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Legal, Rebuilding Headaches From Mold May Last Long After the Storm Leaves

Tuesday, November 20, 2012

By Christopher M. McDonald, David B. Thorne and Dale Johnson II, Shook, Hardy & Bacon

As the East Coast starts the long road to recovery in the aftermath of Superstorm Sandy, one of the most hotly contested areas of litigation, based on lessons learned from Hurricane Katrina, will likely be related to property damage and personal injury allegedly attributable to mold.

Commercial property owners and managers, as well as contractors and insurance companies, are advised to carefully evaluate proper response approaches when responding to complaints about, or evidence of, mold proliferation in spaces with indoor occupants. The alternative may well be protracted and costly courtroom battles.

Mold Basics

Mold spores are found almost everywhere in our environment.1 And to thrive, particularly in indoor environments with controlled temperature ranges, mold only needs moisture and an organic substrate (food source).2 Numerous mold variants will grow on building and construction materials, including drywall paper, ceiling tiles, wood and wood products, paint, wallpaper, and carpeting. Mold can even grow on moist, dirty surfaces such as concrete, fiberglass insulation and ceramic tiles.3 Damaging mold growth can begin within 48 hours of the water damage, according to the U.S. Environmental Protection Agency (EPA).4 If left untreated, mold can destroy cellulose containing products and carbon-based substrates, such as those mentioned above, and weaken a building's infrastructure, leading to a host of unwanted consequences.

Importantly, however, the mere presence of mold is not enough to cause human illness. In addition to the presence of mold, there must also be an exposure sufficient to cause adverse health consequences or illness. Potential exposures may include direct skin contact with the mold, inhalation of the mold spores, dry dust or fragments of the mold, and/or contact with other items contaminated with the mold by-products. Significant disagreement exists as to whether mold exposure can be considered “toxic” at all, particularly in undisturbed indoor environments. Some claim that prolonged exposures have been linked to various human maladies, including cold and flu-like symptoms; diarrhea; respiratory problems such as runny nose, cough, and eye irritation; fatigue; dizziness; and severe headaches.5 Many of the symptoms are nonspecific and can have many confounding factors. In most instances, the symptoms associated with mold exposures subside once the moldy conditions have been remediated. Individuals that might be more susceptible to mold exposure include infants and the elderly, individuals with compromised immune systems, underlying health conditions, asthma or other respiratory or allergy issues. These, and more serious claimed health effects, have been the subject of an increasing number of personal injury lawsuits purportedly related to toxic mold exposures, as well as claims relating to economic damages.

Assessing the “Toxic Mold” Legal Landscape

Mold-related litigation has increased significantly during recent years; tens of thousands of claims have been filed in the United States and Canada6, and the number of cases increased more than 300 percent during the first 10 years of the new century.

Plaintiffs have included workers in offices, hospitals and schools, residential and commercial building tenants, and students and their parents. Defendants have included employers, architects, builders, contractors, construction product manufacturers, building owners and managers, sellers, abatement contractors, maintenance workers, real estate agents, home and building inspectors, designers, environmental consultants, insurers, and school districts.

The damages sought have ranged from compensation for personal injuries and property damage to punitive damages, attorneys' fees and the costs of litigation. The legal theories plaintiffs have asserted are negligence, breach of contract and express or implied warranties, strict liability, fraud, misrepresentation, assault, battery, constructive eviction, infliction of emotional distress, trespass, nuisance, violation of state deceptive trade practices laws and the Americans with Disabilities Act, workers' compensation, and even wrongful death. Cases that have gone to trial have had mixed results, but have included a plaintiffs' verdict of $32 million.7 Several cases, pursued both individually and on a class-wide basis, have also resulted in the closing of apartment complexes, schools and other buildings due to mold contamination.

Laws vary from state to state and can drastically impact whether a party's mold claims will be successful. For example, until recently, New York state courts have largely denied personal injury claims filed by building residents who alleged personal injuries caused by damp and moldy apartment building conditions.8 Courts generally found the causal theory underlying the plaintiff-experts' testimony unsupported by the scientific literature and thus excluded the testimony, effectively shutting the claimants out of court.

A recent New York Appellate Division decision, however, suggests that this may not necessarily continue. Cornell9 involved a woman who alleged that her respiratory and allergic-type symptoms were caused by exposure to “toxic mold” in her apartment building. The trial court dismissed the claims by relying on prior case law, which the court said “resolved the issue of the sufficiency of the current epidemiological evidence to demonstrate causation.”10 But on appeal, the New York Appellate Division reinstated the complaint, finding that the plaintiff's expert causation testimony “easily satisfied” the standard for the admissibility of evidence11 and noted that its earlier decisions did “not set forth any general rule that dampness and mold [could] never be considered the cause of a disease”12. The evidence presented in other cases was simply insufficient, according to the court.

With at least one appellate court now willing to find causation evidence admissible in certain circumstances, it may be easier, particularly in New York, for plaintiffs to recover damages in cases where “toxic mold” exposure is alleged. Indeed, plaintiffs' claims may now be more likely to survive motions to dismiss and motions for summary judgment, thereby increasing the likelihood of their complaints getting before a jury.

Lessons Learned From Hurricane Katrina

Katrina may have spawned more mold-related litigation than any other event in history. That storm has been described as the largest-ever environmental disaster in the United States. Thousands of office buildings, residential complexes, and homes suffered severe and prolonged water damage caused by the incredible flooding and rain, resulting in unprecedented property damage and creating an ideal environment for mold growth.

