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Is Toxic Mold really a Serious Health Problem?
Should Landlords & Insurers really be Responsible?
The State of the Law - A Neutral Analysis - Both Sides!
By Richard Rydstrom, Esq.
Attorney/Accountant/Author/National Speaker
[*The author is on the California special task force reviewing the
implementation of this new law. Member input and personal experiences are invited]
1-877-946-4968
New Laws in 2001 - 2003
California is now the first state in America to make new toxic mold laws.
The building, insurance and landlord industries are effectively at odds with consumers, homeowners and tenants! Why are they fighting? Where's the beef? Is one side right and the other wrong? Is there a real problem between the building, insurance and landlord industries on one quasi-side, and new homeowners, consumers and tenants on the other! Or is it simply greed, or some other form of extremism on behalf of one side, or the other? Neither side would concede to greed or extremism as their motivator, so what do they want?
One side would say they are running a business and simply can't afford to "insure" any and every health problem that junk science experts conjure up - the other - would say they are not trying to make millions from a jury, but simply seeking repairs of uninhabitable property and reconciliation from health injuries caused by toxic mold (lead, asbestos, etc.) or 'sick buildings'.
It appears that a person in the following categories, or with the following conditions, may be more sensitive to serious mold health risks than others because "…(e)xposure to mycotoxins can suppress or alter the immune system, inflame the lungs and result in toxic pneumonitis, cause irritation of the eyes, nose and throat, headaches, diarrhea, and increase the susceptibility of the exposed person to infectious disease and cancer.":
seniors, asthma patients, cancer patients, persons with suppressed immune system, HIV patients, Epstein bar patients, etc
What is Toxic Mold!
The Office Of Senator Deborah Ortiz of the State of California, in pertinent part explains: "Toxic mold is usually said to be caused by water intrusion (into a home or building (context emphasis added)). Inhalation of mold can cause human toxic effects, exacerbates immunologic reactions and can cause infections." "…(M)any molds can produce mycotoxins, which are natural organic compounds that initiate a toxic response in humans." "Among toxin-producing molds, (are) the Aspergillus species and Stachybotrys chartarum…". "Aflatoxins, which are produced by two species of Aspergillus can be carcinogenic, are acutely toxic to liver, brain, kidneys and heart."
Mold Lawsuits Are On The Rise - Is This Evidence of Serious Mold Risks?
It appears the courts are in fact experiencing an onslaught of consumer (homeowners and tenant) lawsuits. The homeowners and tenants are claiming health injuries and property damages caused by construction defects and/or toxic mold. They say they are seeking new laws to help them get repairs made before the manifestation of property damage and personal injury. The building industry says they are seeking new legislation to offer new and better building standards, a new 10-year warranty and in effect restricting the wide-open lawsuit exposure environment.
Very recently the consumers in California won some victories by defeating building industry sponsored bills (AB 2112 CBA, AB 600 Dutra), and passing SB 732 (Ortiz), now known as the Toxic Mold Protections Act of 2001! Until October 5, 2001 when California Governor Davis signed SB 732, there was no effective legislation governing mold standards and related obligations in the nation. Of course we still have a few governmental agency and industry pronouncements on mold suggesting certain methods of assessment and remediation.
The Toxic Mold Protections Act of 2001 directs the California Department of Health Services (DHS) to develop and adopt standards for mold exposure limits for indoor mold environments by July 1, 2003 (Section 26105 (d)). Will this law make it easier to successfully sue or more difficult? Since the law has several seemingly uncertain provisions, language contradictions or unanswered questions, one could expect both plaintiffs and defendants to exploit these new opportunities (or burdens). Does the law create a higher negligence per se duty on the owner and/or landlord who gets a citation from an authorized "enforcement" officer? Will that create a presumption at law of breach or uninhabitability? What is meant by "standards" and "guidelines" and are they mis-used in the Act? Will or did the law adopt the DHS standards of Cal OSHA (ie: permanent exposure limits (PEL))? Is 'bacteria' covered under this Act? Although the law still has many interpretation questions, as most new laws do, the judiciary will be forced to answer them in the upcoming lawsuits. Remember, historically new laws mean new lawsuits!
