her case will certainly help. Most other families will not come out of their situation like she has. I wonder how many years it will go through appeals," asked Nancy Seats, the Liberty City, MO founder of Homeowners Against Deficient Dwellings.

The 66-year-old Seats has been grappling with builders and government officials over structural flaws since not long after 1991 when she moved into her newly-built home and discovered the problems.

For more articles by Broderick Perkins, please press here.

Published: June 5, 2001

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Broderick Perkins parlayed a career in old-school journalism into a contemporary digital news service that really hits home. The award-winning consumer journalist, originally from Wilmington, DE, is founder, publisher and executive editor of the bootstrap DeadlineNews Group, a Silicon Valley-based editorial content and consulting service specializing in residential real estate, consumer news and related editorial consulting services. The DeadlineNews Group includes the website, DeadlineNews.com, offering real estate editorial content and consulting services, and its back shop, the Deadline Newsroom, an open house on news that really hits home. Perkins obtained his formal journalism education from University of Delaware and a journalism boot camp, the Institute of Journalism Education at the University of California-Berkeley. He went on to 20 years of service as a daily newspaper journalist at the Wilmington, DE News Journal and San Jose, CA Mercury News. Perkins covered housing on the San Jose Mercury News reporting team which earned a General News Reporting Pulitzer Prize in 1989 for coverage of the Loma Prieta earthquake. He has also produced real estate, consumer and small business content for the Wall Street Journal, Los Angeles Times, RealtyTimes.com, Nolo.com, Better Homes and Gardens, the National Association of Realtors, Homestore/Move and Intuit/Quicken among more than three dozen publications. In addition to managing the DeadlineNews Group, Perkins most recently served as chief editorial consultant for Nolo's Essential Guide To Buying Your First Home, Nolo, and writes real estate television scripts for RealtyTimes.com.