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2012 Mold Litigation Update – News Stories, Studies Continue To Focus on Mold Despite Lack Of Large Personal Injury Verdicts

March 20, 2012

Every year at this time, we review developments in mold litigation from the past twelve months, with an emphasis on personal injury claims. A decade ago we saw widespread media interest in “toxic” mold and an uptick in lawsuits. That was followed by a series of defense victories in the courtroom, largely built on scientific studies which properly framed the nature and extent of injuries and illnesses which could result from mold exposure. The number of mold personal injury cases declined, but they never went away and in the last several years we have seen a number of multi-million verdicts and settlements, contrary to our own expectations that mold personal injury cases were a dying trend.

In 2011, we did not have any million dollar plus verdicts reported.  However, as set forth in this report, mold personal injury claims continue to be the subject of media reports, scientific studies and litigation. Because mold cases often involves a number of substantive areas of the law, including construction litigation, property damage, personal injuries and insurance law, those with an interest in real property and their insurers and counsel need to be aware of the interplay between each of these interests when mold claims occur. Failure to do so can create on-going problems and lead to protracted litigation.

Celebrity Mold News: Did Brittany Murphy Die From Toxic Mold?

We normally do not cite the Hollywood celebrity website as a source, but the mold story likely to get the most publicity in 2012 is the claim that actress Brittany Murphy, who passed away in 2009, and her husband both died as a result of exposure to “toxic” mold. Sharon Murphy, the actress’ mother, has filed a legal malpractice suit in the Los Angeles County Superior Court. The defendants are the attorneys who represented her in a construction defect case against the builders of the home where Brittany died. The current lawsuit alleges that the construction defects led to mold contamination and, ultimately, the two deaths. The alleged malpractice is the result of the attorneys in the construction defect action settling the matter without advising Sharon Murphy of her right to file a wrongful death claim. The settlement agreement in the construction defect case apparently waived all of Ms. Murphy’s rights against the defendants, including the right to file a wrongful death lawsuit, allegedly without her knowledge or consent.

The potential that mold exposure caused the death of these two individuals is minimal, but the publicity from this story will likely result in a new wave of media attention for mold personal injuries. Ed McMahon’s well known lawsuit was at the vanguard of publicity for the first wave of mold claims.  The allegations here are more serious, i.e., that the mysterious deaths of two young Hollywood celebrities were caused by mold. The inevitable result will be that more people with unexplained health problems will blame mold. That in turn will cause more inquiries to plaintiffs’ attorneys and a potential uptick in lawsuits.

This story also raises an important issue for attorneys handling construction defect claims. Many defect cases involve water intrusion, moisture damage and even specific allegations of mold contamination, but most do not include claims for personal injuries. In settling these cases should defense counsel insist on a release that includes bodily injuries? Is it malpractice for plaintiff’s attorneys to give such a release? The parties to large multi-home residential construction defect actions normally prefer to ignore or exclude personal injury issues. The legal malpractice lawsuit by Sharon Murphy highlights the potential problems for both sides in any construction defect case involving a water loss if bodily injury claims are ignored.

Largest Allergy Study Ever Conducted Shows Significant Increase In Mold Sensitivity

One common theme of our past updates is that mold allergies are the most prevalent illness associated with exposure. Mold is a significant environmental allergen. While the resulting symptoms are often limited to watery eyes and sneezing, mold allergies are a real health problem.

It has been estimated that six percent of the general population has mold allergies. With more than 1 in 20 individuals having allergic reactions to mold, there is a significant chance that plaintiffs in a mold case will be hypersensitive to fungi. These facts undercut arguments that mold does not cause any health problems.

In 2011, Quest Diagnostics released the results of the largest analysis of allergy test results ever conducted. The study found that in the last four years, the number of patients testing positive for environmental allergies increased by 5.8%.  However, the rate of increase for sensitization for mold was twice as high – 12%.

 The significance for those with an interest in mold litigation is that an increasing percentage of the overall population has mold allergies. If these individuals experience a water loss, work in a building with moisture intrusion or otherwise are placed in a situation where there is a likelihood of mold growth, allergic reactions may be triggered. If litigation results, individuals with mold allergies have a much better chance of reaching a jury with their claims than those who allege that they have suffered a “toxic” reaction. Generally it can be expected that damages based solely on allergic reactions to mold will be insignificant, but any increase in the percentage of the population with a legitimate health problem due to mold also increases the potential for mold personal injury litigation.

