SOLVING WATER INTRUSION AND MOLD PROBLEMS IN KENTUCKY July 24, 2003

MOLD FUNDAMENTALS AND THE LAW W. Blaine Early, III Stites & Harbison PLLC 250 West Main Street, Suite 2300 Lexington, Kentucky 40507 (859) 226-2300 [email protected] ©W. Blaine Early, III Sections I and II of this paper introduce the fundamentals of mold science and describe how those fundamentals interact with the law. Section III reviews several examples of litigation related to mold. I.

OVERVIEW OF THE PROBLEM A.

Mold – what is it? Molds are common organisms that are relatives of mushrooms and yeasts

(the Fungi). They are found virtually everywhere, indoors and out. They reproduce and disperse by means of microscopic spores that are easily transported by air and water currents. In nature, molds and other Fungi play a key role in the decomposition of organic matter. We live and work in buildings that are built of and/or contain organic materials (wood, paper, textiles, etc.). Common and widely distributed mold spores easily become lodged on these organic materials, and under suitable conditions mold will begin to grow and decompose the organic substrate. Generally, all that these spores require for growth is moisture, food, and oxygen. In buildings, these conditions arise when water intrudes into places that are not designed to be wet.

B.

Causes of the problem There are at least four levels of problems associated with mold growth in

buildings. First is the structural and aesthetic damage that result when water intrusion leads to the growth of mold. To address this most basic problem you must find and eliminate the source of the water and clean the affected area. Second, molds may adversely affect the health of the occupants of a building that has extensive mold growth. Exposure to molds may cause irritation and allergic reactions and other conditions, but the status of scientific links between mold exposure and health is uncertain. This uncertainty may lead to sensational accusations and anecdotal accounts of a variety of complaints. A summary of these first two problems is presented by an official of the Centers for Disease Control and Prevention (“CDC”) as follows: “While there remain many unresolved scientific questions, we do know that exposure to high levels of molds causes illnesses in susceptible people. Because molds can be harmful, it is important to maintain buildings, prevent water damage and mold growth, and clean up moldy materials.” Stephen C. Redd, M.D., State of the Science on Molds and Human Health, Statement for the Record Before the Subcommittees on Oversight and Investigations and Housing and Community Opportunity, Committee on Financial Services, U.S. House of Representatives (July 18, 2002) (hereinafter “State of the Science on Molds”). The third level of problems lies with addressing liability within our legal system for property damage and personal injury that may result from water

2

intrusion and mold growth. The developing field of mold litigation includes traditional construction law and tort law. The absence of laws and regulations regarding standards for mold exposure and mold remediation leads to legal uncertainty. In addition to the legal uncertainty, the scientific uncertainty recognized by Dr. Redd complicates matters as litigants call on expert witnesses to evaluate the cause of health problems and courts decide whether juries should hear the testimony of those expert witnesses. Finally, persons who may be affected by the property damage and personal injury and those who may face claims of liability attempt to reduce or shift their risk by such means as thorough inspections, indemnity agreements, and insurance. The results of these efforts include the revision of standard contract clauses, the exclusion of certain types of insurance coverage, and the development of new insurance products. C.

Parties who can be affected Any person who lives or works in a building or who has any role in

owning, designing, building, repairing, renovating, managing, or selling a building may be affected by the problems mentioned above. Parties may be individuals or corporate or governmental entities. The examples discussed below in Section III show a wide variety of persons who have been involved in moldrelated litigation regarding these problems. D.

Types of claims The legal claims associated with mold generally take three forms. First

are the contract-based claims (breach of contract, breach of warranty, etc.) that

3

relate to failures to design, construct, install, or repair buildings and building materials when those failures result in water intrusion. Second are the tort claims that range from negligence that results in personal injury to fraud and misrepresentation regarding building conditions. Finally, many reported legal matters concern insurance coverage, including whether a particular loss is covered under a policy and whether an insurer responded to a claim in bad faith. E.

Laws and regulations At this time no law or regulation establishes acceptable or prohibited

levels of mold growth or of exposure to airborne mold. It appears that there is broad interest in determining safe levels, however, because the United States Congress and several states have considered bills aimed at establishing these levels. The absence of standards is better explained by the uncertainty surrounding mold analysis and exposure rather than by a lack of public concern. Dr. Redd of the CDC described the situation as follows: There are a number of barriers that need to be overcome in investigating the possible effects of mold on health. There are no accepted standards for mold sampling in indoor environments or for analyzing and interpreting the data in terms of human health. Molds are ubiquitous in the environment, and can be found almost anywhere samples are taken. It is not known, however, what quantity of mold is acceptable in indoor environments with respect to health. Because of difficulties related to sampling for mold, most studies have tended to be based primarily on baseline environmental data rather than human dose-response data. For these reasons, and because individuals have different sensitivities to molds, setting standards and guidelines for indoor mold exposure levels is difficult and may not be practical.