The California new law will require landlords and owners of both commercial and residential property to disclose to prospective buyers and tenants the presence of toxic mold that exceed the new law exposure limits. Disclosure will not be required until at least 6 months after DHS adopts the new standards. The law does not require landlords to sample, inspect or test for levels of such toxins - but - it does not attempt to shield liability either! Nevertheless, case law has held landlords liable (and builders, contractors, etc.) and may continue to hold landlords (and others) liable even if they don't sample, inspect or test! For example a nationally instructive case held landlords liable for lead paint based injuries even with no knowledge of the hazard:
"Just as a motorist is presumed to know the laws regulating motor vehicles, the court reasoned, so a landlord is presumed to know the requirements of the local housing code pertaining to the habitability of leased premises. Landlords need not inspect the premises before leasing, the court said, but because of the implied representation of habitability that accompanies the making of the lease, they fail to do so at their peril." (emphasis added) (Benik v Hatcher 750 A2d 10 (Md Ct App. 2000). Is this the inevitable standard with respect to knowledge?
Protection from liability is up to you, insurance alone is insufficient! You should engage the services of an attorney and seek information on business and estate entity integration! Call for my free articles: "You're Begging To Be Sued ™ © 1998-2001, and "The 13 Secrets Of The Rich or Informed" ™ © 1988-2001.
Lawsuits Across The USA!
Moreover, many lawsuits in California, New York, Florida, Illinois and especially Texas offer an insight into what may lie in the road ahead. The following are a few of the cases against the building industry and related defendants that have held liability or illustrate the claims of liability. Although there are some plaintiffs' cases which lost in this area (i.e., class certification denied in Zinser v Accufix Res. Inst. 253 F 3d 1180 (2001) due to failure of common issues between members, and the Tarp v E&W case where causation was not proven due to prior injuries and dates of injury analysis), the number and severity of the winners and pending actions are worth illustrating to paint the true national picture.
Mold! $14,000,000!
A $14,000,000 verdict was upheld in the appellate court against the construction manager for mold growth due to dampness and excessive humidity in the county courthouse (from faulty HVAC and mechanical systems, leaking windows, curtain walls EFIS and other defects from wet and damp building materials which fed the growth of mold, mildew and other organisms). The water-damaged building becomes the covered property damage for coverage under the CGL insurance claim. (Centrex-Rooney Construction Co., Inc v Martin County, Florida 706 S2d 20 (Fla App 1998)).
Asbestos! $15,000,000!
An operating engineer at an office building for 21 years was diagnosed with mesothelioma from exposure to asbestos fire proofing material sprayed inside. Plaintiff and his wife sued the building owner and other operating engineers. They settled for $5 million. (Hoskins v Business Mens Asssurance Co of Am., Mo Jackson Cty Cir Ct No 00-CV-206172, Feb 23, 2001). Plaintiff also sued the manufacturer and won $10,000,000. (Hoskins v Federal Mogul Corp 20 PLLR 135 (Aug. 2001)).
Defective galvanized plumbing! $41,000,000
It cost some 40 builders, developers, owners and pipe manufacturers approximately $41,000,000 for leaking rusty or corroded clogged galvanized Korean pipes (plumbing) in an approved class action settlement in Los Angeles County Superior Court. Over 3552 single-family homes and 1124 condos in 15 new-home communities in Santa Clarita Valley built from 1986-1994. (Newhall Land & Farming Co., American Beauty Homes, Dale Poe Dev., Presley Homes, Pacific Bay, Paragon Homes, Monteverde Devl., Dong Du Steel Ltd,. Et al. LASC).
Some Other Lawsuit Examples!
* Water leakage and mold caused personal property and structural damage to a family living in a New York apartment. Plaintiffs are seeking $180,000,000 against owner Glenwood Management Corp, operated by East 77th Realty LLC. (Dean HM Chenensky, et al v Glenwood Management Corp, et al., No 120461/00 NY Sup NY Co).
* 125 lawsuits are seeking $8 Billion in New York against apartment owners for personal injury damages incurred by exposure to fungi and mold contamination. (Samaris S. Davis., et al v Henry Phipps Plaza South, et al No 116331/98, N. Y. Sup. N.Y. Co., May 1999). The judge denied the class action certification on August 8, 2001 on liability issues only. A separate wrongful death(s) action is pending.
* A New York employee for a community college and his wife are seeking $65,000,000 for injuries and damages caused by mold exposure. (Coiro, et al., v Dormitory Authority of the State of New York, No NY Sup Queens Co).
