Mold litigation: Next tort arena or passing fad?

Issue January 2003 By Lynne Feibelmann

For a frustrated Abington couple, mold growing in their home became so bad they were left with only one option: razing their four-bedroom dream home.
Dean and Patrice Moore first tried to get rid of the problem through other methods - from coring holes in the house's foundation in hopes it would better ventilate the building to tossing out mold-infested home furnishings and family heirlooms.

But nothing would work, so they decided to tear down the building. And as the Moores rebuild, they have joined a burgeoning class of people - plaintiffs suing insurance companies to address mold coverage in policies.

Toxic mold has become a national health and property damage issue, resulting in an increasing number of lawsuits. In fact, a jury in Texas last year awarded $32 million to a family who sued their insurance company after suffering from mold growth in their home. (Ballard v. Fire Insurance Exchange).

Serial litigation is a result of that hallmark case with lawsuits focusing on health claims and property damage, according to Jeff Alitz, partner at Donovan Hatem in Boston.

The Moores filed a lawsuit against Safety Insurance Co. alleging the company breached its contract obligations by failing to adequately investigate their claims, remediate the problem or make a reasonable settlement, according to the complaint filed in Suffolk County Superior Court in September.

The Moores reportedly claimed they felt ill in their house because of the water infiltration and mold problem.

Toxic mold litigation is also hitting the news more frequently as high-profile people, such as Ed McMahon, file lawsuits on claims that toxic mold is taking over their homes. McMahon reportedly claimed a botched repair job on a broken pipe caused black toxic mold to spread through his Beverly Hills mansion and may have even led to the death of his dog, Muffin. He reportedly filed a $20 million lawsuit last spring against his insurance company, insurance adjusters and environmental cleanup contractors.

While toxic mold litigation may becoming more popular, it still is among the toughest cases to prove, lawyers said.

In Massachusetts, mold is a concern for homes, schools and commercial buildings. The dual focus complicates toxic mold cases, bringing together two distinct areas of the law: personal injury and construction law.

Personal injury

Not all molds are toxic, according to scientific experts on the subject. Stachybotrys, Aspergillus flavus and Fusarium have been noted as mycotoxins, molds that can induce symptoms such as sore throat, headache, general malaise and memory loss.

But proving that those symptoms - which often are associated with the common cold and the flu - are directly connected to molds can be difficult.

"The causation aspect is extremely hard; it's the toughest hurdle for plaintiffs to overcome," said Alitz. "Mold is everywhere. It's hard to prove there's a causal relationship between contact with mold and medical problems. No legislation I'm aware of says mold is bad."

Legislation is pending in the United States Senate that would amend the Toxic Substances Control Act by setting up perimeters for mold. The United States Toxic Mold Safety and Protection Act, or the "Melina Bill," calls for research, education programs, victim assistance and guidelines and standards for preventing indoor mold growth and removing it.

Also, Environmental Protection Agency scientists in 2001 developed technology to detect dangerous molds. Linked to indoor air problems where moisture has become an issue, Stachybotrys, or "black mold" can be identified by a DNA-based system created by Dr. Stephen J. Vesper and Dr. Richard Haugland in the EPA's Office of Research and Development.

This summer Dr. Stephen Redd, chief of air pollution and respiratory health at the Centers for Disease Control and Prevention, addressed the issue of mold as a health concern that can and does cause infections and respiratory illnesses. According to the speech he gave before Congress, water and mold-damage are contributing factors.

Causation: Linking mold to the problem

The combination of water and mold damage also rears its head in construction.

"Mold is present everywhere in everyone's house. It's when it comes in contact with water and moisture that it becomes a problem," said Jessica Graf, a senior associate with Nixon Peabody in Boston, who has experience with environmental law and matters dealing with hazardous waste.

"Plaintiffs need to [prove that] with a basis in scientific fact, not speculation."

Graf agreed with Alitz that it is difficult to show a connection between symptoms, such as wheezing and shortness of breath, to mold.

Unlike Texas or California where flooding is common, Massachusetts is not a ripe breeding ground for toxic mold because of seasonal change, which prevents mold from becoming stagnant, Graf said.

Louis Massery, founder and partner at Massery & Gillis in Boston, said many plaintiffs have approached him this year seeking relief for symptoms. He said evidence from physicians and toxicologists is necessary to prove personal injury.

Finding threshold levels to differentiate allergic and toxic effects is an ongoing issue.

"The proof that you are damaged by the mold is very hard to come by, especially since the symptoms go away when the plaintiff leaves the house and looks completely healthy sitting in front of a jury," Massery said.

Potential plaintiffs who seek his services have difficulty describing their symptoms, according to Massery, who handles complex product liability and toxic tort cases.

