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Toxic Mold: Engineers, Builders, Contractors And Landlords Beware

By Linda Alderman
Over the past few years allegations of damage arising from the presence of toxic mold in buildings have resulted in the filing of hundreds of law suits for property damage and/or personal injury.

Plaintiffs, many of whom are seriously ill, are suing building owners, property managers, architects, contractors and commercial and personal lines insurers for millions of dollars -- and winning. 


What Is Toxic Mold?
Molds are fungi that grow when damp conditions are present. Some mold spores are relatively benign, while others are believed to cause health problems for humans. Mold spores that cause an adverse health reaction are referred to as "toxic." The effect on humans will depend on the type of mold, the metabolic byproduct of the mold, the extent of the contact and length of exposure, as well as the individual susceptibility of the person exposed. 

The overwhelming majority of molds are harmless, but exposure to several types of mold has been associated with the potential for adverse health effects. When a mold produces mycotoxins (a poisonous substance produced by a fungus) it becomes dangerous to those who are exposed to it through ingestion (eating or inhalation) or through skin contact. The causal relationship between exposure to mold and human health is being actively studied in the medical community at this time, however, research does exist that suggests that toxigenic molds can cause problems with the vascular, digestive, nervous, urinary and reproductive systems of the human body. Symptoms include headaches, rashes, lung disease, and cognitive memory loss. 

As of this writing there are no federal or state regulations that establish standards for exposure to "toxic" mold, nor are there federal or state standards for mold abatement.

Toxic Mold Litigation
The increase of toxic mold cases may be related to the manner in which buildings have been constructed. For newer buildings, the same insulation that prevents drafts also may prevent airborne chemicals and moisture from venting. This increased moisture buildup can create a breeding ground for mold and other bacteria. In older buildings deterioration of building materials may allow moisture to accumulate in places where mold spores and other bacteria can grow. 

Litigation related to toxic mold has resulted in a number of large damage awards. In two separate cases, courthouses in Florida were evacuated as a result of toxic mold. The damage award for the remediation and costs for the Polk County Courthouse was approximately $100 million dollars. In the case involving Martin County, the county was awarded $11.5 million in damages plus $2.9 million in interest. In Texas the builders of a private home contaminated with toxic mold were ordered to pay damages of $32.1 million in June 2001. The $32.1 million award represents $6.2 million for replacement of the home and contents, $5 million for mental anguish, $12 million in punitive damages and $8.9 million for legal fees. In 1999, a Delaware jury found the owner of an apartment complex liable for $1 million in damages to three tenants for medical expenses, permanent impairment and pain and suffering associated with exposure to various mycotoxins, bacteria, fungi and other toxins while living in that apartment complex. A homeowners group in California sued builders and contractors alleging property damage and bodily injury due to mold contamination and the matter settled for $1.3 million. 

Implications to the Insurance Industry
The insurance industry is bracing itself. Some courts have held that the pollution exclusion does not apply to mold claims because it is not the traditional type of "pollutant" for which the exclusion was drafted to cover. In one case the insurer argued that the pollution exclusion was broad enough to include a home environment contaminated with mold. In rejecting that argument the court stated that because the injuries were caused by exposure to mold that grew from water vapor trapped in the walls, that "no contaminants were released, but rather formed over time as a result of environmental conditions." One court held that even where there was a mold exclusion in a homeowner's policy that it was inapplicable because the mold growth occurred as a result of a leaking roof. Some courts, however, have analogized mold contamination to lead paint flaking in holding that it falls within the plain language of the pollution exclusion since it disperses into the air, like lead flakes from paint. Other courts have stated that a pollution exclusion should not apply to substances that are commonly found in the environment. 

Personal injury and property damage claims related to mold exposure are increasing at lightening speed. Engineers, developers, landlords, contractors, subcontractors, architects, property owners and managers, insurers and others need to quickly evaluate how they can proactively manage the risk associated with potential future claims of mold infestation. 

Attorney Alderman  regularly represents land owners, operators, and other impacted parties in matters related to Environmental Law, Wetlands, Land Use or Zoning. 

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