4

State of the Science on Molds at 9 – 10 (emphasis added). In spite of this uncertainty, however, several states and the U.S. House of Representatives have proposed or passed legislation regarding the development of mold standards. Last year Congressman John Conyers (D-Michigan) introduced H.R. 5040, the United States Toxic Mold Safety and Protection Act of 2002 (hereinafter “The Melina Bill”). This comprehensive bill proposed a number of research, regulatory, remediation, and tax initiatives related to indoor mold growth. For example, it directed the United States Environmental Protection Agency (“EPA”) and the CDC to “undertake a comprehensive study of the health effects of indoor mold growth and toxic mold.” The Melina Bill, Section 102(a). Commenting on the development of standards for exposure, the American Industrial Hygiene Association (“AIHA”) stated as follows: AIHA does not believe it is possible to define or set permissible exposure limits for “toxic mold.” With the current science, AIHA believes that it is not possible for any single study to ascertain levels at which exposure to mold or mold byproducts will harm human health. AIHA Comments on H.R. 5404 – The Melina Bill, available at http://www.aiha.org/GovernmentAffairs-PR/html/pr-SPR-02-815-01.htm. The bill also directed the EPA and other agencies to develop standards for inspection and remediation of mold growth; for the certification of mold inspectors, remediators, and laboratories; and for HVAC systems to control mold growth. Id. at Section 103. Other sections of The Melina Bill required inspections of rental property and public housing, authorized grants for the

5

remediation of mold problems in public buildings, authorized tax credits for mold inspections and remediation, and created a National Toxic Mold Hazard Insurance Program. It appears that this ambitious bill died in committee. Some states have considered strategies similar to those in The Melina Bill – that is, directing state agencies or task forces to develop guidelines for acceptable levels of mold exposure. For example, in 2002 Indiana considered House Bill No. 1253, which would have required the state department of health, among other duties, to develop “toxic mold standards,” “indoor mold exposure limits,” and “identification guidelines for the recognition of mold, water damage, or microbial volatile organic compounds in indoor environments.” Although House Bill No. 1253 passed the Indiana House, it failed in the Senate. Maryland and California, however, have adopted legislation aimed at developing these guidelines. In 2001 Maryland passed Senate Bill 283, which created a Task Force on Indoor Air Quality to undertake, among other duties, to “study the nature, location, and extent of health and environmental risks posed to workers as a result of molds, spores, and other toxic organisms located in the HVAC systems of office buildings.” Senate Bill 283, Section 1(d)(1). Finally, in 2001 California adopted Senate Bill 732, the Toxic Mold Protection Act of 2001. This Act directed the California State Department of Health Services to “consider the feasibility of adopting permissible exposure limits to mold in indoor environments” and, if the department finds that such limits are feasible, to “adopt permissible exposure limits to mold for indoor environments that avoid adverse

6

effects on health, with an adequate margin of safety, and avoid any significant risk to public health.” California Health and Safety Code, Division 20, Chapter 18, Sections 26102 and 26103. Whether these and other state initiatives will yield reliable guidelines with regard to acceptable levels of mold exposure remains to be seen. New York City has adopted guidelines regarding the assessment and remediation of mold. It did not, however, establish exposure limits. The remediation guidelines are discussed below, but with regard to limits related to health, the New York Guidelines state as follows: The presence of fungi on building materials as identified by a visual assessment or by bulk/surface sampling results does not necessitate that people will be exposed or exhibit health effects. In order for humans to be exposed indoors, fungal spores, fragments, or metabolites must be released into the air and inhaled, physically contacted (dermal exposure), or ingested. Whether or not symptoms develop in people exposed to fungi depends on the nature of the fungal material (e.g., allergenic, toxic, or infectious), the amount of exposure, and the susceptibility of exposed persons. Susceptibility varies with the genetic predisposition (e.g., allergic reactions do not always occur in all individuals), age, state of health, and concurrent exposures. For these reasons, and because measurements of exposure are not standardized and biological markers of exposure to fungi are largely unknown, it is not possible to determine “safe” or “unsafe” levels of exposure for people in general. New York City Department of Health & Mental Hygiene, Guidelines on Assessment and Remediation of Fungi in Indoor Environments § 1.1 (2002) (hereinafter “New York Guidelines”) (emphasis added).

7

F.

How real is the problem? As discussed above, there are at least four levels of problems associated

with mold growth and exposure. These problems are very real. In general, mold will grow in suitable environments. If faulty construction or design or failure of building elements or materials lead to water intrusion, mold growth will be one of the results. Proactive attention to the prevention of water damage and prompt response to water damage once it occurs may help to minimize mold growth. Prompt and careful remediation of mold growth may limit exposures. However, the public and the media have focused attention on these issues, and in the current uncertain state of medical information and legal standards, there may be substantial risk of litigation. One viable response may be to shift this risk to other persons or entities. II.

THE SCIENCE OF MOLD A.

What causes mold? An understanding of the nature of molds is essential in understanding the

factors that promote mold growth.1 Molds are Fungi, one of the five kingdoms used to classify living organisms. In addition to molds, the Fungi include such common organisms as mushrooms and yeasts. Fungi have cells that are encased by a cell wall. Their cells typically grow in long columns or filaments called hyphae. A mass of fungal hyphae is called a mycelium, which can be very large. Molds exhibit this type of filamentous growth. 1

For this section, see generally, J. W. Deacon, Modern Mycology (3rd ed. 1997) and Elizabeth Moore-Landecker, Fundamentals of the Fungi (4th ed. 1996).

