The Mold Crisis in California
 
December 12, 2003
 

According to reports, approximately 10,000 mold-related lawsuits are pending across the nation, and California has become one of the leading states for mold-related litigation. This article examines how the California courts and legislature have responded to this mold crisis.

It is becoming common knowledge that mold exists virtually everywhere. Mold growth occurs wherever water and a food source (i.e. cellulose in wood, ceiling tiles, carpet backing, etc.) are present. Cases involving mold generally arise from conditions where some type of water has intruded into a building.

Although the possibility of exposure to mold is pervasive, most people function in its presence without any adverse health effects. About 10 percent of the population, however, is especially sensitive to mold and may experience common allergic reactions to it. Specific types of mold such as Aspergillus, Penicillium, Fusarium and Stachybotrys can produce byproducts, known as mycotoxins, that are alleged to be toxic and to cause adverse health effects like memory loss, pulmonary bleeding, chronic fatigue and neurological damages in even non-sensitive individuals. The causal association between toxic molds and adverse health affects is being questioned within the scientific community.[1]

Mold became a “hot-bed” for litigation when on June 1, 2001 a Texas jury awarded Melinda Ballard and her family $32.1 million in a mold-related lawsuit against their insurance carrier. Allison v. Fire Ins. Exch., 98S.W.3d 227, 238-40, 248-59, 265-65 (Tex. App. Austin 2002). What many failed to acknowledge, however, was that this was not a case about injuries caused by mold. The trial court excluded all evidence of the plaintiffs’ personal injuries and the jury found their insurance carrier liable only for its improper handling of the plaintiffs’ insurance claim for property damage caused by mold. The appellate court reduced the jury award to about $4 million. [2]

A few months after the Ballard verdict, on November 8, 2001, a California jury awarded Darren and Marci Mazza and their eight-year-old son, Bryce, $2.7 million after a two-week trial. Mazza v. Schurtz, Case No. 00AS04795 (Sacramento Superior Court). Unlike the Ballard case, which was an insurance bad faith claim, the plaintiffs here successfully sued the owners and managers of their apartment for personal injuries they suffered as a result of mold. This is believed to be one of the largest verdicts in a mold personal injury lawsuit.[3]

In this case, the Mazzas became seriously ill and suffered numerous health problems within six months after moving into Sacramento’s Partridge Point Apartments. Darren suffered from headaches and heart problems, and was hospitalized for acute respiratory distress. Marci also had reactions to the mold, and Bryce awoke one morning with a mouth full of canker sores. The apartment complex had the molds Stachybotrys, Aspergillus and Penicillium on various surfaces, in the air of the Mazza’s home, and in a carpet test sample. The Mazza family was ultimately forced to move out, leaving their belongings behind and incurring nearly $125,000 in medical bills. [4]

After the Mazza Case, numerous lawsuits were brought for mold-related claims, including the high-profile celebrity suits brought by Ed MacMahon and Erin Brockovich, that moved California to the forefront of publicity about mold. Due to the flurry of mold-related lawsuits, former Governor Gray Davis signed Senate Bill 732 in October 2001, known as the California Toxic Mold Protection Act (Health & Safety Code § 26100, et. seq.), making California one of the first states in the nation to attempt to establish legal guidelines relating to mold. [5] The Act, enacted on January 1, 2001, authorizes the Department of Health Services (DHS) to consider the feasibility of adopting permissible exposure limits to mold in indoor environments. Subsequently, DHS is to develop and adopt guidelines for the identification and recognition of mold, for permissible exposure limits to mold to avoid adverse health effects, and for the remediation of toxic molds. To accomplish these tasks, the DHS is to convene a task force of volunteers to advise the DHS on the development of these new standards for mold.

The Act also provides for various disclosure requirements for sellers, owners, transferors, landlords and industrial tenants related to the presence of mold, or to chronic water intrusion exceeding the permissible levels set by the Act. The legislation has provided that these disclosure requirements will not become effective until six months after the adoption of DHS’ proposed guidelines, which have not yet been established.[6] Further, AB 284, enacted at the same time as the Act, requires the California Research Bureau to perform a study of fungal contamination in indoor environments.

Despite the seemingly bold response by California’s legislature to the perceived mold crisis, little has been done to implement the Act due to lack of funding. On September 30, 2002, a budget trailer bill, AB 442, was signed that authorized the DHS to establish a fund to receive voluntary contributions to support the implementation of the Act. As of March 13, 2003, the DHS had been able to preliminarily establish the fund and had received 187 individual volunteers, but lack of funding has prevented it from convening the task force.[7] The DHS estimated that it needs $964,000 to initiate and complete its proposed work plan for implementing the Act over a 2.5 year period.

The current lack of evidence regarding the kinds and levels of mold that are potentially dangerous has created great uncertainty in determining potential liability. This uncertainty has instilled fear in building owners, sellers, realtors, contractors and others who are in a position to be hit with huge verdicts. In the current climate of mold hysteria, it seems that the discovery of any amount of mold could potentially provide a basis for a lawsuit and for significant liability. The lack of funding for the DHS study only worsens these concerns.

