Toxic Mold Litigation
Charlie Kingdollar, Stamford

The number of lawsuits filed alleging injuries and/or damages caused by toxic mold continues to increase. Five recent cases provide good examples of the number of defendants that can be named as defendants in these cases. As these cases illustrate, contractors, subcontractors, construction managers, property managers, architects, construction component suppliers and building owners have all been targeted in toxic mold litigation:

1) About 100 workers employed at the Visalia County, California courthouse filed suit alleging that exposure to toxic molds in the courthouse caused a variety of adverse health affects (Saddler v. County of Tulare). Injuries alleged include respiratory ailments, skin rashes, headaches, nausea, vertigo and memory loss. The suit, which alleges that various contractors negligently developed, designed, planned, and built the courthouse, also maintains that the county failed to properly maintain the building. Defendants include: the County of Tulare, Kitchell Capital Construction Management, Garcia Construction Inc; Bakersfield Glass Co., Superior Academy Granite Co., Fresno Marble and Tile, San Francisco Lathing Co., Pacific Electrical & Mechanical Co., E.H. Moore & Sons, Kitchell CEM, Beaver Construction, Forcum/Mackey Construction Inc., C.W. Forcum Construction Inc. and Turrupseed Electric Service Inc.;

2) A Washington school teacher filed suit against the general contractor, construction manager, and architect of the Woodward Middle School in Bainbridge Island School District alleging exposure to toxic mold in her classroom and other places in the school caused her personal injuries (Fulgham v. Merit Construction Co.). The plaintiff alleges certain construction defects in that the school's windows walls and roof do not repel and shed moisture as they should. Defendants, Merit Construction Co., URS Consultants Inc. and Northwest Architectural Co. subsequently filed suit against several subcontractors including Dunham Glass Inc., Henrickson Co. Inc., Wright Brothers Roofing Inc., Fairweather Masonry Co. Inc., and MTR Sheetmetal Inc. (Merit Construction Co. v. Dunham Glass Inc.);

3) Teachers and students from Riverside High School,in Washington filed suit against the Riverside School District and its Superintendent of Schools, as well as the contractors and architect of an addition built onto the school (Mielke v. Riverside School District). Plaintiffs are alleging that exposure to mold spores in the sir of the addition is causing their illnesses. Toxic molds (staccybotris, aspergillus, penicillium and ulocladium) have been discovered in the building and a portion of the building had to be evacuated in January 2000. The suit includes allegations of construction defects, faulty design of the ventilation system, and faulty design of the windows used in the in the building. The suit also accuses the school district of civil rights violations for failing to "exercise reasonable care in insuring a safe school environment." Besides the school district and Superintendent, defendants also include Jeld-Wen Inc., Shea Construction Inc. and Architects West Inc. The defendants have countersued each other and have also sued other subcontractors as third party defendants including construction component suppliers;

4) Three Maryland office workers filed a lawsuit seeking $3 million for personal injuries arising out of exposure to toxic mold (Eddy v. Fegan). The suit alleges that mold and fungi "were allowed to flourish" within the building's 30 years old heating, ventilation and air conditioning system. Defendants are the current and former building owners, the current and former property managers and the on-site building supervisor. The plaintiffs' injuries include asthma and reactive airways disorder; and

5) The former residents of two Seattle apartments have filed suit against the building owner alleging that substandard construction and maintenance resulted in toxic mold growing between the interior walls of their apartments causing the residents to become chronically ill (Foppe et al. v. Archstone Communities Inc.). The plaintiffs have been diagnosed with asthma and other allergies. An inspection of the apartment building confirmed the presence of staccybotris in both apartments. The lawsuit alleges that the landlords knew of the water leakage before the tenants moved onto the building and performed only cosmetic repairs without disclosing the water damage to the tenants. In addition to the damages being sought for bodily injuries, the former residents also seek tens of thousands of dollars in property damage.

The expansion of defendants in toxic mold litigation to include construction component suppliers is new and adds an element of products liability coverage to the completed operations exposure facing contractors and subcontractors.

One cannot help but notice some brewing similarities in the burgeoning toxic mold litigation and Superfund cleanup litigation in that:

1) both types of claims will often allege both bodily injuries and property damage;
2) multiple plaintiffs can allege injuries which may result, and indeed has already resulted, in class action suits:
2) it seems a wide net will be cast to pull into litigation as many defendants as possible; and
3) primary defendants will in turn file suit against other potentially responsible parties to seek contributions for damages payments.

Defense expenses of toxic mold claims could be considerable. Toxic mold litigation involving allegations of bodily injuries will likely involve the use of medical expert witnesses by both plaintiffs and defendants. The additional litigation caused by primary defendants suing third party defendants will likely increase defense expenses.

Having no standard cleanup regulations pertaining to toxic mold might also increase costs as parties argue how clean is clean. Mold not thoroughly remediated can become problematic within months of the cleanup's initial completion and require more intensive/expensive remedial efforts. This in turn, may result in claims against environmental consultants hired to measure and/or remediate toxic mold which could impact Environmental Consultants E&O policies

We are still at the leading edge of toxic mold litigation facing property/casualty insurers, but the wave is gaining force as media coverage and case awards and settlements spur not only the plaintiffs' bar into action but also certain property owners. For example, after several recent school closings in Connecticut due to toxic mold, the City of Bridgeport has decided to take air samples in all its public schools checking for mold spores.

Toxic mold has quickly moved far from the hypothetical, possible future, insurance issue as liability insurers are already receiving notifications of toxic mold claims.

Legal Disclaimer: This information was compiled by General Reinsurance Corporation and is intended to provide background information to our underwriting staff, as well as to our clients' underwriters. The information may need to be revised and updated from time to time. You should consult with your own legal counsel before relying upon it.