2009-05-18, 10:07

Just When You Think It’s Safe, The Mold Monster Rears It Ugly Head Again

By: Multifamily Real Estate Industry Team
Two recent multi-million dollar verdicts for apartment tenants claiming mold related illness reminds us that there is no room for complacency with an ever-ready plaintiffs trial bar prepared to turn tenant mold cases into big payoffs – again.

According to a white paper published by the Mortgage Bankers Association in June 2005, (updated July 2007), prior to 2000, there were few mold claims and those that did exist generally settled for a few thousand dollars. After a few high profile cases in Texas and California, the number of mold-related cases began to increase. (http://74.125.95.132/search?q=cache:fTFtCUfgwAwJ:www.mortgagebankers.org/files/CREF/committees/UnderwritingandClosing/MoldPapterUpdated7_07.pdf+%22mold:+steps+toward+clarity%22&cd=1&hl=en&ct=clnk&gl=us )

From 2001 through 2003, the number of personal injury mold-related claims in the U.S. had skyrocketed to the point where the media and others began referring to mold litigation as the “next asbestos.” In 2001, mold insurers reportedly paid out $1.3 billion in mold-related claims and more than $3 billion in 2002. (http://www.waptac.org/si.asp?id=948 ) As a result, insurers implemented mold exclusions in their policies to eliminate the risk of paying out uncertain amounts of money in mold-related claims.

In 2003, the National Academy of Sciences’ Institute of Medicine published a report entitled, “Damp Indoor Spaces and Health” (http://www.nap.edu/openbook.php?isbn=0309091934 ), which found there was insufficient evidence to support linking mold and dampness to serious illness or disease. The report also found that people who suffered from asthma or immune problems could be impacted by exposure to mold, but that mold could not cause either condition.

After the Institute of Medicine’s report was published, and relying upon the substance and weight of the report, defense attorneys successfully developed strategies to limit evidence linking diseases of unknown cause to mold exposure. With that success, however, came complacency.

Two recent verdicts show why it is still as important as ever to handle mold claims aggressively.

In April 2009, a Phoenix, Arizona jury awarded $3.3 million to a former tenant for illness and injuries suffered from her exposure to mold in her apartment unit. The jury found that the landlord failed to maintain the premises in a condition fit for human occupation and make timely repairs. (http://toxlaw.com/chatboards/blackmold/topic2379/4.28.09.10.30.08.html and http://www.azcentral.com/news/articles/2009/05/02/20090502mold0502.html ) The Plaintiff’s action alleged that the landlord, one of the largest developers and multi-family residential housing owners in the Phoenix area, failed to warn of mold remediation in neighboring apartment units and for its failure to address water leaks until mold began growing in the building. Plaintiff alleged that she and other tenants had complained to the Defendant of water leaks and she suffered both physical and cognitive injuries. At trial Defendant relied on the testimony of an allergist who told the jury that mold exposure cannot cause long term injury, while the Plaintiff relied on the testimony of three experts: a Certified Industrial Hygienist, who opined that based on the remediation reports, Plaintiff suffered from mold exposures sufficient to cause illnesses; a medical doctor, who opined that Plaintiff had disabling cognitive and physical injuries caused by mold exposure; and a psychologist who opined that testing revealed Plaintiff’s loss of cognitive abilities.

In late 2008, a Los Angeles, California jury awarded $1.5 million to a former tenant for illnesses related to alleged mold exposure, and for failing to make timely repairs. (http://www.wshblaw.com/news.php?type=newsletters,updates ) In this case, Plaintiff alleged that the landlord and its management company failed to properly address complaints of numerous water issues in her unit, including a leaking sink and defective shower drain. It was found that the excess moisture in the unit led to mold growth and that because of the exposure to that mold Plaintiff allegedly suffered breathing problems, joint pain, memory loss, brain damage, among other injuries.

Despite these verdicts, the science remains on the side of the defense. The National Academy of Sciences’ Institute of Medicine’s report, “Damp Indoor Spaces and Health” (http://www.nap.edu/openbook.php?isbn=0309091934 ), as well as other position statements issued by the American College of Medical Toxicology, have discredited allegations of “toxic” injures due to mold exposure in the residential environment. (http://www.acmt.net/cgi/page.cgi?aid=12&_id=52&zine=show ).

As these verdicts demonstrate, though, not all judges will exclude “junk science” prior to trial. Juries will hear competing medical testimony, while contrasting an ill individual plaintiff with a landlord – perhaps a corporate one -- defendant. Preventing mold-related lawsuits from happening in the first place remains the best defense. Implementing proven operations and maintenance programs designed to maintain asset value and reduce the likelihood of mold lawsuits requires an upfront investment of resources; adhering to a program requires a continual commitment. But at the end of the day, these costs are more predictable than a jury.

(This entry posted by Erin Miller, Jim Mitchell, John Sweeney and Sky Woodward, all members of Womble Carlyle's Products Liability Litigation team)

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