8

Molds and other fungi reproduce (both sexually and asexually) by producing spores. Asexual spores are the primary means of dispersal. Molds typically produce spores that are dispersed by wind or other air currents. Spores differ from other fungal cells in that the cell walls are usually much thicker and may be pigmented, they contain relatively large amounts of chemicals used to store energy, and they contain relatively small amounts of water. Once released, spores may remain dormant for long periods of time (some may persist for up to 20 years) until physiological and environmental conditions are suitable to begin growth. Fungi do not produce their own food; they must obtain their food from organic sources already formed. Molds generally obtain their food by secreting enzymes into the immediate environment. The enzymes digest the organic materials on which the mold is growing, and the resulting small molecules are absorbed into the fungal cells. Almost any organic molecule can be digested. Fungi need water for the release of enzymes and for absorption of nutrients, and the availability of water is a primary factor in controlling mold growth. B.

Different types of mold The Fungi are highly variable and include hundreds of thousands of

species. Of those many species, more than 1,000 species of molds have been observed in homes in the United States. State of the Science on Molds at 2. A treatise on common airborne fungi listed fifty-nine (59) species of mold associated with indoor environments. Robert A. Samson, et al., Introduction to

9

Food- and Airborne Fungi (6th ed. 2000) (hereinafter “Airborne Fungi”). The following discussion presents general descriptions of a few common types of mold as examples of those that may be found in indoor environments. Alternaria alternata is found worldwide. It grows in colonies that are black, greenish-black, or gray on a variety of materials including plants, foods, soil, textiles, and other moist areas, including window frames. Airborne Fungi at 62; University of Minnesota, Environmental Health & Safety, Indoor Fungi Resources, available at http://www.dehs.umn.edu/iaq/fungus (hereinafter “Minnesota Fungi Resources”). Aspergillus spp., including A. fumigatus, A. niger, and A. versicolor. Aspergillus is a widely-distributed and variable genus with over 100 species. Colonies may be white, black, yellow, brown, green, or grey. A. fumigatus, a common cause of aspergillosus (discussed below in Section II.C), forms green colonies and may be found outdoors in compost piles and indoors in garbage, house dust, and in humidifiers and HVAC systems. Airborne Fungi at 64, 74; Minnesota Fungi Resources. Another species, A. niger, forms dark brown or black colonies. It grows on foods (fruits and vegetables), grains, and textiles. Airborne Fungi at 76; Minnesota Fungi Resources. Finally, A. versicolor is a very common indoor mold. Its colonies change colors as they grow, from white to yellow to yellow-green and even pink. It grows outdoors in the soil and on hay. Indoors it may be found on cheese and other dairy products, peanuts, grains, and dried meats. Airborne Fungi at 94; Minnesota Fungi Resources.

10

Cladosporium herbarum, which forms greenish colonies, is a common species distributed worldwide. It grows on dead or dying plants, a variety of foods, textiles, and other organic matter. Cladosporium has been found on the interior surfaces of air supply ducts. Airborne Fungi at 110; Minnesota Fungi Resources. Mucor racemosus forms brownish and grey colonies. Another worldwide species, it grows in soil, animal dung, foods (milk, fruits, and fruit juice), grains, and on dead plant material. Airborne Fungi at 16; Minnesota Fungi Resources. Penicillium, like Aspergillus, is a large and very common genus with many species. Colonies may be white and/or various shades of green. Penicillium spp. grow on a variety of substrates, including textiles, wall paper, foods (virtually all), and in soils and heating/cooling ducts. Airborne Fungi at 174 – 243; Minnesota Fungi Resources. Stachybotrys chartarum (= S. atra) forms black to blackish-green colonies. This species is rarely found in outdoor environments. Indoors it is found on building materials that are rich in cellulose and low in nitrogen, including paper, wallboard, textiles, and dead plant material. The spores are produced in a slimy or gelatinous mass. They are short-lived once released, and they are not found commonly in indoor samples. Airborne Fungi at 258; Minnesota Fungi Resources. C.

Medical impact and realities Exposure to mold has both well-documented effects on human health and

some that are more uncertain and speculative. At least three factors appear to

11

influence the health effects of mold exposure: the degree of exposure, including both the amount and the length of time of exposure; the species of mold; and individual variation. Generally speaking, molds may cause irritation (skin, eyes, respiratory system); dermatitis and allergic reactions; respiratory problems or aggravate asthma; and infections. See, e.g., Science on Mold; United States Environmental Protection Agency, Mold Remediation in Schools and Commercial Buildings (hereinafter “EPA Mold Remediation”) Appendix B (2001). Although litigation concerning mold exposure often involves allegations of these and additional symptoms and effects, according to the CDC “[w]e do not know whether molds cause adverse health effects, such as pulmonary hemorrhage, memory loss, or lethargy.” State of the Science on Molds at 3. This section examines the real and the speculative health effects of mold exposure. 1.

Irritation

Physical contact with mold spores or mold fragments (portions of hyphae, etc.) may cause irritation of the skin, eyes, and sensitive respiratory surfaces. EPA Mold Remediation; United States Environmental Protection Agency, A Brief Guide to Mold, Moisture, and Your Home (2002). 2.

