MOLD EXPOSURE: WHO OWNS THE PROBLEM?

by:
D. Wesley Newhouse
Newhouse, Prophater, Letcher & Moots, LLC
Tel: (614) 255-5441

I. CURRENT STATUS OF MOLD LITIGATION

A. High Profile Cases

1. $34 million verdict for Texas woman against her insurance carrier
   for mold contamination of her 22 room mansion.
2. $18 million jury verdict for 96 year old man against his insurance
   carrier based on bad faith refusal to pay for mold contamination.
3. $1.35 million settlement for a couple in Newport Beach, California
   against their landlord for mold contamination of their apartment.
4. $14.2 million award against a Florida construction management
   company for mold contamination of a courthouse building in Martin
   County, Florida.

B. Recent Ohio Decisions

1. Broida vs. McGulmphy, unreported, 2002 W.L. 31015563 (App.
   Ohio 9th Dist. 2002), verdict for the defendants. Defendants were
   the sellers of a home. They disclosed water problems in the home
   to the purchasers. Because the purchasers were on notice of the
   water problems, they could not claim that they were defrauded in
   respect to the presence of mold in the home.
   
   
2. Duman vs. Campbell, unreported, 2002 W.L. 973095 (App. Ohio 8th
   Dist. 2002). Defense verdict for home sellers who disclosed leaky
   bathroom plumbing to purchasers who later claimed faulty plumbing
   caused mold infestation.
   
   
3. Bryant vs. Bulach, unreported, 2003 W.L. 1689613 (App. Ohio 12th
   Dist. 2003), where the doctrine of caveat emptor precluded home
   purchasers from recovering damages for water leaking and mold
   because the leakage and mold could have been discovered by
   reasonable inspection, the purchasers had the opportunity to
   inspect the home, and the sellers made no false representations
   regarding the condition of the home.

II. POTENTIAL DEFENDANTS

A. Homebuilders.
Homebuilders face claims for breach of contract, breach of warranty,
negligence and fraud. The breach of warranty claim is of greater
significance today because a recent Ohio Supreme Court decision found
that a builder of a home can face liability for emotional distress damages
for a breach of warranty. Negligence claims against homebuilders will
focus on the selection of materials, defects in construction and installation
of components, negligent design and negligent repair. Homeowners who
can prove that homebuilders knew of construction defects which later led
to mold contamination may be able to recover on a theory of fraud. The
fraud theory is of particular interest since it permits the plaintiff to recover
punitive damages and attorney fees.

B. Sellers of Property and Realtors.
The sellers of property and their realtors face liability for breach of contract
and fraud. In a residential context, standard disclosure forms eventually
will address sellers’ knowledge of mold contamination and moisture
conditions. For now, the standard documents do not address this, so the
purchasers of homes and commercial and institutional buildings may
assert fraud based on omission of information by sellers and realtors.

C. Landlords.
Tenants will assert claims for breach of lease arising from the failure of the
landlord to provide habitable premises. Tenants may also assert claims
for fraud arising from the failure to disclose mold contamination, and for
negligence arising from the failure of landlords to properly inspect, repair
and maintain properties. Tenants may also be able to assert claims for
violation of the Landlord Tenant Act. Such violations can result in the
award of attorney fees.

D. Insurers.
Insurers have faced substantial bad faith verdicts in California, Texas and
Florida. Insurers providing homeowners’ policies that refuse to pay the
cost of remediation and alternate housing face potential liability for the
bodily injuries that arise from the exposure of homeowners to mold.

E. Owners of Commercial and Institutional Buildings.
Tenants and their employees may assert claims against the owners of
commercial and institutional buildings, and the companies they hire to
manage and maintain the buildings. Employees of building owners may
also assert claims. Such claims would include recovery of workers’
compensation benefits as well as intentional tort actions and OSHA
complaints. Building owners and employers also face liability under the
Americans with Disabilities Act for failure to make buildings accessible to
those who have allergic reactions to mold.

III. PROOF OF CAUSATION.

A. Daubert.
The United States Supreme Court ruled that parties cannot offer “junk
science” in the guise of expert testimony in Daubert vs. Merrell Dow
Pharmaceuticals (1993), 509 U.S. 579, 113 S. Ct. 2786. The Ohio
Supreme Court adopted the Daubert rule in Miller vs. Bike Athletic Co.
(1998), 80 Ohio St.3d 607, 687 N.E.2d 735. The factors for admitting
scientific testimony are:

• Whether the theory or technique in question can be (and has
  been) tested;
  
  
• Whether the theory or technique in question has been
  subjected to peer review and publication;
  
• Whether there is a known or potential error rate for the
  theory or technique;
  
  
• Whether there exists standards controlling the performance
  of the technique or operation in question;
  
  
• Whether the theory or technique has attracted widespread
  acceptance within a relevant scientific community.
  
  Daubert at 593-594.

B. Application of Daubert to Mold Cases.
The extent to which mold causes serious adverse health effects is a
matter of great debate in the medical and scientific community. See
Ronald E. Gots, “Mold and Mold Toxins: The Newest Toxic Tort.” 8 J.
Controversial Med. Claims 1 (2001). In a lawsuit, there will be much
debate over the adequacy of the scientific basis for expert opinions stating
that mold exposure has caused severe respiratory injury or the
aggravation of immune system disorders such as lupus. The lack of
nationally-recognized standards for mold exposure and the control and
remediation of mold make it more likely that courts will reject expert
testimony regarding the link between mold contamination and illness or
injury.

IV. EXPERT WITNESSES.

A. Source and Cause of Moisture in Buildings.
Architects, engineers and industrial hygienists will examine buildings to
determine sources of water intrusion and accumulation, and their
relationship to the development of mold.

B. Extent of Mold Infiltration.
Industrial hygienists will examine building conditions, create photographic
evidence, take samples, and perform analyses to determine the nature
and extent of mold contamination. It is important to establish what type of
mold has contaminated the building, for claimants may be allergic to some
molds but not others.

C. The Link Between Mold and Injury.
Toxicologists, internists or other appropriately credentialed medical
professionals will establish a link between mold exposure and symptoms
suffered by injured parties. The more experienced and well-credentialed
the physician, and the more careful and conservative his or