* Employees of a newspaper are seeking $10,000,000 from the owner (landlord) of their building for injuries from exposure to toxic mold. (J.J. Acquisition Corp. v Pacific Gulf Properties). Homeowners sued developers and contractors for construction defects from the growth of toxic mold. (Spectrum Community Association v Bristol house Partnership, June 2000).
* 1700 students, parents and teachers filed suit for $67,000,000 for injuries caused by exposure to toxic mold and flood pollutants at an elementary school for failure to remediate flood damage causing growth of mold. (Andrejevic et al v Board of Education of Wheaton-Warrenville School Dist No 200 Dupage County IL).
* Plaintiffs in Ontario Superior Court are seeking $2 Billion in a proposed class action lawsuit for students exposed to mold at various schools for the period September 1995 to June 1999, and their parents. (MacDonald v Dufferin-Peel Catholic Dist Sch Brd).
* Erin Brockovich sued the builder and former owner in California for adverse health effects from the exposure to mold caused by water intrusion in a personal injury and construction defect lawsuit. (Erin Brockovich v Robert Selleck).
Mold & Bad Faith Insurance Denials!
Briefly, insurance bad-faith is a term used to describe the wrongful conduct of, or lawsuits brought against, an insurance company for failure to proper handle or pay an insurance claim. My associates have recovered over $200,000,000 for such wrongful conduct. This is your warning! It is time for you to take steps to protect yourself in the event that your insurance company denies your insurance claim. No, not all claims are denied, however, new laws bring new lawsuits, which bring new insurance claims and a percentage of new denials. The following are some lawsuits that paint the state of the law:
* In Texas, the jury found that a Farmers Insurance Company committed fraud in a bad faith handling and denial of coverage in a black mold case for water damage, by allowing toxic mold to advance in the insured's 22 room mansion. It cost Farmers approximately $32 million! (Ballard v Fire Insurance Exchange, Judge John Dietz Travis Cty Texas).
* Anderson won $18,500,000 against All State Insurance for refusing to pay full amounts to remediate or fix the mold damage to his house caused by bursted pipes in February 1997. (Anderson v All State Insurance Co, Ca. No CIV-00-907 E.D. Calif; In remittitur total revised to $3,294,381.80).
* $48,500,000 was agreed to in settlement for defective construction causing mold contamination against the general contractor for $13,500,000 and surety bonds for $35,000,000. (Polk County Florida)
State of the Law!
Despite the numerous lawsuits, all is not doomed for the building industry as evidenced by a recent major win in the California Supreme Court against consumers (homeowners and tenants), concerning construction defects (and potentially mold). In Aas v. Superior Court 24 Cal 4th 627, 101 Cal Rptr. 2d 718 (2000) the court held that homeowners and associations (ie: consumers) could not bring a negligence construction defect lawsuit against a developer and general contractor (ie: builder) until they experienced actual 'property damage'. Speculative, future or the threat of harm was simply not sufficient. Apparently this case may mean that a plaintiff would not be able to bring a case for negligence for code violations until it causes actual property damage, personal injury or death. Moreover, will insurance companies be held responsible? Or is it time for the insurance companies to stand up and announce that they are not financially able to ensure redress for every (now common) contingency? More legislation? More lawsuits?
The majority and the dissenting Chief Justice Ron George in the Aas case opined that the legislature is the proper place to change the law, as the law of negligence may be inconsistent with social policy. Justice George said that - "the obligation falls upon the Legislature to correct this court's unfortunate misstep in the development of the law, and to provide the protection that California residents deserve." To overcome the anti-consumer aspects of this case, Sen. Martha Escutia (D-Montebello) introduced SB 355 and Assembly Rep. Darrell Steinberg introduced AB 267. The change would not require evidence of death, bodily injury or existing property damage. Existing law should recognize cost of repair as recoverable damage to sustain a lawsuit.
On November 10, 2001 CNN reported that Farmers Insurance Company would not renew most homeowners insurance policies in the state of Texas, presumably due to recent mold and/or construction defect lawsuits and judgments! We do not know the extent of intended non-renewals at this time. The consumer may get a leg up before the end of 2001, but additional or amended legislation is expected from both sides! It appears there is a real fight coming to the legislature and a court near you! Are there more bad-faith lawsuits to come? Stay tuned!
Richard Rydstrom, Esq.
Attorney/Accountant/National Speaker & Author
International Who's Who of Professionals
Author & Speaker for: LandlordsClub.Com ™
Call 1-877-946-4968 for More Info
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