Turning Mold Into Gold
Author: KARL A. BERG, JR.
Over the last few years homebuilders have become increasingly concerned about mold. Those concerns have been fueled by a few well publicized cases, including one where a Texas homeowner was awarded $32 million dollars as a result of an insurance carrier’s mishandling of a mold claim (reduced to only $4 million dollars on appeal), and by the increasing frequency of complaints of mold they are receiving. Should homebuilders be concerned about their exposure to mold claims, and how should they respond in the event they receive complaints about mold?
Mold is a type of fungi. Some experts estimate there may be 100,000 or more species of fungi. Understandably then, mold is everywhere. As mold spores are microscopic they are easily dispersed through the air. In order for mold to begin to grow, spores must have moisture, food and the right temperature. If these conditions are satisfied, mold may begin to grow within a day or two. Currently there are no governmental standards for airborne mold levels in homes.
Some types of mold, including stachybotrys chartarum and aspergillus, produce mycotoxins which may be harmful to people. Considerable debate exists in the scientific and medical communities regarding whether exposure to mycotoxins is harmful. However, because at least one survey revealed a significant percentage of people believe mold is “very dangerous” and that if mold is present in a building it proves the building is poorly constructed, homebuilders must take the threat of a mold claim seriously. Therefore, it is incumbent upon them to promptly and properly respond if any suggestion is made that mold is present in one of their homes.
Homebuilders should be prepared before they receive a mold complaint. A checklist might be prepared identifying the steps to take if they receive a mold claim. However, preparing such a checklist is not risk-free. If the checklist is not used, the failure to do so will no doubt be used as “evidence” the builder was negligent because it did not follow its own protocols. The checklist should include: identification of the source of the moisture, including how long it existed; identification of all property damage observed and/or personal injuries alleged; identification of the mold observed, including pictures and sampling if warranted; and identification of the remediation necessary. A builder should also identify several restoration contractors experienced in remediating water damage and have their information handy. Likewise, a builder should identify several industrial hygienists who they can call should air monitoring or other testing be required. Because mold develops quickly, thinking about how it will respond before a crisis arises will allow a builder to respond immediately and effectively. It may also reduce the remediation costs and lessen the risk of a lawsuit.
Finally, no discussion of mold is complete without addressing insurance coverage. Due to the few large verdicts and concerns that the number of mold claims will continue to increase, many carriers have added endorsements to their policies excluding coverage for any bodily injury or property damage caused by mold or other “organic pathogens.” Nevertheless, if a builder is sued it should still provide notice of the claim as the duty to defend is quite broad. If the homeowner alleges property damage unrelated to mold, or defective work by a subcontractor, a duty to defend may exist even if mold is part of the claim.
Is mold the next gold for plaintiffs’ attorneys? As long as builders respond promptly and professionally it doesn’t have to be.
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