Risks and Difficulties of Mold Litigation by Rinat Klier-Erich - FirstTeam

Risk Difficulties of Molitigation by Rinat Klier-Erich, Manning & Kass, Ellrod, Ramirez, Trester

Mold litigation is unique in that it is a crossover between design and construction defect, personal injury, and property damage. Mold litigation is expert-intensive, and it involves construction law, personal injury law, contracts, and insurance. Mold litigation in particular, has expanded into many forms of litigants, including property owners and buyers, employees, tenants, or merely building occupants. These claims gained a lot of publicity (for example, Ed McMahon, of the Tonight Show who was awarded significant damages for alleged heath issues resulting from mold in his residence). Yet, the science regarding mold and whether it can cause significant or permanent health effects is not established—specifically, because when the exposure to mold stops, like most allergies, the symptoms disappear.

Molds are a type of fungi that thrive in moisture. They grow on other materials. Outdoors, molds are an integral part of natural processes, breaking down leaves, wood, and plant debris. However, indoors, they can be unhealthy. There are over 10,000 species of mold, of which around 100 can cause allergies in humans; approximately 50 are pathogenic (i.e. they can grow inside the human body), and about 50 are capable of creating mycotoxins, which are released by the mold and cause toxic reactions in healthy individuals. Toxic mold is different from regular mold. It normally exudes a dank, musty odor. It is also capable of producing mycotoxins. Among the types that are considered toxic and which are the subject of most lawsuits, are Stachybotrys chartarum, Aspergillus, and Penicillium. The most common toxic mold encountered in lawsuits is Stachybotrys, or “black mold.”

Common areas for indoor mold growth include bathroom tile, kitchen (appliances and sink), basement walls, areas around windows where moisture condenses, and near leaky water fountains or sinks. Common causes of water or moisture problems resulting in mold growth include roof leaks; delays in proper building and maintenance; condensation from heating, ventilation, and air-conditioning systems; condensation associated with high humidity or cold spots in a building; flooding from plumbing failures or heavy rains; slow leaks in plumbing fixtures and pipes; and the malfunction of humidification systems. Interestingly, mold infestation is an increasingly problematic issue in newer buildings and homes because more recently constructed buildings and homes are much tighter and more energy efficient; and in structures where occupants rarely open windows, this results in less ventilation of the indoor environment.

Mold cases start with blaming the defendants for creating the moisture that allows mold to grow. Some cases however, also allege knowledge and failure to disclose, and others allege failure to repair or eradicate the mold properly once it is discovered. Plaintiffs in mold litigation allege a variety of illnesses and adverse health effects: from headaches, nausea, fatigue, asthma, hay-fever-like symptoms (runny nose and scratchy throat), and respiratory problems, to fibromyalgia, chronic fatigue syndrome, reactive airway dysfunction syndrome, difficulty with memory, other cognitive functions, and even cancer. The more common allergic reactions in individuals are coughing, sneezing and breathing problems. The soft tissues around the nose, mouth, trachea, and lungs are extremely vulnerable to mycotoxin contamination. Yet, there is a lack of scientific consensus on the more seriously alleged illnesses and what level of mold exposure may cause such illnesses. The U.S. Centers for Disease Control and Prevention (CDC) website states that a causal link between the presence of the toxic mold and pulmonary hemorrhage or memory loss has not been proven.

In addition to the illness to humans, the mycotoxins also cause a significant amount of property damage. Once inside, mold can contaminate anything in the surrounding area, including clothing, furniture, and works of art. Once contaminated, these items usually have to be destroyed. Building materials and fixtures are also fertile ground for mold growth.

Therefore, building material typically must be removed and replaced, which is quite costly.
As a result of many mold cases and large verdicts, some insurance companies have changed their coverage and either exclude mold claims or offer sub-limits only for mold claim. In California, the California Association of Realtors created a mold disclosure that each buyer receives during a purchase transaction, explaining that mold can arise where there is water intrusion and the buyers are recommended to obtain mold tests if they learn of past water intrusion. Some molds cannot be seen (they may exist behind drywall, in the carpet, or under the sub-floor) and therefore an air sample must be performed to detect mold spores in the air.

Currently, there are no government—such as the Environmental Protection Agency (EPA)—or industry standards that specify allowable or acceptable levels of indoor, airborne molds. However, the EPA issued a guidance document for mold remediation projects that provides some general guidelines for evaluating and responding to an indoor mold problem.

Given this scientific uncertainty, toxic mold litigation frequently hinges on expert witness testimony. The ability of the plaintiff on the one hand to establish causation between the alleged injuries and the particular species of mold, and the defense expert rejecting that link will determine how the case goes. In some cases, judges do not allow plaintiff’s testimony without a preliminary hearing establishing solid medical evidence of such link. The “Daubert” standard comes from the 1992 United States Supreme Court decision in Daubert v. Merrell Dow Pharmaceuticals, Inc., holding that any medical or scientific opinions must be reviewed by the judge as the “gatekeeper” to decide whether the evidence is admissible.

In addition to proving the existence of mold, plaintiffs must prove a chain of custody between the testing company and the results of the testing. An environmental testing firm or laboratory has to conduct mold sampling in the allegedly contaminated area at the time of exposure. A link also has to be established that mold existed at the time the defendant was involved (for example, if the claim involves a sale, that the mold existed in the structure before the sale). The hurdles of having a properly certified testing and lab facilities, physical connection between the contaminated area and the exposed plaintiff, and a link to the defendant’s wrongful conduct are significant challenges. The main defense focus is on convincing the court to exclude the plaintiff’s proposed “expert” testimony as scientifically unreliable, which is a real possibility in light of the lack of scientific consensus regarding mold toxicity and the questionable methodology utilized by many environmental sampling firms.

It is important to consider any water intrusion as a risk. Property owners (sellers) and property managers must also understand how to treat mold-infested areas once it is discovered. If litigation arises, it is usually prolonged and costly, but despite large verdicts, testing methodology and causation are difficult to prove.

Published by the Norco College Real Estate Program with the support of the Real Estate Programs of Saddleback College and Mount San Antonio College and the California Community College Real Estate Education Center.