Allergic Reactions to Mold

Persons exposed to mold spores or mold fragments by contact with the skin or eyes or by inhalation may exhibit a variety of allergic responses, including dermatitis (skin rash), eye irritation, runny nose (rhinitis), and sneezing. EPA Mold Remediation at Appendix B; D. H. Howard and J.D Miller, eds., VI Mycota

12

– Human and Animal Relationships (hereinafter “Mycota – Human Relationships”) 173 – 191 (1996). Some molds that are found in indoor environments are recognized as important allergens. These include Alternaria alternata, Aspergillus spp., Cladosporium herbarum, Mucor racemosus, and Penicillium spp. Mycoata – Human Relationships at 182 – 185. In particular, even at low concentrations, A. alternata may produce allergic reactions, and exposure may induce asthma attacks. Id. Like many aspects of the health effects of molds, however, there is much uncertainty about the relationship of exposure and response because allergen content may vary from strain to strain of a given species and because it is difficult to determine the type and amount of allergens to which a person is or was exposed. Id. Hypersensitivity pneumonitis, an allergic condition, affects the respiratory system and may result from either short-term or long-term exposure to molds (or a variety of other materials). Factors that affect the severity of the response include variations from person to person, the type of antigen, and the degree of exposure. Symptoms include headache, general malaise, chills, cough, and difficulty breathing. See, e.g., Mycota – Human Relationships at 187 – 88; State of the Science on Molds at 3. According to the CDC “[o]utbreaks of hypersensitivity pneumonitis . . . have been reported in office buildings in relation to exposures to mold-contaminated humidifiers and ventilation systems.” State of the Science on Molds at 3. Conditions related to hypersensitivity pneumonitis include organic dust toxic syndrome (“ODTS”) and related conditions such as

13

“Farmers Lung,” which is associated with exposure to moldy hay. Mycota – Human Relationships at 159 – 72. 3.

Asthma

Asthma may be caused or aggravated by exposure to molds, and it may be related to mold’s allergenic or irritating properties. See, e.g., EPA Mold Remediation at Appendix B. 4.

Infections

Under certain conditions, once molds are inhaled or otherwise come into contact with a host they may grow and multiply and invade the tissues of the host. Mold infections may be more likely in persons with depressed immune function. Examples include histoplasmosis and aspergillosis. Histoplasmosis may result from inhalation of spores of the fungus Histoplasma capsulatum, which is found in soils and seems more common in soils that have been enriched in nitrogen as a result of the accumulation of bird or bat guano. Many who have the infection may never exhibit symptoms. Those who do may exhibit flu-like conditions, chest pain, cough, and shortness of breath. In the long-term, histoplasmosis is like tuberculosis. National Institute for Occupational Safety and Health, Histoplasmosis: Protecting Workers at Risk Publication 97-146 (1997). Several opportunistic infections, called aspergillosis, may result from exposure to species of Aspergillus. Spores of this common group of molds are commonly inhaled and, in healthy individuals, the normal protective mechanisms of the respiratory

14

system destroy them. In susceptible individuals, however, the spores may begin to grow in the lungs and/or sinuses. Mycota – Human Relationships at 147 – 51. 5.

Mycotoxins

Certain molds produce chemicals that, by themselves, produce disease. These compounds are called mycotoxins. EPA Mold Remediation at Appendix B; Airborne Fungi at 321. A variety of diseases are linked to mycotoxins, including Ergotism, which is associated with ingestion of grain containing the mold that produced the ergot mycotoxin. Ergotism may affect the nervous system and the digestive system causing nausea, vomiting, and diarrhea Mycotoa – Human Relationships at 214 – 15. Another mycotoxin is aflatoxin B1, a potent carcinogen that is also implicated in liver disease. The molds associated with ergot and with aflatoxin are not generally found in indoor environments. EPA Mold Remediation at Appendix B. Stachybotrys, discussed below, also may produce mycotoxins. 6.

Stachybotrys chartarum

In the mid-1990s ten infants in Cleveland, Ohio developed acute idiopathic pulmonary hemorrhage (pulmonary hemosiderosis); one of the infants died. The CDC conducted preliminary studies and concluded that the incidents of disease were associated with water damaged households and resulting increased levels of fungi, including S. chartarum, in the homes. Cultures of the S. chartarum obtained from the homes produced tricothecene mycotoxins in the

15

laboratory. The CDC’s connection of S. chartarum to pulmonary hemorrhage was widely reported. After the initial reports the CDC instituted a multidisciplinary group of CDC scientists and outside experts who examined the connections between water damage, mold, and the clinical pulmonary hemorrhage, and they concluded that the evidence did not support the connection between the infants’ pulmonary hemorrhage and mold. The CDC stated, in part, as follows: The interpretation of water damage and its association with [pulmonary hemorrhage] was considered to have been hampered by the limited descriptive information, by the lack of standard criteria for water damage, and by the absence of a standard protocol for inspecting and recording information from home to home. Similarly, assessment of exposure to fungi or mycotoxin also was difficult to interpret because the methods did not distinguish between contamination and clinically meaningful exposure. No isolates or serologic evidence of exposure to fungi or mycotoxin were obtained in individual case infants. CDC, Update: Pulmonary Hemorrhage/Hemosiderosis Among Infants – Cleveland, Ohio, 1993-1996, MMWR Weekly, (March 10, 2000) (emphasis added). See also Report of the CDC Working Group on Pulmonary Hemorrhage/Hemosiderosis, Appendix G (June 17, 1999). More recently, in the summer of 2002, the CDC reiterated the lack of connection between Stachybotrys and this condition as follows: CDC reviewers and an external panel of experts determined that there was insufficient evidence of any association between exposure to S. atra [S. chartarum] or other toxic fungi and idiopathic pulmonary hemosiderosis in infants. State of the Science on Molds at 4. Stachybotrys and its tricothecene mycotoxins have also been associated with symptoms that include fatigue, headaches, and

16

sore throat. Mycota – Human Relationships at 217. Research continues regarding the varied effects that Stachybotrys may have. D.

