The Return of Mold

A “Friends” reunion; a “Sopranos” prequel movie; Brittany Spears—pop culture from the early 2000s has made a comeback. Unfortunately something far less enjoyable from that era may also be finding its way back into our lives: mold litigation. We see multiple signs of a mold sequel and offer advice on how to avoid becoming a star of this show.

Mold cases got a boost in the early 2000s from a verdict in Ballard v. Farmer’s Insurance Group, when a Texas jury awarded a homeowner $32 million arising from alleged “toxic” mold issues. Although Ballard was an insurance bad faith case, and the verdict was later reduced on appeal, the news of this trial set off a wave of litigation, resulting in significant personal injury verdicts in California and other jurisdictions. When former “Tonight Show” sidekick Ed McMahon settled his own mold lawsuit in 2003 for over $7 million, the gold rush was on.

However, a series of defense verdicts and greater scrutiny of the medical and scientific basis for mold personal injury claims slowed the number of filings after the initial wave. The high cost for plaintiffs’ counsel to retain industrial hygiene, mycology, and allergy/immunology experts to litigate mold cases added to their shrinking numbers in recent years.

But, like other turn-of-the-century phenomenon, mold cases may be coming back. Since the start of 2021, stories about mold-related personal injuries have emerged in the media. In May, a South Florida jury awarded $48 million to a tenant who alleged she had been sickened by mold in her unit. At the same time, the media ran stories of military families suing the private operators of housing at the Naval Postgraduate School in Monterey, California for exposing their children to mold (complete with photos of a rash-covered baby). Earlier in the year, Miami condominium owners sued for mold intrusion after a consultant cut a hole in their roofs.

And the courts themselves are now part of the story. In Springfield, Massachusetts, the main courthouse has been shut down through parts of 2021 due to mold, which allegedly led to numerous health issues.

The reasons behind the new surge in mold claims are not entirely known. Litigation trends build on themselves. Whether upheld on appeal or actually collected, one large reported verdict is enough to spark the filing of similar lawsuits. But we see additional reasons for the uptick in mold claims.

Work from home. This pandemic-driven trend causes individuals to both spend more time at home, and to expect their residence to be a place of shelter from outside dangers. The presence of mold in a work-from-home environment both lengthens time of exposure and may be met with a more visceral reaction when it is seen as invading a safe space.

Airborne pathogens. Little more needs to be said in regard to another pandemic-driven development—the general public’s newfound awareness of the dangers of viruses. Fungi, like viruses, are a potential airborne pathogen. Those who consider themselves particularly susceptible to serious complications due to the COVID-19 are likely to be more aggressive in responding to possible exposure to mold spores as well.

The Champlain Towers South condominium collapse. The tragic June 24, 2021 collapse of a 12 story condo building in Surfside, Florida was a national story for days. It focused the public on the dangers of deferred maintenance and the long-term consequences of ongoing structural issues in residential buildings. Water intrusion and mold exposure can also result from these same problems.

Decline in asbestos lawsuits. The number of lawsuits due to asbestos exposure have reportedly declined at an 8% annual rate over the last five years, with the trend accelerating last year. The population of potentially exposed workers will continue to shrink. Given the scope and number of asbestos lawsuits that have been filed over the course of the last 25 years, even if only a handful of asbestos attorneys look to mold as a potential replacement, the increase in the number of mold lawsuits filed will be significant.

Landlord Perception

At the same time, habitability claims grounded in mold-related issues are seeing traction as a byproduct of the pandemic. Eviction moratoriums enacted on the national, state, and local levels did not have a corresponding relief from the landlord obligations for mortgages, property taxes, maintenance, and property management expenses. Request for repairs from a delinquent tenant may have been either ignored or otherwise not met with a rapid response by the frustrated landlord. And delays allow time for microbial growth while creating an unseemly paper trail of evidence for the trier of fact.

Escalating rents in all markets further engender hard feelings for those locked into high rents or facing increases post moratorium. Rents rose 10.3% annually in professionally managed apartments in the 2021 third quarter, according to data from RealPage, a real estate data analytics firm. At the same time, vacancy rates plunged below 3%. This heightened housing strain has strengthened the position of the landlords. 

