Mold Liability: The Good, the Bad and the Really Ugly
Years ago my father told me that there were certain four-letter words that just should not be spoken. He said that they were hurtful words and caused others to feel bad. If he were alive today, he would be adding to his list another such word: mold.
This microscopic organism has been around for millions of years, but only recently mold has risen to the forefront of litigation and insurance-related controversies. The construction industry is not immune to these disputes, and it can expect to deal with mold problems for the inevitable future.
Every five years, almost like clockwork, another construction product or "toxin" becomes the darling of plaintiffs' attorneys, and the focus of widespread news coverage. In the 1980s, the hot issues were asbestos and urea-formaldehyde foam insulation. By the 1990s, the focus became radon, fire retardant treated plywood, polybutylene pipe and EIFS. Now, its mold and "sick building syndrome," coupled with splashy lawyer ads warning of "toxic mold" and "black death." It is certainly true that some molds, at high concentrations, can cause adverse health reactions in some people. But most mold that we encounter is of no threat. Unfortunately, the truth has not thwarted the new cottage industry of mold lawyers, testing firms and remediation companies.
While the highly publicized mold "crisis" presents some issues of genuine concern, there are some steps you can take to minimize your liability exposure. This article discusses the science of mold, the impact of mold upon construction, lawsuits and insurance, and offers suggestions as to what you can do about it.
Mold is a ubiquitous, multi-celled, parasitic life form. Over 100,000 species of mold exist in the air, soil and water, and they are found throughout most buildings. Mold requires moisture to survive, and thus it is generally found in buildings around areas with water leaks and high humidity. Removing the moisture typically reduces or eliminates the mold, but spores of the mold may dislodge and become airborne, increasing the likelihood that they will come into contact with persons.
Most mold is harmless. Some mold species, however, produce mycotoxins that cause toxic reactions at certain levels in humans. Stachybotrys and aspergillus are the most common molds that can ? at sufficiently high levels ? produce adverse reactions. The ailments caused by high dose mold exposures include allergic reactions, respiratory difficulties, asthma, infections and rashes, to name a few.
Heavy concentrations of mold can be seen by the naked eye, and may appear as black, green or brown discoloration on wall surfaces. Mold in smaller concentrations is usually not visible, but can still produce unwelcome health problems. Its presence can be determined only by competent testing, usually in the form of air sampling and surface-swipe analysis, which compares the quantity and species of mold found with certain standards, controls and outdoor samples. With the increase in mold claims and publicity, many testing firms have opened for business to capture part of the expanding "mold market." Diligence should be exercised before engaging any purported mold expert or testing firm to ensure that the firm and its evaluators are genuinely qualified. Some competent testing and analytical firms include certified industrial hygienists and toxicologists.
In addition to the recent rise in mold testing firms are those companies now claiming expertise in mold remediation. While testing is relatively cheap, remediation is the "big dollar" item, and it is increasingly common to encounter otherwise unqualified experts advising that the presence of mold in one's house or building necessitates comprehensive decontamination of all interior surfaces. Some remediation firms even urge replacement of all interior walls, flooring and ceilings; however, these extreme measures are rarely recommended under the published scientific studies and government reports. While there is a wealth of information available about mold, much of it is of questionable merit. Some recommended resources on mold, health issues and remediation are available through various Internet web sites, including:
- the EPA's "Mold Remediation in Schools and Commercial Buildings"
- the CDC's "Questions and Answers on Stachybotrys chartarum and other molds"
- the New York City Department of Health & Mental Hygiene's "Guidelines on Assessment and Remediation of Fungi in Indoor Environments"
The consensus of expert opinion is that the easiest way to reduce the growth of mold in buildings is to prevent water intrusion and reduce indoor humidity. If mold continues to flourish, then recommended remediation measures range from installing more dehumidifiers, to cleaning affected surfaces (small area option), to removal of wall and flooring surfaces (large area, extensive contamination). The web sites referenced earlier can provide a more thorough discussion of remediation options.
