FEATURE ARTICLE, NOVEMBER 2004

MOLD, CAT HAIR, POLLEN & PEANUTS
Attorneys with Friese & Price share their knowledge of mold and its effects on the real estate industry.
Alon Hilton Price and Larissa Bixler

Mold has existed since the beginning of time. However, given the recent deluge of litigation involving mold infestation complaints, mold appears to many as a new phenomenon. Debate rages amongst real estate professionals and legal pundits as to whether the recent mold craze has any validity. However, one thing is clear — heightened awareness about possible health risks from untreated mold has increased litigation concerning mold issues. Real estate developers, contractors, attorneys, and brokers face liability in the mold arena.

The hypotheses for the increase in mold litigation are numerous, encompassing everything from the greenhouse effect to aggressive plaintiffs’ lawyers. The majority of mold experts agree various construction practices lead to an increase in indoor mold growth and, therefore, to an increase in mold litigation.

While construction practices might contribute to mold growth, some people claim that the most significant cause of the increase in mold litigation is recent media coverage. Television personality Ed McMahon ended up with a $7.2 million settlement after claiming his favorite dog was killed from inhaling mold that infested his home after flooding.1 Environmental activist Erin Brockovich has channeled her energies into a “toxic mold” awareness campaign after discovering her “dream house” to be infested with mold.2 President George W. Bush and wife Laura continue to advocate indoor air quality awareness since discovering that their former home, the Texas Governor’s mansion, was harboring mold.3

While some say the awareness alerts us to the possibility of health problems, many others view the heightened awareness as excessive hype, scaring people into hunting down any sign of mold, a natural substance present in our homes for ages — a substance that has somehow not bothered us until the past few years. Undoubtedly, the truth lies somewhere between the two extremes.

Large and much-publicized jury verdicts involving mold have most likely inspired people to bring mold lawsuits. The most well-known case is a $32 million judgment in Texas. (The judgment was later reduced to $15 million.)4 The Ballard family brought suit against their homeowner’s insurance company when their water damage claim was not handled properly and led to mold contamination. Another well-known case involving a mold-infested courthouse in Florida resulted in a $14 million verdict for the plaintiffs against the construction contractor.5

Some see mold as an even more prolific source of litigation material than asbestos. John Odendahl, who handles bad faith litigation at Farmer’s Insurance Company, claims, “They stopped making asbestos, but they can’t stop mold. Creative lawyers will always find ways to argue around [insurance] policy language.”6

Odendahl’s words are rather bleak for those in the construction and development industry, since mold can crop up despite the most earnest of prevention strategies. However, many voices in the legal community disagree with Odendahl, claiming mold claims are a temporary litigation fad which will dissipate due to “weak medical causation evidence, lack of published exposure standards, lack of target corporate defendants . . . , [and because] mold-related diseases are less severe and less permanent than asbestos-related diseases and they manifest relatively quickly (thus people are exposed to mold over shorter periods of time).”7

Some articles discussing misinterpret molds as “toxic mold,” a label that understandably induces fear. More than 1,000 varieties of mold exist in the United States alone, none of which are “toxic,” per se. The Centers for Disease Control (CDC) clarifies the misnomer: “The term ‘toxic mold’ is not accurate. While certain molds are toxigenic, meaning they can produce toxins (specifically mycotoxins), the molds themselves are not toxic, or poisonous.”8 Just as cat hair, pollen, peanuts and other allergens affect people to varying degrees of seriousness, mold merely has a toxigenic effect, to which individuals may or may not react. The most familiar toxigenic mold is Stachybotrys chartarum, commonly referred to as “black mold.”

On May 25, 2004, the Institute of Medicine (IOM), sponsored by the CDC, released a report about the effects of damp, moldy indoor environments on health.9 The report marked the culmination of 27 months of scientific research and evaluation conducted by a committee of medical professionals and scientists. The press release states:

The report did not completely eliminate the possibility that mold is linked to more serious health conditions but stated “the evidence did not meet the strict scientific standards needed to establish a clear, causal relationship.”11

The IOM report is too recent to observe any actual impact it has on litigation proceedings; however, one can certainly speculate as to the report’s potential impact. Judges currently use two different standards of evaluation for scientific expert testimony: the Frye test and the Daubert test.12 The Daubert test replaced the Frye test in the federal courts; state courts, however, are free to choose whichever test they deem best. The Frye test evaluates scientific testimony based on whether it is “sufficiently established to have gained general acceptance” in its particular field.13 Given the report was sponsored by the Centers for Disease Control and The National Academies and was conducted by the Institute of Medicine, the conclusions of the report are likely to be given considerable weight by judges when evaluating scientific testimony and will, thus, make it more difficult for plaintiffs to establish medical causation in mold personal injury lawsuits.

The majority of mold claims are in Florida, Texas and California — states that enjoy very humid climates. Georgia, another humid state, has not been immune to the trend toward mold litigation.

For example, a pending lawsuit14 involving low-income tenants in Atlanta’s Moreland Woods Apartments was partially settled in June 2002, awarding $5,000 per unit to some 300 tenants to cover relocation expenses and personal property damage due to mold that infested the apartments, allegedly causing headaches, fatigue, allergy and asthma attacks.15 As of the date of this article, the injury claims had yet to be resolved.