"I will take a case on if there is clear evidence of liability of a third party, if there is a clearly established colony of mold and if the whole family suffers the symptoms," he said.

Stan Helinski, associate at Hugo and Pollack of Boston, said personal injury cases should be pursued with caution due to sparse medical literature and because physicians often don't spend enough time on the causality aspect.

"Although treating physicians are often quick to suggest a connection between mold and respiratory depression, when it comes time for a deposition, many will refuse to testify to the relationship," he said.

Massery agreed.

"(Plaintiffs) are looking for someone to assist them in solving this problem and unfortunately we just can't line up very many experts."

Property damage

Proving that mold has caused damage to property is not as difficult to establish as health claims. However holding insurance companies responsible is a current struggle.

Alitz said new building construction techniques have contributed to the increase in lawsuits in the 1990s. Due to the mid-1970s energy crisis, buildings were made airtight and included locked windows and heating ventilation/air-conditioning systems that caused water vapor.

Leah Rochwarg, associate at Gadsby Hannah in Boston who is representing the Moore family, said carpet, stucco and dry wall are breeding ground for mold growth in schools, commercial facilities and homes.

"It's also a public safety risk because it affects the structural integrity of building materials and can impair the fire retardant quality of walls," said Rochwarg, who spoke generally about toxic mold litigation but declined to discuss the Moore case specifically because of pending litigation.

Claims of negligence, bad faith, unfair settlement practices and breach of faith are brought against builders, contractors and designers, Rochwarg added.

Chris Tauro, associate at Cetrulo & Capone of Boston, said he has seen cases in Abington and Beverly of allegedly infested apartment buildings. If insurance companies refuse to answer toxic mold claims and someone feels aggrieved, litigation often arises, he said.

"It works itself out in the court system. The science is very new," he said.

Massery said often times insurance companies will not pay for damage if it happened in a person's home.

"It's not a covered loss. The action is against the contractor for property damage," he said.

"If it's just a claim for damages to the house with a leaking roof or something that is in an office building, such as a leaking laboratory cage washer for animals or bad pipes, then it's relatively straight forward," said Massery. "If it turns out the mold is spread enough than it can result in a claim for constructive eviction."

Graf said some insurance companies are not taking the matter seriously enough. She links mold to cracking floorboards, crumbling plaster, pipe leakage and inadequate construction but maintained that few strains of mold are problematic.

"Insurance companies are regrouping and may charge premiums if people want to be covered for mold," she said.

Helinski said mold exclusion in insurance policies should not deter an attorney from taking on a case. "Generally, if the case is mold and water intrusion is covered under the policy, mold will be part of the loss."

Evidence, he said, should be carefully accrued in advance by all parties on a set day for unbiased results. Building materials, water intrusion and relative humidity are all contributing factors to mold growth, which can be determined by an expert and mapped out chronologically.

Next phenomenon?

Compared to lead paint and asbestos, toxic mold's impact on law is still developing. Some attorneys said it's a passing phenomenon.

"It will quiet down faster than asbestos. I would be surprised if this thing grew into a giant problem," said Massery. "It's a lot of hot air; a lot of seminars all over the place. I'm getting skeptical if it's an important new area of law."

David Governo of Governo Law Firm in Boston has led mold litigation seminars and represents an insurance company in a separate mold case. He said people have "latched onto" toxic mold because it has been in the media.

"They are using it as an excuse to renovate and collect from insurance companies," Governo said.

Still, Tauro said toxic mold is "taking off across the U.S."

"It's a real problem. It appears the plaintiff's is working actively. I can't foretell if it will fade out but we'll see more case first," he said.

And Rochwarg said the ultimate issue of whether toxic mold litigation becomes more prevalent depends on a number of factors, from scientific research to pending legislation. But until those questions are answered, Rochwarg said it is up to various groups, from contractors to building designers to "take measures to minimize and manage the risks because right now the future is unclear as to where this is going to go."

Rochwarg said designers, contractors and owners need to develop best management practices, especially since state and federal guidelines have yet to be established. The legal community is awaiting responses from designers and construction companies as well as the insurance industry, she said.

"The problem is not going to immediately go away because many buildings out there have been built with energy efficient models. This is not just going to be swept under the rug," Rochwarg said. "There is a tension and concern."

After asbestos and tobacco litigation, toxic mold is the next toxic tort arena, according to Alitz, who has given seminars on the topic.

"It's a matter of serial litigation applied to profession. There was one big hallmark case and cases filed derivative of that case. A cynic would say hysteria arose. It's too soon to tell. It probably won't be part of the legal landscape forever but it could change overnight."