Increasing Mold Claims
The number of mold-related lawsuits nationwide is now in excess of 10,000, and is predicted to reach 50,000 in several years. Why? There are various reasons. First, there is a growing belief that well-intentioned efforts to make buildings more energy efficient and air-tight have contributed to a buildup of indoor air contaminants and moisture. Thus, while improved technology reduces costs to heat and cool a building, some undesired effects may also arise. Second, some argue that certain building construction practices contribute to water intrusion (e.g., poor sequencing of work, lack of adequate flashing, sealant, etc.). Third, design flaws in certain building products (e.g., windows with inadequate drainage) also permit water to penetrate into wall cavities, and once there, some products (e.g., barrier EIFS) may prevent that water from exiting the building wall.
Apart from construction-related issues, the increase in mold claims is attributable to the combination of significant print and electronic media publicity, increased advertising by lawyers and mold testing firms, substantial jury awards in several cases, and general lack of understanding about mold by many unsuspecting building occupants. As an example of the growing focus upon mold, a Google search for the word "mold" yields over 3.5 million results. As for the high jury awards, most have arisen in homeowner disputes with their insurers who refused to pay for the cost of mold remediation in their insured's home. Thereafter, the insurers were sued for bad faith, and juries awarded multi-million dollar verdicts. This has led only to further publicity about mold, and an increased desire by many insurers to exclude coverage for mold-related claims.
What Should You Do
The mold "crisis" is not going away soon, but you can take various steps to reduce your liability exposure. First, research the mold issue, using the web site links referenced earlier or other credible sources. Learn more about what mold is and what it can do.
Second, as you are involved in construction activities, be alert to water intrusion problems. Your crewmembers and other trades on-site should be coordinated to minimize the exposure of interior building materials to the elements. Focus on proper sequencing of work and selection of building products designed to prevent water intrusion. Secure the building envelope as soon as practicable, and inspect for proper sealant, flashing and points of water entry. If elevated moisture is detected, take prompt measures to eliminate it.
Third, educate your employees about mold issues and implement a plan so that any complaints about water intrusion or mold are reported immediately to a competent decision-maker for appropriate, timely response.
Fourth, carefully examine your insurance coverage. Many liability policies now exclude claims related to mold. Further, some insurers decline coverage for mold claims based upon "absolute pollution" and other policy exclusions. If you are the target of a mold claim, place your insurer on notice immediately of such claim; you can battle the coverage issues later. Notification delay may result in a declination of coverage.
Fifth, in reviewing your construction contracts, seek to protect yourself through indemnification provisions whereby your potential liability may be transferred to others involved in the design, construction or maintenance of a building.
Finally, defend mold claims aggressively, hopefully through counsel engaged by your insurer. While there is considerable adverse publicity about mold, the reality is that it is medically difficult to prove causation of many mold-related personal injuries. Many factors wholly unrelated to mold may well cause a claimant's alleged injuries. A truly viable mold personal injury claim requires good science, testing and medical evidence to demonstrate that an alleged injury was more likely caused by mold than other factors. Further, any defendant in a mold lawsuit should also consider adding other co-defendants to the lawsuit who may bear responsibility for: 1) building design, construction or maintenance; or 2) product defects that contribute to water intrusion or mold growth within a building.
So far, it seems that virtually everything about mold is negative. What good can be said about it? Well, absent mold, we would have to do without beer, bread, cheese, penicillin and a thousand other things that many of us use and appreciate daily. Mold will remain another bad, four-letter word, but one that can be managed with prudence. It's the other four-letter words I'll worry about with my son. In the meantime, I'll tell him this:
There once was a lawyer quite bold
Coveting wealth before he was old
His lawsuits craved facts
But he was quite lax
So he claimed all his clients had mold
About the Author
Warren Lutz, Esq., is a Director with the Washington, D.C., law firm of Jackson & Campbell, P.C. He specializes in product liability, toxic torts and construction litigation.
This article is not intended to provide legal advice, but to raise issues on legal matters. You should consult with an attorney regarding your legal issues, as the advice you may receive will depend upon your facts and the laws of your jurisdiction.