WAKE UP AND SMELL THE STACHYBOTRYS

An attorney friend of mine recently told me a disturbing story about an elderly couple who had been forced out of their home. No, this was not a story about their lost fortunes in Enron. Rather, it was a story about their nightmare involving a toxic black mold known as stachybotrys. 

The couple had purchased this home and had put a substantial chunk of their retirement savings into it. Built in the mid 1980s, the home had several defects that were litigated in the mid 1990s. The Homeowner’s Association (HOA) repaired many of the defects using small contractors and their own handyman, including repairs to the home’s siding to stop some water leakage into a wall cavity. However, a serious mold infestation in the wall cavity went undetected and has flourished over the last few years. 

The husband, stricken with cancer, currently is undergoing chemotherapy and is extremely susceptible to infection. His doctor has told him that returning to the house and exposing himself to the stachybotrys spores could kill him. The couple is staying with relatives, the HOA is not taking action and the couple’s attorney is contemplating a lawsuit against the HOA. 

Crisis

This couple’s story serves as another testament to the current mold crisis plaguing the building industry. Yet, even as tragic mold stories continue to multiply, many industry members still insist that there is no real crisis.
Are we merely overreacting to a forever-existing fungus? We’ve always had mold, it’s true. We even eat certain types of it. Much of my youth was spent in the deep woods of east Texas, where often the humidity and temperature hovered around 100. This sweltering environment served as a breeding ground for mold. It would grow on the furniture! Mold was no big deal. 

In the last 10 years, however, mold has grown into a big deal. Texas, as a matter of fact, now takes its mold very seriously. In a recent high-profile case, a Texas investment banker developed brain damage from toxic mold and was awarded $32 million in a suit against Farmer’s Insurance. 

Across the U.S., the mold litigation industry has bloomed like a thriving colony of aspergillus (another toxic mold). Last year, a federal jury in California awarded $18.5 million to a homeowner against an insurer that had denied coverage for mold. Last May, the Delaware Supreme Court upheld a $1.4 million award to two women whose landlord failed to repair leaks that resulted in mold growth. In October, a group of homeowners in Ohio settled for $1.3 million in a mold claim against builders and contractors. Today, one California law firm claims to have more than 1000 mold-related cases in process. 

Insurance

The insurance industry is feeling the burn of the mold crisis as well, perhaps even more so than the building industry. The Independent Insurance Agents of America (IIAA) recently conducted research on the insurance implications of toxic mold claims. According to the IIAA’s subsequent report, the issue of toxic mold is “approaching one of hysteria.” 

Insurers have begun categorizing mold as a toxic substance, forcing contractors to purchase special coverage for damage and injury caused by mold. Contractors that don’t already have a mold exclusion on their general liability insurance likely will be required to have it when they renew their policies. 

According to a report by Jeff Cavignac, president of leading San Diego insurance brokerage firm Cavignac & Associates, some insurance companies in California are refusing to write policies on homes and commercial buildings if prior water damage claims have been made, or if inspections turn up the potential for mold problems. Further, insurance companies are starting to non-renew policies with prior water damage activity. 

Already, Farmers Insurance Exchange in Texas is expected to loose $300 million this year on water and mold damage claims. In fact, the top three carriers, who together write more than two-thirds of homeowner policies in Texas, have halted sales of new homeowner’s policies due to the rising number of mold and water damage claims. 

Guidelines?

Despite the growing crisis, I find it astounding that there are NO federal or state guidelines currently in place that tell contractors and building owners what should be considered safe or “allowable” levels of mold. No guidelines whatsoever. 

Yet, California, in its usual trend-setting way, has proposed a landmark bill that would regulate toxic mold. The Toxic Mold Protection Act, recently passed by the state Senate, would require the California Department of Health Services to establish permissible mold exposure limits and set standards on how to handle serious mold infestations. 

The pending legislation is receiving mixed reviews from the building and insurance industries. While many see the advantages of setting guidelines, they fear those guidelines may be unrealistic and could lead to a massive wave of new litigation. 

Education

Education is the best weapon to combat the mold crisis. The EPA website, www.epa.gov, is a good place to start. It features educational articles that focus on water intrusion symptoms, detection, and treatment. 

Who needs the education? Some argue that contractors need to be educated in order to “build it right the first time.” I argue that this logic is somewhat banal and unfair. While construction defects are an inevitable reality, most contractors’ primary goal (achieved more often than not) is to construct high-quality, leak-free buildings. Putting all the responsibility on them entirely only holds so much water, so to speak. 

Accountability, therefore, must be extended to building owners. Owners must be held accountable for maintaining the health of their buildings. An ongoing building inspection and maintenance program is essential. Would you drive your car without ever having an oil-change or tune-up? 

Education undoubtedly will help to dissolve the ubiquitous “it only leaks when it rains” building owner mentality. Water intrusion is more than just a leaky roof. It is a health and litigation risk that will only snowball if not addressed immediately. The mold crisis demands that we wake up and smell the stachybotrys. Chances are, it’s lurking right under our noses.