Building owners and landlords were faced with numerous challenges in the aftermath. But perhaps most significantly, the lack of electrical power following the storm prevented timely efforts to “dry out” buildings and stop the colonization and spread of mold. Indeed, given the difficult conditions following the storm, many property owners were simply unable to remove the water from their properties for weeks, rendering the EPA's advice to “dry out” water-damaged buildings within 24 to 48 hours moot.

Unfortunately, even when conditions improved, many property owners used improper or ineffective treatment methods to clean up mold-affected properties. The cost of proper remediation was undoubtedly a factor. However, hiring untrained or unskilled workers to examine and remove contaminated building materials for the sake of expediency only further exposed commercial property owners and landlords to liability risks.

Following Katrina, adequate training in handling materials exposed to water and moisture were undertaken, and guidelines and procedures were developed to address water intrusion incidents. Some states have even gone so far as to require mitigation experts to be licensed in the effective treatment of water and moisture damage. Now the EPA, Occupational Safety and Health Administration (OSHA), (American Society of Heating, Refrigerating and Air Conditioning Engineers (ASHRAE), the American Industrial Hygiene Association, and even the New York City Department of Health and Mental Hygiene have guidelines and recommendations for the proper remediation of mold, which can be consulted by property owners and managers.

Tips for Mitigating Litigation Risk

In the wake of Superstorm Sandy, building owners and landlords are faced with many of the same challenges seen after Katrina—lack of electrical power and difficulty removing water from their properties. However, property owners and landlords may be able to avoid costly and time consuming litigation by implementing proper remediation strategies now.

The most important advice is to act quickly to begin your inspection and remediation, and if necessary, to hire qualified professionals to help you with the water damage and mold removal issues. Studies have shown that symptoms potentially associated with mold exposures subside when the exposure ceases; thus, remedial measures that minimize mold exposures can reduce the risk of adverse health effects to building occupants.

The following are some tips for building owners and landlords to consider in addition to hiring qualified professionals with engineering/science degrees with significant experience in mold remediation:

•  Mold begins to grow quickly (often within 48 hours) so don't wait to begin your inspection for water damage and mold.

•  Mold needs moisture to grow so remove or dry out all water damaged areas, including personal property, wall board and trim, carpeting and pads, and wood products.

•  Inspections for mold and moisture should include hidden places like behind wallboards, molding, and wallpaper.

•  Dehumidifiers and industrial strength fans can be good methods for drying and controlling the moisture level in buildings areas that have been flooded.

•  Equipment such as infrared cameras, moisture meters, and special scopes that bore holes in cellulose materials to detect moisture and mold might be used by qualified professionals to access damage. Environmental sampling can also be appropriate in some circumstances

•  If property or personal items are cleaned rather than removed, precautions should be taken to protect employees and building occupants when necessary, and under these circumstances the area should be sealed off during remediation. Proper cleaning methods should be utilized.

•  Significantly impacted HVAC and ventilation systems should be inspected by qualified professionals as mold and moisture growth in these systems can cause problems for the entire building.

•  Depending on the circumstances, notify building occupants, employees and others about the remedial measures being taken because proper communication can help avoid future concerns, complaints, and litigation.

•  Consider other environmental issues that may be present in the building, such as asbestos products or lead paint, before beginning your remediation work.

•  Consult your local governmental guidelines and regulations, as well as those of national organizations like the EPA, OSHA, ASHRAE, and industrial hygienist organizations like the American Conference of Governmental Industrial Hygienists (ACGIH) and American Industrial Hygiene Association (AIHA).

•  If your problem is limited in size and scope, make sure that the building staff that will remediate the area is properly trained and, when necessary, uses proper protective equipment and plastic sheeting.

•  Consider adopting a remediation protocol for your building in the event of future incidents so that you are prepared for future events or water leaks.

•  Make sure the individuals that conduct any remediation document their work and take pictures where appropriate to avoid any misrepresentations on the state of moisture or mold growth in the building should disputes or litigation arises.

•  Consult with your insurance agent before any work begins, and access the start of your coverage for wind, water and other sources of damage from natural disasters.

If litigation is a serious threat, consider hiring knowledgeable counsel that can guide you through the remediation process and communications with building tenants and employees. Outside counsel can also assist with such things as risk assessment, document management, property inspections, property damage assessments, remediation, governmental investigations, tenant relocation, and insurance and recovery matters. Counsel can also help deal with the complex regulatory issues that often must be confronted in these cases, including negotiations with federal, state and local regulatory agencies on remediation and cost-recovery matters.

Christopher M. McDonald is the division managing partner of Shook, Hardy & Bacon's General Litigation and Business Services Division. David B. Thorne is chair of Shook, Hardy & Bacon's Mold Litigation Practice, as well as a partner in the firm's Global Product Liability Group. Dale Johnson II is an associate in Shook, Hardy & Bacon's Mold Litigation Practice, as well as its Global Product Liability and Agribusiness & Food Safety Groups.

Disclaimer

This document and any discussions set forth herein are for informational purposes only, and should not be construed as legal advice, which has to be addressed to particular facts and circumstances involved in any given situation. Review or use of the document and any discussions does not create an attorney-client relationship with the author or publisher. To the extent that this document may contain suggested provisions, they will require modification to suit a particular transaction, jurisdiction or situation. Please consult with an attorney with the appropriate level of experience if you have any questions. Any tax information contained in the document or discussions is not intended to be used, and cannot be used, for purposes of avoiding penalties imposed under the United States Internal Revenue Code. Any opinions expressed are those of the author. The Bureau of National Affairs, Inc. and its affiliated entities do not take responsibility for the content in this document or discussions and do not make any representation or warranty as to their completeness or accuracy.

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