The New Wave of Toxic Mold Litigation Against Building Owners & Operators
By Ken Lapatine and Scott
Greenspan, Greenberg Traurig, New York Office
View or download the PDF version of this Alert
Recently, the plaintiffs’ tort bar has launched a wave of toxic mold
litigation against building owners and operators. Numerous publications,
as well as our research, confirm that the number of toxic mold lawsuit filings
is escalating dramatically.
|"The number of toxic mold lawsuit
filings is escalating dramatically."
Mold is found everywhere – both indoors and outdoors. Significantly,
a number of building materials, such as ceiling tiles, drywall, sheetrock,
wood, carpet, wallpaper and upholstery, are ideal places where mold can
Although most molds are harmless, some molds, especially in high concentrations,
may be hazardous to health. These risks include: (1) allergic reactions;
(2) exacerbation of asthma; (3) Hypersensitivity Pneumonitis (HP), which
can cause permanent lung damage; (4) pulmonary hemosiderosis – potentially
fatal lung hemmoraging – in infants; and (5) problems in memory, concentration
and learning. The state of scientific research as to the health hazards
of mold is still early and inconclusive.
Importantly, public awareness of the potential dangers of toxic mold
is escalating. Toxic mold stories have very recently appeared on the front
covers of the New York Times Magazine, the Daily News, and in Time Magazine.
The CBS television program 48 Hours has featured a segment on the hazards
of toxic mold.
The result of the growing public concern over toxic mold has been a wave
of personal injury and property damage lawsuits against the real estate
community and others seeking large damage awards.
Examples of recent toxic mold lawsuits against building owners include
- In New York, nearly 500 tenants of the subsidized housing project,
Henry Phillips Plaza South, located in Manhattan, have filed personal
injury lawsuits seeking over $12 billion in damages.
- In Oregon, a condominium association sued the developer and seller
of new condominiums that allegedly were infested with toxic mold, seeking
$1.9 million in property damages.
- In California, the staff of the California Job Journal, having moved
its entire operations out of a building which it contends was contaminated
with mold, is now suing the building owner.
Ominously, plaintiffs are winning huge mold verdicts. As examples: (1)
a Florida jury ordered the builders of the Martin County Courthouse, which
was infested with toxic mold, to pay $14.2 million to Martin County, a verdict
that was upheld on appeal; (2) on May 7, 2001, the Delaware Supreme Court
upheld a $1 million verdict against a building owner issued to 2 apartment
residents allegedly injured by mold exposure; (3) on June 1, 2001, a Texas
jury awarded a homeowner $32 million after finding that the homeowner’s
insurance carrier acted in an unfair, deceptive and fraudulent manner when
evaluating the homeowner’s property damage claim for mold; and (4) on January
16, 2001, a federal court in California ordered Allstate Insurance Company
to pay $2.5 million in punitive damages to its homeowner policyholder for
Allstate’s bad faith in handling the homeowner’s property insurance claim.
Real estate defendants have also paid out large settlements for mold
cases. Polk County obtained $47.8 million in settlements from a number of
companies involved in the construction of its courthouse (including the
general contractor, subcontractor, architects and consulting engineers),
which was infested with toxic mold. Over 100 courthouse employees and their
families also sued this same group of defendants, recovering approximately
$8.8 million in settlements. In another recent settlement, the homeowners
of a 96-unit town home project in Ventura County, California settled a toxic
mold lawsuit against the developers and contractors of the project for $1,329,224.
The insurance industry has begun to react to this wave of mold litigation.
Insurance companies such as Chubb have inserted absolute mold exclusions
into some of their insurance policies sold to building owners and are denying
coverage for toxic mold claims. And the Insurance Services Office, Inc.,
which drafts most of the insurance polices sold in the U.S., is drafting
an absolute mold exclusion.
Greenberg Traurig has marshaled its legal talent and formed a toxic mold
response taskforce to assist building owners confronted with toxic mold
complaints and lawsuits.
Greenberg Traurig has entered into strategic partnerships with leading
environmental consulting firms and toxicologists to assist the real estate
community with investigating toxic mold complaints and remediating problems,
if they exist. Our toxic mold response taskforce consists of lawyers with
decades of environmental tort, product liability and insurance coverage
Experienced – and prompt – environmental and legal representation are
the best defenses to a toxic mold complaint or lawsuit. A prompt environmental
investigation may reveal that either that there is no toxic mold problem
or that others are responsible in whole or part for the mold problem. And
prompt legal representation can assist building owners in recovering on
their insurance for the mold loss and in crafting a winning defense strategy.
We at Greenberg Traurig, by forming the toxic mold response taskforce,
have pre-positioned the environmental and legal expertise to assist our
building owner clients in handling and overcoming toxic mold claims.
© 2001 Greenberg Traurig
For more information, please review our Litigation or Environmental Practice
descriptions, or feel free to contact one of our attorneys.
This GT ALERT is issued for general purposes only and is not intended
to be construed or used as legal advice. Greenberg Traurig attorneys provide
practical, result-oriented strategies and solutions tailored to meet our
clients’ individual legal needs. The Firm’s responsive approach to client
service often cuts across legal subject matter, applying the right experience
and resources to provide cost-effective solutions.