Investigating and testing for mold

Many sources suggest that mold growth may begin within 24 to 48 hours after a substrate is exposed to water. Therefore, it is important to begin surveillance soon after a water problem is discovered. To determine the source of water it may be useful to evaluate any recent events or changes to the building such as repairs, new construction, plumbing failures, etc. Visual inspection is the first step – that is, looking for evidence of water damage and mold growth. New York Guidelines § 2.1. A thorough visual inspection should include obvious locations such as building surfaces, including wallboard, ceiling tiles, and carpets. It should also include “hidden” locations such as wall cavities, crawl spaces, utility courses, areas above ceiling tiles, HVAC systems and ductwork, and areas for food storage and trash collection. Mycota – Human Relations at 298 – 99; New York Guidelines § 2.1. During a visual inspection, detection of any odor may also assist in locating evidence of water intrusion or mold growth. Once mold is discovered the source of water should be identified and stopped, and the mold growth should be appropriately addressed. As a general rule, if mold can be detected visually, then more extensive sampling and identification of the mold are not necessary. EPA Mold Remediation at 25; New York Guidelines §§ 2.2 and 2.3. However, more extensive investigation, including sampling, may be warranted if litigation is

17

anticipated litigation or in the case of specific allergies and other health concerns. Improper sampling will not provide reliable information and will be a worthless and a needless expense. Therefore, if undertaken, sampling should be done by a trained professional and only after a specific plan has been developed in concert with the mold professional and with legal counsel. The American Industrial Hygiene Association and the American Conference of Governmental Industrial Hygienists have guidelines for sampling. The mold investigator may take samples directly from the mold colonies or the surfaces on which mold is growing. These samples may be taken by pressing a clear adhesive tape against the contaminated surface, by using a sterile swab or needle to wipe or pick samples, or by scraping sections of the growth into a clean sample container. Mycota – Human Relations at 300 – 02. The investigator may sample indoor air for evidence of mold. Air samples may be taken by placing plates of growth medium in a space and then opening the plate for a specified time. This method provides only preliminary information. A more reliable technique utilizes sampling devices that draw a measured quantity of air through them and onto a growth medium. Mycota – Human Relations at 302 – 04. Once collected the mold samples can be grown on special media and/or at controlled environmental conditions to assist in identification of the species present. Id.

18

E.

Mold remediation and abatement The first priority in any remediation or abatement effort is to identify and

stop the source of water. The best way to prevent mold growth is to prevent water from going where it should not go. Toward this end, the EPA suggests the following ways to prevent mold growth. • • •

• • • • • •

Fix leaky plumbing and leaks in the building envelope as soon as possible. Watch for condensation and wet spots. Fix source(s) of moisture problem(s) as soon as possible. Prevent moisture due to condensation by increasing surface temperature or reducing the moisture level in air (humidity). To increase surface temperature, insulate or increase air circulation. To reduce the moisture level in air, repair leaks, increase ventilation (if outside air is cold and dry), or dehumidify (if outdoor air is warm and humid). Keep heating, ventilation, and air conditioning (HVAC) drip pans clean, flowing properly, and unobstructed. Vent moisture-generating appliances, such as dryers, to the outside where possible. Maintain low indoor humidity, below 60% relative humidity (RH), ideally 30-50%, if possible. Perform regular building/HVAC inspections and maintenance as scheduled. Clean and dry wet or damp spots within 48 hours. Don’t let foundations stay wet. Provide drainage and slope the ground away from the foundation.

EPA Mold Remediation at 3. Once the water problem has been identified and solved, the next step is to clean, dry, and or remove the affected materials. New York Guidelines §3. The specific steps utilized in a particular project may depend on several factors including the size of the affected area, the length of time of water exposure, and

19

the extent of mold growth. The EPA provides the following checklist for mold remediation: Investigate and evaluate moisture and mold problems • Assess size of moldy area (square feet) • Consider the possibility of hidden mold • Clean up small mold problems and fix moisture problems before they become large problems • Select remediation manager for medium or large size mold problem • Investigate areas associated with occupant complaints • Identify source(s) or cause of water or moisture problem(s) • Note type of water-damaged materials (wallboard, carpet, etc.) • Check inside air ducts and air handling unit • Throughout process, consult qualified professional if necessary or desired Communicate with building occupants at all stages of process, as appropriate • Designate contact person for questions and comments about medium or large scale remediation as needed Plan remediation • Adapt or modify remediation guidelines to fit your situation; use professional judgment • Plan to dry wet, non-moldy materials within 48 hours to prevent mold growth . . . • Select cleanup methods for moldy items . . . • Select Personal Protection Equipment – protect remediators . . . • Select containment equipment – protect building occupants . . . • Select remediation personnel who have the experience and training needed to implement the remediation plan and use Personal Protection Equipment and containment as appropriate Remediate moisture and mold problems • Fix moisture problem, implement repair plan and/or maintenance plan

20

• • •

Dry wet, non-moldy materials within 48 hours to prevent mold growth Clean and dry moldy materials . . . Discard moldy porous items that can’t be cleaned . . .

