Articles

MOLD EXPOSURE: WHO OWNS THE PROBLEM?

by:
D. Wesley Newhouse
Newhouse, Prophater, Kolman & Hogan, 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