Multi-Million Dollar Verdict For Owners Of Moldy South Carolina Condominiums: What About The Personal Injury Claims?

The largest reported verdict for a mold related claim in 2011 was $7.7 million awarded to the owners of 216 condominium units in South Carolina. The verdict was on top of $8 million in settlements. The owner’s initial complaints included mold and air quality issues. Their subsequent lawsuit alleged that shoddily installed stucco allowed water to intrude behind walls, damaging trusses and other wooden support structures. Eventually, residents noticed water staining and mold on interior walls.

Media reports of the verdict and settlements do not mention personal injury claims. This situation raises more questions than it answers. Will the residents of the 216 units have the right to pursue such claims separately? Did they not believe that any personal injuries had occurred? It is certainly a valid strategy for plaintiffs’ attorneys to ask their clients to waive or sever their personal injury claims in this situation. An otherwise valid property damage case can be lost when unsupported and even bizarre mold personal injury claims are made.

On the other hand, ignoring the potential for such claims can also have consequences. The Brittany Murphy story demonstrates the consequences to plaintiffs’ attorneys who ignore the personal injury side of mold risk malpractice lawsuits. Likewise, in any case involving mold, defense attorneys need to determine if personal injuries are alleged to ensure that these claims are either included in a settlement or knowingly excluded.

American College of Occupation and Environmental Medicine Releases Updated Mold Study

In 2002 the American College of Occupation and Environmental Medicine (ACOEM) released its evidence based statement, “Adverse Human Health Effects Associated with Molds in the Indoor Environment.” The ACOEM report divided mold related diseases into three categories: allergy and hypersensitivity, infection and toxicity. This framework has been helpful in organizing and addressing the hodge podge of symptoms and claims often made in mold personal injury litigation. The statement was also very skeptical of alleged health issues based on toxicity, and noted that the presence of toxigenic molds (those that produce mycotoxins) does not demonstrate the presence of mycotoxins themselves. That requires separate testing, which is rarely, if ever, done. The ACOEM report was one of several scientific studies and reports that helped halt the onslaught of toxic mold cases early last decade.

ACOEM released an updated version of “Adverse Human Health Effects Associated with Molds in the Indoor Environment” in 2011. It contains the same framework for analyzing mold personal injury cases and continues to question the scientific basis for toxic mold claims arising in the indoor environment, describing them as “improbable and inconsistent with reported spore concentrations.” ACOEM does not completely discount the possibility that toxic injuries could occur, but the rigorous criteria set forth for diagnosing such a condition simply cannot be met in most mold cases.

The updated ACOEM report is the most recent study to address these issues. It should be familiar to everyone evaluating and defending mold personal injury cases.

Verdicts Show Disparate Valuations Of Mold Claims

As noted, there were no million dollar plus verdicts reported in 2011. But for those that like to track verdict trends, we offer two results at the opposite end of the valuation scale. In our view, the last several years have shown the same pattern, i.e., many defense verdicts and small settlements, with the occasional large award.

Aaron E. Spence v. Hickory Lakes, L.P., Cobb County, Georgia (Dec. 2010)

A jury awarded just $8,000 to tenants who suffered health effects and were forced to move due to mold growth in their apartments.  The plaintiffs offered the testimony of an expert whose testing revealed that some mold spore levels in the apartments were over 300 times higher than normal. Plaintiffs’ doctor and a toxicologist both offered additional expert testimony that mold was the cause of plaintiffs’ ill health.

Board of Managers of Essex House Condominium v. Brooke L. Milstein ex rel. Manhattan L.B. Living Trust, New York County, New York (2011)

Plaintiffs bought a condominium for $5 million on Central Park South in Manhattan.  After short time in the unit, Mrs. Milstein was allegedly forced to leave the unit due to mold contamination. Plaintiffs hired an expert who discovered that the contamination was caused by a problem with the HVAC system. The resulting lawsuit alleged that the defendant condominium owners’ association knew about the problems and attempted to cover them up.  While the jury did not return punitive damages for the cover up, it did award $714,798 in economic damages to plaintiffs.



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