EPA Mold Remediation at 27. The New York Guidelines list four levels of contamination and provide recommendations for techniques and personnel selection. New York Guidelines §3. These levels range from Level I, for areas of ten square feet or less to Level IV, for extensive contamination of more that 100 square feet. The guidelines also suggest various levels of containment to prevent the mold from being spread throughout the building during clean up. The recommendations range from no containment during remediation of the smallest areas, to covering the work area with plastic sheeting, to complete isolation of the work area, including sealing HVAC ducts and the use of exhaust fans with HEPA (high efficiency particulate air) filters. Id. The EPA recommends the use of personal protective equipment (“PPE”) when doing mold remediation to protect the eyes, skin, and respiratory system. Proper equipment includes fitted goggles (not safety glasses) and gloves. For protecting the respiratory system, the minimum protection is an N-95 disposable mask. If the job involves extensive mold growth, then a respirator with a HEPA filter is recommended. EPA Mold Remediation at 19 – 21. III.

THE PRESENT STATE OF MOLD LITIGATION A.

Types of claims being brought and damages sought The following discussion presents several categories of claims and

examples of litigation regarding those types of claims.

21

1.

Breach of Contract

The presence of mold may indicate that a construction or repair project has not been completed properly. For example, in Centex-Rooney Constr. Co. v. Martin County, 706 So.2d 20 (Fla. Distr. Ct. App. 1997), a Florida county government won a jury verdict of over $14 million for breach of contract against a construction manager and its sureties for defects in construction of the county courthouse. Soon after county employees moved into the building they observed mold growth, which appears to have been related to various causes, including leaking windows and exterior walls. After several employees complained of health problems the county retained experts on indoor air quality who opined that several of the employees had work-related asthma and then found in the building “significant presence of two highly unusual and toxigenic molds.” Id. at 24. After these findings the county ordered evacuation and repair of the building. When remediation contractors removed interior drywall and exterior coverings they found extensive mold and water damage and several hidden construction defects. The construction manager argued that there was no proof that the construction defects resulted in a health hazard, and it offered evidence that the fungal levels inside the building were actually lower than outside. However, the court held that regardless of the reason for evacuation and repair, the county discovered the construction defects, which were proved at trial, and was entitled to recover the costs of repair of the defects. Although the court considered evidence that linked the mold to health problems it did not find that link essential

22

in affirming the jury’s verdict. Therefore, in Centex-Rooney Construction Co., mold growth was symptom of a larger problem – construction defects that allowed water intrusion. In Dilello v. Katnik Corp., Case No. B146979, 2002 Cal. App. Unpub. LEXIS 11814 (Cal. Ct. App. December 19, 2002), a California jury awarded more than $1.5 million in damages to plaintiffs for mold damage to their home and other related losses and apportioned fault 90% to the builder and 10% to the architect. About two weeks after moving into a newly constructed home, Dilello exhibited a variety of symptoms, including respiratory problems and bronchitis, sinus pain, and fatigue. Dilello found mold in the home – in the kitchen cabinets, the lower cabinets in a bar area in the family room, in a bathroom, and laundry room. A consultant tested for the presence and abundance of mold spores and found Penicillium, Aspergillus (including Aspergillus versicolor, a possible carcinogen), and Cladosporium. Spore concentrations measured in the home were from 20 to 50 times higher than outdoors. For example, the consultant found spores of Penicillium and Aspergillus at concentrations of 1,167 spores/m3 in the kitchen, 533 spores/m3 in a playroom, and 300 and 400 spores/m3 in two bedrooms. Spores of Cladosporium were found in concentrations of 3,067 spores/m3 in the kitchen, and 267 and 1,133 spores/m3 in two bedrooms. The mold growth was related to water intrusion from a variety of sources. The home site exhibited drainage problems, which caused water to accumulate in the crawl space. The windows and rear deck leaked and allowed water to

23

infiltrate the walls. A water line to a toilet also leaked. Finally, shifting and settling of the house caused a shower pan to fail, which resulted in additional water intrusion. The plaintiff recovered the cost to repair the defective construction and the resulting damage. In Mondelli v. Kendel Homes Corp., 631 N.W.2d 846 (Neb. 2001), homeowners brought suit against the home builder for breach of implied warranty and for negligence, and they brought suit against the city for its alleged negligence in inspecting the home during construction. Plaintiffs alleged that water leaked into the house through the walls and windows and allowed mold to proliferate in the walls and on the carpet, furniture, and other items. The plaintiffs complained of health problems, including headaches, nasal congestion, and asthma. The trial court found that the house was defective in a number of ways, including the absence of a water-resistant sheathing, improperly installed flashing, improper weep holes, and improper application of mortar. Based on these defects, which the court determined were in violation of the local building code and industry standards, the court found that the home builder had breached the implied warranty that the home would be built in a workmanlike manner. The court further found that the builder’s failures constituted negligence. However, the trial court determined that the plaintiffs had failed to prove causation and damages and, therefore, found for the defendants. The Mondellis were unable to prove causation and damages primarily because the trial court excluded the

24

testimony of their expert witnesses, an environmental toxicologist and a microbiologist. On appeal, the Nebraska Supreme Court held that both the environmental toxicologist and the microbiologist should have been allowed to testify. The toxicologist testified at her deposition that there were no state or industry standards regarding acceptable levels of indoor mold. Nonetheless she testified that “molds are a cause of asthma and allergic rhinitis” and that the “mold levels in the Mondelli house were far above mold levels found in clinical studies around the country.” Mondelli 631 N.W.2d at 855. The microbiologist’s testimony concerned quantitative air samples taken in the Mondelli home. The Nebraska Supreme Court remanded the case for a new trial. As to the plaintiffs’ claim against the city, the Court relied on a Nebraska statute, the Political Subdivisions Tort Claims Act, which makes a city immune from suit for negligent failure to inspect property unless the city “had reasonable notice of any hazard or whether its failure to inspect . . . constituted a reckless disregard for public health or safety.” Mondelli, 631 N.W.2d at 860. Finding that the city had no notice of any hazard and that the failure to inspect did not constitute a reckless disregard for public health and safety, the Court determined that the claim against the city should have been dismissed. 2.

