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July 25, 2002

Toxic black mold — the next asbestos?

  • New legislation might be in store for the future
    • By JANY JACOB
    Oles Morrison Rinker & Baker

    Jacob
    Jacob
    The Washington construction industry is going to become increasing familiar with what more than a few consider to be mass hysteria in other parts of the country over the presence of indoor “toxic” mold spores.

    Mold has been around forever but only recently has it began to support a billion dollar industry of remediation contractors, consultants, laboratories, physicians and attorneys — as evidenced by an explosion of multi-million dollar lawsuits for property damage and personal injury.

    Why now? Changes in the amounts of synthetic building materials used, building codes that call for airtight buildings, construction/design defects, and just plain hysteria have been fingered as the culprits for this new wave of litigation that may very well become “the next asbestos.”

    Toxic mold plaintiffs typically bring breach-of-contract and toxic tort claims and the personal injury component may cost the defendants several times the amount of the property damages sought.

    For instance, in last summer’s Ballard v. Farmers Insurance case, a jury awarded a Texas homeowner $32.1 million (consisting of $6.2 million for remediation or replacement cost of the property damaged as well as living expenses; $12 million in punitive damages; $5 million for emotional distress damages; and $8.9 million in attorneys’ fees and costs) for mold damage to her large Texas residence. The defendant in that case was an insurance carrier but other cases around the country have named contractors, subcontractors, owners, developers, landlords, architects, engineers, suppliers and manufacturers as defendants.

    Washington is not immune.

    The discovery of toxic mold growth in Washington is on the rise and toxic mold litigation is consequently escalating. There have been situations in our state over the past few years where building materials were left out in the rain due to delays associated with owner or architect actions or due to permit inspection complications. The damp materials were later incorporated into the building structure and toxic mold growth resulted.

    Another typical situation is where a design or construction defect permits water intrusion into the structure and this leads to mold growth.

    Unfortunately, statutory and regulatory guidance is limited. The EPA is still in the research and development phase of addressing indoor air quality (IAQ) and sick building syndrome issues related to mold.

    California leads the way

    OSHA withdrew its proposed IAQ standards in December of last year. Thus, there is no federal law on the subject. In Washington, two state statutes refer to IAQ concerns but they do not provide any legal recourse for mold contamination. See RCW 4.24.560 and RCW 19.27.190.

    California is the first state to enact toxic mold legislation. California’s Toxic Mold Protection Act of 2001 (TMPA), codified at Cal. Health & Safety Code § 26100- 26156 and Cal. Civ.Code § 1102.6 (real property disclosure provision), went into effect Jan. 1, 2002.

    The goal of the TMPA is to develop permissible exposure limits (or PELs) for toxic molds, if feasible, and to set standards for the remediation of toxic mold. To achieve this, a taskforce comprised of all stakeholders will be created.

    Section 26147 of TMPA requires residential landlords with knowledge or notice of mold in the building to provide written disclosure to both prospective and current tenants of unaffected units of the presence of mold. Pursuant to Section 26143, commercial and industrial landlords with knowledge of or notice of the presence of mold in the building have an affirmative duty, within a reasonable period of time, to remediate it.

    The law requires any person who sells or transfers real property to likewise disclose the presence of mold to prospective purchasers. Landlords and sellers are not required to conduct testing to ascertain whether the PELs have been met. However, there is an exemption on the disclosure requirement once remediation pursuant to the guidelines promulgated by the California Department of Health Services under Section 26130 is achieved.

    The new California code sections are particularly interesting because they may be used in future litigation to support an argument that a failure to comply therewith establishes negligence per se.

    If and when the Washington Legislature enacts toxic mold legislation, it is likely to follow the California model, and WISHA may very well adopt PELs similar to any future PELs promulgated by the California Department of Health Services.

    NYC guidelines

    Guidelines developed by the New York City Department of Health also address the subject of toxic mold remediation. These guidelines set forth four levels of toxic mold growth: Level I refers to small isolated areas of mold growth (10 square feet or less); Level II refers to mid-sized isolated areas (10-30 square feet); Level III refers to large isolated areas (30-100 square feet); and Level IV refers to extensive mold contamination (100 square feet or more). At Level II a HEPA vacuum is recommended and at Level IV a negative-pressure enclosure and face respirators for workers are recommended.

    Plaintiffs facing toxic mold remediation costs should first determine whether the mold is a “covered loss” under their insurance policy. Insurance carriers are routinely refusing coverage for what may be characterized as a preexisting condition or mold growth that is not the apparent result of a sudden and accidental loss such as a pipe leak or storm damage. Furthermore, many carriers are dropping coverage, raising premiums and/or reducing coverage.

    Toxic mold litigants need to pay attention to the applicable Washington statute of limitations: it is three years for torts, six years for written contracts, and three years for oral contracts. The “date of discovery rule” may in some cases extend the period in which the statute of limitations begins to run. Thus, it is imperative to note the date of performance or completion of nonconforming work.

    The statute of limitations for negligence actions begins to accrue from the date of discovery of medical complications resulting from mold. It is also critical to note when the builder’s warranty expires.

    For the personal injury component of mold litigation, plaintiffs will need strong expert testimony and defendants should attack causation because the science linking mold growth and medical damages is suspect.

    Jany K. Jacob is an attorney at Oles Morrison Rinker & Baker LLP. She practices in the areas of environmental law and construction law and may be reached at (206) 623-3427 or by e-mail at jacob@oles.com.


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