In actuality, however, the effective result of the current lack of scientific and medical standards for mold exposure levels and a lack of conclusive evidence linking mold to adverse health effects is that plaintiffs bear a difficult burden of attempting to prove that injuries were in fact caused by exposure to particular molds. Proving causation is thus one of the most significant problems a plaintiff must overcome to prevail in a toxic mold case.

Because mold exists everywhere in the natural environment, and because people have lived with mold throughout human existence without knowing of its ill health effects, it is not enough for a plaintiff to prove merely that a potentially toxigenic mold exists in a space he or she occupied. As reported by the DHS’ Environmental Health Investigations Branch:

Toxigenic fungi, including S. chartarum, may not produce toxins, depending on several factors, including the specific fungal strain and the organic substrate it is metabolizing. Thus, isolation of a potentially toxigenic fungus from a building does not indicate the occupants have actually been exposed to mycotoxins … there are no readily available methods to test building air or materials for mycotoxins.” [emphasis added][8]

Thus, the plaintiff faces an uphill battle to establish a causal linkage between the exposure to mold and the injuries attributed to the mold. This link is not always available.

For instance, in Tarp v. E&W Associates, No. 5965603 (Fresno County Superior Court), a husband and wife sued real estate developers after leasing a business space contaminated with Stachybotrys chartarum as a result of a series of flooding events. The plaintiffs, unable to introduce any credible evidence that the health effects they suffered were causally related to the leasehold they occupied, or that the defendants were directly responsible for their injuries, lost the case. The wife’s credibility had been greatly diminished when it was shown that she had a medical history of other ailments, including Bell’s Palsy and possible multiple sclerosis, well before she occupied the leased property. In addition to losing the case, plaintiffs were required to pay the developers’ attorneys’ fees of $653,000 because of an attorneys’ fees clause contained in the plaintiff’s lease agreement.

Similarly, in Allison v. West Del Amo Pacific Condominium Assoc., No. YC040331 (Los Angeles Superior Court), the jury found in March 2002 that the mold discovered in the plaintiffs’ condominium did not cause their claimed medical conditions of brain dysfunction, memory loss and fear of developing cancer. The plaintiffs had sought $1.5 million based on mold growth caused by a leaking pipe above the guest bathroom and on the condominium association’s failure to eliminate the mold despite their complaints.

Also, in an unpublished opinion, Dick v. Pacific Heights Townhouse, 2002 Cal. App. Unpub. LEXIS 8957, the appellate court affirmed the trial court’s ruling that the plaintiff failed to sustain her burden of proving that the broken sewer pipe outside her townhouse, which resulted in the growth of mold, caused her medical condition. In so holding, the court rejected the plaintiff’s assertion that the “substantial factor” test for causation should be adjusted to accommodate the difficulties in establishing causation because, according to the plaintiff, contact occurs at a microscopic level and the toxic exposure has not yet been fully explored by the medical community.

These cases highlight the importance of causation in a “toxic mold” case. They are a warning that the success of a mold-based claim will depend, in large part, on proof of causation – that the defendant’s conduct caused the growth of the mold that caused the damage or injury.

Until reliable scientific evidence or governmental standards are established, building owners and others that are vulnerable to a lawsuit will continue to face uncertainties in knowing what levels of mold will be potentially dangerous and will therefore expose them to liability. Plaintiffs, on the other hand, will continue to face difficulties in meeting their burden of proof. Under the current conditions, potential litigants are well advised to invest time and resources into obtaining expert opinions and medical evidence.

For more information, e-mail Steven Weber at steven.weber@hklaw.com, or call toll free, 1-888-688-8500.

_____________________

1. The Association General Contractors of America, Managing the Risk of Mold in the Construction of Buildings.

2. Allison v. Fire Ins. Esxch., 98S.W.3d 227, 238-40, 248-59, 265-65 (Tex. App. Austin 2002); Kirk Hansen, Mold: The Fungus Among Us Is Difficult to Evict, Insur. J. (May 9, 2003), at http://www.insurancejournal.com/news/exclusive/national/2003/05/09/28845.htm/print; Catherine Tapia, Calif. Mold Cases Closely Watched in Wake of Large Plaintiff Awards, Insur. J. (Dec. 24, 2001), at http://rvclaw.com/insurancejournal-12/24/01p.asp

3. Mazza v. Schurtz, Case No. 00AS04795 (Sacramento Superior Court).

4. Ibid.

5. Randy J. Maniloff, Mold: The Hysteria Among Us – Exposure to Mold Causes Bad Faith Claims Against Insurers, Mealey’s Litigation Report: Mold, Vo. 2, #11 (Nov. 2002).

6. Cal. Health & Safety Code § 26100, et. seq.

7. SB 732 (Toxic Mold Protection Act of 2001) Implementation Update, March 2003, Dep’t of Health & Human Services Agency, at http://www.cal-iag.org//SB732update.htm.

8. “Misinterpretation of Stachybotrys Serology, Cal. Dep’t of Health Services: Envt’l Health Investigations Branch (Dec. 2000), at http://www.dhs.ca.gov/ehib/ehib2/topics/erologyf2.htm; Catherine Tapia, Fear of the Unknown – The Mold Issue Raises More Questions Than Answers (Part II), Insur. J. (Sept. 10, 2001), at http://rvclaw.com/insurancejournal-2p.asp.