Tort Claims

As discussed above, the Mondelli case involved both contract and tort (negligence) claims. Another negligence case is New Haverford Partnership v.

25

Stroot, 772 A.2d 792 (Del. 2001). In Stroot a jury awarded over $1 million in verdicts against an apartment building’s landlord for failure to maintain the property in a safe and sanitary manner. Among many problems, water leaked from the bathroom of the tenant above the plaintiff into the plaintiff’s bathroom ceiling. The ceiling eventually collapsed and exposed areas of mold growth. The plaintiff had had allergies and asthma since childhood, but since moving into the apartment her medical problems had increased. The plaintiff also complained of a “cognitive deficit.” The court allowed expert testimony that mold was the cause of the plaintiff’s cognitive deficit. Furthermore, the court affirmed the introduction of expert testimony that mold levels inside the building were ten times higher than outside the building. These studies were conducted two years after the alleged exposure. In FSR Brokerage, Inc. v. Superior Court of Los Angeles County, Case No. B156982, 2002 Cal. App. Unpub. LEXIS 94 (Cal. Ct. App. April 16, 2002), homebuyers sued their realtor and the seller’s realtor for fraud. The buyer alleged that the realtors had failed to disclose known defects about the house, including conditions that the buyer alleged contributed to mold growth that caused chronic asthma and allergy problems. Finally, in Miller v. Stroud Township, 804 A.2d 749 (Pa. Commw. Ct. 2002), discussed below, the plaintiff alleged the tort of trespass.

26

3.

Insurance Claims

Many mold-related claims concern whether or not an insurance policy covers damage caused by mold and concern how the insurer responded to the claim. In one of the most notorious cases, Ballard v. Fire Ins. Exchange Case No. 99-05252 (Tex. Dist. Ct. 2001) a jury awarded $32 million to Texas homeowners in their suit against their insurer. The home’s bathroom plumbing leaked, causing water damage and growth of mold, including Stachybotrys atra. The family complained of headaches, dizziness, and fatigue and eventually left the house. The insurer declined to pay to repair the damage but eventually offered $1.8 million for the cleanup – an offer that the homeowners refused. The jury found that the insurer had acted in bad faith, unfairly, deceptively, and fraudulently and awarded $32 million. In Bowers v. Farmers Ins. Exchange 991 P.2d 734 (Wash. Ct. App. 2000), a lessor obtained a Landlord’s Protection Package insurance policy, which specifically excluded coverage for loss caused by mold but included coverage for vandalism. Tenants constructed a marijuana-growing facility in the basement of the house, installed waterproof foil on the walls and high-intensity lights, and diverted all of the building’s heat to the basement. As a result of these modifications moisture collected in the house, and mold grew throughout on floors, walls, carpet, insulation, etc. After the insurance company denied the landlord’s claim for mold-related damage she filed suit. The court held that the cause of the damage was the tenants’ actions related to marijuana growth –

27

actions that the court found covered under the policy as vandalism. Thus, even though the policy contained a specific exclusion for losses due to mold the insurance company had to pay the loss. Another “insurance exclusion” case is Home Ins. Co. v. McClain, Case No. 05-97-01479-CV, 2000 WL 144115 (Tex. Ct. App. Feb. 10, 2000), in which the homeowner’s policy excluded losses caused by “rust, rot, mold or other fungi.” The homeowners had retained a contractor to construct an addition for their house. The roof on the addition and on the previously-existing portion of the house leaked, and rainwater soaked the interior walls, ceilings, and subfloors and collected in the crawl space. Mold and bacteria grew in the damp environments. After the insurer denied coverage the homeowners sued the insurer and the contractor. The homeowners settled with the contractor for $260,000 but maintained the action against the insurer. Regarding coverage for the moldrelated damage, the court held that the mold growth was due to water from the leaking roof, that the leaking roof caused water damage (a covered loss), and that the insurance coverage applied. 4.

Other claims

In Equal Employment Opportunity Commission v. Newport News Shipbuilding & Drydock Co., 949 F. Supp. 403 (E.D. Va. 1996), an employee who was allergic to mold and who was positive for Human Immunodeficiency Virus (“HIV”) complained that his employer had failed to “reasonably accommodate [his] need for a mold-free work environment in violation of the

28

[ADA].” Newport News, 949 F. Supp. at 404; Americans with Disabilities Act (“ADA”), 42 U.S.C. §12101 et seq. Allergy tests revealed that the employee was allergic to several allergens, including the mold, Aspergillus niger, which was found in samples of the air in the employee’s office. The court held that the employer had reasonably accommodated the employee’s needs and granted summary judgment for the employer. The company’s efforts included addressing a drainage problem outside the building, repairing a leak in a water fountain, cleaning the air conditioning units and ductwork, and installing new air filters. Id. at 406. B.

Defendants

As evidenced by the cases discussed above, the array of potential defendants in mold litigation is very broad. The following examples elaborate on the previous cases. 1.