The verdict is still out on the extent to which mold claims will take off in Georgia. Judges in other states have thus far exhibited an understanding of the fact that mold is, and always has been, inevitable to some extent. The largest mold verdicts so far have been in cases involving fraudulent concealment, misinformation or manifestly inferior craftsmanship. The best defense then is really an impeccable offense — take every precaution in design, construction and remediation; remain above-board with all parties when it comes to the presence of mold; and stay well informed about developments in mold litigation and remediation.

Alon Hilton Price is an attorney and Larissa Bixler is a legal assistant with Friese & Price Law Firm, LLC in Atlanta.

The Foundation of the Wall and Ceiling Industry (FWCI) compiled the following list of construction practices linked to the proliferation of mold: • “Advanced energy conservation construction techniques that tighten building envelopes or parapets and thereby drastically hinder the escape of water and moisture • Proliferation of building materials containing organic sources that serve as a prime “feeding ground” for and encourage the spread of mold • Inadequate, insufficient or improper design details, especially in areas where water intrusion is likely to occur such as roof angles, eaves and building penetrations such as windows and doors • HVAC system design, installation, maintenance and operating practices that result in failing to control movement of water vapor • Shorter construction schedules that sequence finish work before the interior environment can be conditioned • Inadequate, insufficient, or improper protection of construction materials, particularly interior finishing materials, from the weather or from water-based construction processes.”16 ©2003 Foundation of the Wall and Ceiling Industry. All Rights Reserved.

Internet Resources • Centers for Disease Control: Mold Information. Provides answers to frequently asked questions and information on handling a mold infestation. http://www.cdc.gov/nceh/airpollution/mold/default.htm. • Environmental Protection Agency: Mold Information. http://epa.gov/mold/. • “Managing the Risk of Mold in the Construction of Buildings.” Comprehensive article available on the website of the Georgia chapter of the Association of General Contractors (ACG). http://www.agc.org/content/public/PDF/Safety/may03_mold.pdf. • Mold-Help.org. Has a clear mold activist bias, but provides much information of interest. http://www.mold-help.org. • “Mold Litigation: Prevention and Defense.” Provides excellent background information on mold as well as information on how to prevent mold risk and liability. Written by the law firm of Burr & Forman for the Foundation of the Wall and Ceiling Industry. • Mold Update.com. Published by the National Association of Mutual Insurance Companies. Provides a news archive, litigation update, insurance update, and science update. http://www.moldupdate.com. • Toxic Black Mold News Stories webpage. Yes, “toxic mold” is a misnomer, but this site does provide a wealth of regularly updated news on mold. Operated by the Mold Inspector Laboratory. http://www.moldnews.net.

1 Guccione, Jean. “Ed McMahon Settles Suit Over Mold for$7.2 million.” Los Angeles Times. May 9, 2003. <http://www.rvclaw.com/latimesmcmahon.asp>. 2 “Brockovich Takes on a New Foe: Mold.” CBS News. September 5, 2001. <http://www.rvclaw.com/eb-cbsnews.asp>. 3 “Austin’s Honorable HVAC.” Mold-Help.org. 1999. <http://www.mold-help.org/pages/submenus/moldnews/austins_hvac.htm>. 4 Allison v. Fire Ins. Exchange, 98 S.W.3d 227 (Tex. App. 2002). 5 Centex-Rooney Const. Co. v. Martin Co. 706 So.2d 20, 25 (Fla. App., 1997). 6 Arnon, Elizabeth. “As Toxic Mold Suits Grow, Insurers Go.” The National Law Journal. October 21, 2002. <http://www.childresszdeb.com/FSL5Apps/Temp/radCB489.tmp.asp>. 7 <http://www.moldhelp.org/pages/submenus/mold_and_insurance/asbestos.htm>. 8 http://www.cdc.gov/nceh/airpollution/mold/stachy.htm#Q1 9 Institute of Medicine. “For Immediate Release: Indoor Mold, Building Dampness Linked to Respiratory Problems and Require Better Prevention; Evidence Does Not Support Links to Wider Array of Illnesses.” May 25, 2004. The National Academies: Advisors to the Nation on Science, Engineering, and Medicine. <http://www4.nas.edu/news.nsf/6a3520dc2dbfc2ad85256ca8005 c1381/8ab6efa4525efc9785256e9f0058126b?OpenDocument>. 10 Ibid. 11 Ibid. 12 Daubert v. Merrill Dow Pharmaceuticals, Inc. 509 U.S. 579 (1993), Frye v. U.S., 54 App. D.C. 46, 293 F. 1013 (D.C. Cir. 1923). 13 Frye v. U.S. 14 Knowlton v. Grant Park Village Ltd. P’ship, et al., No. 2002 Civ. 062252 (Super. Ct. Fulton Co., July 18, 2003). 15 “Press Release, June 20, 2002: A Win for Low-Income Apartment Tenants in Atlanta.” Childress & Zdeb. June 20, 2002. <http.www.childresszdeb.com/FSL5Apps/Temp/rad942AC.tmp.asp>. 16 Burr & Forman. “Mold Litigation: Prevention and Defense.” Foundation of the Wall and Ceiling Industry. 2003. http://www.awci.org/moldlitigation.pdf>.

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