Landlords are often perceived by jurors as the “bad guys” who are raising rents while delaying repairs. Jurors tend to perceive property owners as part of big business—even the mom-and-pop operators of just a few units. If a jury in Florida can see fit to award $48 million to a home health care worker for living in an apartment for 18 months with mold, those handling the defense of these cases should know this area is fraught with peril. Changing the perception from “bad” to “good” must be curated during the repair process, underscoring best efforts to remediate. This same level of attention must be brought to every aspect of discovery and trial. 

Combating Mold Claims

Although occupational exposure to mold has always been a concern, the targets of mold litigation remain mostly those with interests in real property: developers, builders, landlords, property management companies, and homeowners’ associations. What can these groups do to avoid being swept up in a new wave of mold litigation? While every situation is unique and requires targeted advice, we offer the following general guidelines.

Rely on established authorities. Over the course of the pandemic, the Centers for Disease Control & Prevention (CDC) has been the primary source of federal guidance. Whether or not accepted by all members of the public, the CDC’s views are established and authoritative. Current CDC statements on mold include:

• Molds “are found both indoors and outdoors in all climates, during all seasons of the year.”
• “There are no established health-based standards for acceptable levels of biological agents in indoor air. We do not recommend routine air sampling for mold with building air quality evaluations because air concentrations of molds cannot be interpreted with regard to health risks.”
• “There is always some mold around. Molds have been on the Earth for millions of years. Mold can get in your home through open doors, windows, vents, and heating and air conditioning systems. Mold in the air outside can be brought indoors on clothing, shoes, bags, and even pets.”

Expect strong reactions. The CDC’s findings are anything but alarmist. For instance, despite widespread publicity regarding so-called “toxic” mold such as Stachybotrys chartarum, the CDC states that these “toxic” molds “should be considered the same as other common molds which can grow in your house or workplace.”

Despite the science, many individuals will react emotionally to mold in a building due to misinformation. The assessment of Massachusetts State Representative Angelo Puppolo in regard to the Springfield Courthouse is a good example: “This building is sick. Even if the studies come back and say the air quality is good, the ducts are good; the electrical is good, there is still an underlying issue here. People have gotten sick: People have died of cancer, they’ve died of ALS.”

That level of emotion always makes it difficult for a potential defendant to work constructively with a claimant.

Take practical steps. Ignoring a water-intrusion problem is never a good idea. It can lead to structural issues in addition to mold. But remember, the CDC does not recommend routine testing for the presence of mold—“We have found that thorough visual inspections and/or detection of problem areas via musty odors are more reliable.”

Once moisture issues are located, they must be addressed. “Wetted materials need to be dried within 48 hours of getting wet or subsequently removed, and necessary repairs need to be made to prevent further water entry into the building.”

Hire the right help. The wave of mold lawsuits 20 years ago gave rise to a cottage industry of mold “experts” who provided potential defendants with testing, remediation, and even health consulting services. They often did more harm then good and many claims resulted from botched clean-ups. Due diligence with respect to credentials, academic backgrounds, and matching the right consultant to the right job is always worth the effort.

Defending Mold Claims in Court

For those claims in litigation, the defense team should be mindful of changing juror trends and attitudes toward landlords. For example, bad guys are not raising rents to be greedy; they, like their tenants, also have escalating costs. With the labor shortage, finding timely repair contractors is more challenging. Careful attention is required to craft the narrative to recast the landlord in the proper light given developments over the pandemic. 

One lesson from years past is that, wherever there is mold, there is water intrusion; where there is water intrusion, there are areas of potential construction deficiencies that could present oppor-tunities for blame and/or risk transfer. We have seen the advent of sublimits, exclusions, and other coverage language that developed over the years to address these issues. One thing we know: The tort and claim is evolving and may be back in the form or guise of the habitability genre.

Unlike Jennifer Aniston in “Friends,” mold litigation is not a happy memory for most. The key to handling a potential new wave of mold claims is to be responsive in the right way. Endless air and surface testing won’t convince some claimants that a mold problem has been handled. But if you prevent moisture and water intrusion into a building envelope, most mold issues will handle themselves. If claims persist, hire the right experts and consultants. As with most problems, doing the job the right way the first time always pays off.