Builders and Construction Managers

Builders and construction managers and general contractors are prime targets for mold litigation. Recall the cases of Centex-Rooney Constr. Co. v. Martin County and Mondelli v. Kendel Homes Corp., discussed above, for examples of these entities as defendants. 2.

Realtor

See FSR Brokerage, Inc. v. Superior Court of Los Angeles County, Case No. B156982, 2002 Cal. App. Unpub. LEXIS 94 (Cal. Ct. App. April 16, 2002),

29

discussed above, in which a homebuyer alleged that the realtors had failed to disclose known defects about the house. 3.

Architect

In L. L. Bean v. United States Mineral Products Company, Case No. CV98-632, 1999 Me. Super. LEXIS 323 (Superior Ct. Me. December 3, 1999), L.L.Bean contracted for construction of a building to be used for a distribution center. The architect’s design called for use of a particular fireproofing material. The plaintiff found mold growing on the fireproofing material, determined that the mold was a health risk, and had the material removed. The owner (L.L. Bean) and the general contractor (Cinabro Corporation) sued the architect, the subcontractor that applied the fireproofing material, and the material’s manufacturer. 4.

Subcontractor

See L. L. Bean v. United States Mineral Products Company, Case No. CV-98-632, 1999 Me. Super. LEXIS 323 (Superior Ct. Me. December 3, 1999), discussed above. 5.

Manufacturer

See L. L. Bean v. United States Mineral Products Company, Case No. CV-98-632, 1999 Me. Super. LEXIS 323 (Superior Ct. Me. December 3, 1999), discussed above. 6.

Remediation Contractor

In Hodgson, Russ, Andrews, Woods & Goodyear, LLP v. Isolatek

30

International Corp., 752 N.Y.S.2d 472 (N.Y. App. Div. 2002), a lessee contracted for renovation of the portion of building it leased. The work included removal of asbestos and installation of new, spray-on, fireproofing material. Plaintiff observed mold growing on the new fireproofing material soon after it was applied to a portion of the building. Plaintiff arranged with a mold remediation contractor to remove the mold. The mold reappeared several months later, however, and the plaintiff elected to demolish the partially-completed job and begin the renovation again. Plaintiff sued, among others, the general contractor, the contractor that applied the fireproofing, the manufacturer of the fireproofing, and the remediation contractor. 7.

Local Governments

In Miller v. Stroud Township, 804 A.2d 749 (Pa. Commw. Ct. 2002), homeowners sued the local township and the township’s sewer authority under a theory of continuing trespass that was based on the township’s construction of sanitary sewers that discharged sewage and fecal material onto the plaintiffs’ property whenever it rained. Plaintiffs alleged that the water intrusion and sewage resulted in unhealthy concentrations of mold and other microorganisms in their home. The appellate court held that the plaintiffs properly alleged a continuing trespass or “an aggravation of the original trespass.” 8.

Insurer

For cases involving insurers as defendants, see Ballard v. Fire Ins. Exchange, Bowers v. Farmers Ins. Exchange, and Home Ins. Co. v. McClain

31

discussed above. B.

Plaintiffs

Potential plaintiffs are also quite varied. 1.

Homeowners

See Ballard v. Fire Ins. Exchange and Mondelli v. Kendel Homes Corp., discussed above. 2.

Lessees

See New Haverford Partnership v. Stroot and Hodgson, Russ, Andrews, Woods & Goodyear, LLP v. Isolatek International Corp. 3.

Class Action

In Wheeler v. AvalonBay Communities, Case No. B153535, 2002 Cal. App. Unpub. LEXIS 10906 (Cal. Ct. App. November 22, 2002), four former tenants at a 748-unit apartment complex brought suit against the owners and managers of the complex and sought class certification. The plaintiffs alleged that the owners/managers breached an implied warranty of habitability. They based this theory on a variety of factors, including several related to mold, mildew, and fungus growth. For example, they alleged that the defendants allowed “water to intrude into the apartments and cause mold, mildew and fungus to grown throughout the building which in turn . . . caused termite infestation.” Id. at *3. They also alleged that the defendants failed to make timely repairs to prevent water intrusion and failed to abate mold and termite infestations. The trial court struck the class designation with regard to the implied warranty, in part

32

because “each purported class member would have to prove exposure to a particular toxic substance, the timing of such exposure, and the effect of such exposure; Defendants would legitimately seek to present evidence of exposure other than at the apartment complex for each class member.” Id. at *8 - *9. The Court of Appeal affirmed, stating, in pertinent part, as follows: “the representative plaintiffs allege no common defect . . . one apartment may have water intrusion causing dampness, or mold, or termite infestation, any of which may be barely noticeable or may substantially interfere with the tenant’s use and enjoyment of the premises.” Id. at *13 - *14. 4.

Governmental Entity

See Centex-Rooney Constr. Co. v. Martin County for an example of a governmental agency as a plaintiff. CONCLUSION Molds are common and diverse organisms that will grow indoors or out, wherever there are sources of moisture and organic materials. The key to controlling mold growth in buildings is to control water. While certain molds and other Fungi have well-known effects on human health, the general impact of airborne mold exposure in indoor environments is still under investigation. The variety of molds and the variation in individual susceptibility make generalizations difficult. Although some jurisdictions are attempting to develop guidelines, at this time there are no statutory or regulatory limits for indoor mold exposure. Uncertainty in medical science and uncertainty in the law contribute to

33

the growth of litigation in mold-related claims. Virtually anyone who is connected with buildings is a potential litigant.

W. Blaine Early, III (2003)

34