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Water Intrusion And Mold Litigation In New
Jersey
- James H. Landgraf,
Esquire
In recent years, the
presence of mold,
resulting from both
internal and
external forces, has
increasingly become
a more heavily
litigated topic.
Mold can develop as
a result of faulty
building design,
poor construction,
or through water
accumulation and
penetration. Mold
spores can be found
in the air, carpet,
ductwork, in wall
and ceiling joints,
and on surfaces such
as wall cavities
that are prone to
condensation. Mold
can destroy anything
that it is growing
on, causing property
damage and giving
rise to construction
litigation. In
addition, it creates
potential health
defects, giving rise
to causes of action
for personal injury.
This article
discusses the
parties, theories of
liability,
evidentiary and
causation problems,
and insurance issues
with regard to the
topic of mold
litigation in the
state of New Jersey.
It must be noted,
however, that
despite the increase
in litigation
surrounding this
issue, there is no
reported case law in
New Jersey,
addressing mold
issues.
Damages
Owners, occupants,
and others who may
be adversely
affected as a result
of water
penetration/intrusion
and/or the presence
of mold may have
claims for monetary
compensation for
their losses. Under
the law in New
Jersey, plaintiffs,
upon proper proofs,
may receive damages
for:
1. property damage;
2. bodily injury;
3. economic loss
including business
loss, diminution of
value and lost
profits;
4. loss of use and
other consequential
costs associated
with the loss of
use;
5. lost rent;
6. relocation;
7. investigation;
8. abatement;
9. Medical
monitoring;
10. emotional
distress; and
11. punitive damages
Potentially Liable
Parties
Attorneys are
ethically obligated
to zealously defend
their client's
interest to the best
of their ability. In
representing a
client in a water
intrusion and/or
mold case it is
their obligation to
consider the
potential liability
of a large number of
involved persons.
This is particularly
so given the
application of the
"entire controversy"
doctrine. While not
advocating the
common practice of
throwing out a large
net simply for the
purpose of adding
potential
pocketbooks,
plaintiffs and
defendants must
consider all
contributing factors
and parties, whether
or not their
involvement is
immediately
apparent. There are
several possible
liable parties in
mold/construction
defect cases:
1. General
Contractor - typical
factual claims
against the general
contractor may
include, defective
construction and
workmanship, failure
to comply with
requirements of the
plans and
specifications or
applicable
construction codes,
failure to supervise
subcontractors, use
of inappropriate
materials, and
failure to maintain
appropriate climatic
conditions during
the course of the
project or work out
of sequence which
would allow water
sources into the
building affecting
materials that are
present .
2. Subcontractor(s)
- the claims against
the subcontractor
are generally the
same as against the
general contractor.
The potentially
liable
subcontractors are
innumerable, but
usually include the
building framing,
siding, windows,
concrete/masonry,
roofing, plumbing,
and mechanical
subcontractors.
3. Architect and/or
engineer -
allegations
typically are with
regard to faulty
design and/or
negligent
supervision.
4. Maintenance
contractor -
allegations
typically involve
failure of operation
and maintenance of
mechanical and
plumbing systems,
which allow for
water penetration or
water/humidity
accumulation.
5. Product
Manufacturer -
allegations include
problems with
product design,
breach of warranty
and failure to
provide adequate
warnings and
instructions.
6. Material Supplier
- allegations
include breach of
warranty
7. Governmental
Officials/Agencies -
these persons may
fall into a
liability situation
on the basis of
faulty
inspections/approvals,
if tort claim
limitations came be
overcome
8.
Owners/Tenants/Employers
- where the injured
party is a tenant,
occupant, invitee or
employee of an
occupant, there may
be liability on the
part of these
classifications of
parties for failure
to inspect,
maintain, repair,
warn and the like.
9. Sureties - where
performance bond
have been required
and damage is
discovered before
final completion and
acceptance, a claim
may be made against
applicable bonds
10. Insurance
Carriers - In
addition to a
carrier's third
party involvement on
behalf of defending
an insured, first
party claims may
exist by an insured
owner, tenant, or
the like.
Possible Causes of
Action
In order to prevail
in a lawsuit, the
claiming party
(whether it is a
plaintiff or even a
defendant who has
raised a cross-claim
or third party
claim) must prove
the elements of at
least one cause of
action. Plaintiffs
typically include
owners, office
workers, commercial
or residential
tenants and
visitors. The
claimants can
include not only the
plaintiff, but also
the defendants of
the action that
assert claims over
against the other
parties.
1. Breach of
Contract - A
contract is an
agreement between
two parties that is
supported by some
consideration such
as payment of money
or provision of
labor and materials.
In order to
establish a breach
of contract action,
the Claimant must
prove a) a contract
between the parties,
b) breach of the
contract, and c)
recoverable damages.
Since mold and water
penetration cases
typically start with
an analysis of the
design and
construction of the
building, the
contracts that were
associated with the
design and
construction must be
a first level of
review for a cause
of action.
Construction
contracts typically
require that the
construction occur
in accordance with
attached or
incorporated plans,
specifications, and
the applicable
building codes.
Failure on the part
of the contractor to
comply with the
plans and
specifications
constitutes a breach
of contract.
Similarly,
contractual
relationships will
exist between the
contractor and its
subcontractors and
suppliers and
between
subcontractors and
their
sub-contractors and
suppliers. By law, a
written contract
must exist between
the owner and its
design professional
as well as between
the prime design
professional and any
sub-consultants that
it has used (i.e. -
architect to
mechanical
engineer). Each of
these contracts will
have identified
responsibilities,
may incorporate
terms of other
contracts (such as a
subcontract that
incorporates the
terms of the prime
contract) and will
often expressly
establish general
standards of
performance
(typically the
architect's
contract). A roof
that leaks, an HVAC
system that emits
excessive moisture
or leaks
condensation,
basement walls or
slabs that allow
water into the area
can each generally
be tracked back to
someone not having
properly performed
their contracted
work.
In order to recover
under a breach of
contract cause of
action, the parties
must generally be in
privity with one
another. This means
that an action
brought under a
breach of contract
claim can only be
brought against the
other party to the
contract. It is
possible to raise a
claim that one is a
"third party
beneficiary" to a
contract between two
other parties, but
such requires a
showing that the
contracting parties
truly intended such.
Such proof of intent
is difficult in the
construction
context. In fact,
with respect to the
architect
agreements, which
are often on AIA
forms, language is
present that
specifically rejects
the ability of
another party to
have a claim based
upon the
owner/architect
agreement.
2. Breach of
Warranty -
Warranties are
promises,
assurances, and
guarantees that are
legally treated like
a breach of contract
between the parties.
They may be
expressed or implied
by either law or
standard usage.
While in a breach of
contract claim the
parties must usually
be in privity with
one another, in the
case of warranties a
claim can arise even
if there is no
acknowledged
contract between the
parties. For
example, warranties
can be assigned, and
a contractor will
frequently assign to
the owner all
warranties furnished
by subcontractors
and material
suppliers. The
assigned party is
then in privity of
contract with the
warrantor and can
sue the warrantor
directly in a breach
of warranty action.
Where a product is
involved, the
Uniform Commercial
Code as adopted in
New Jersey also
provides certain
users of the product
the ability to
pursue a warranty
claim against the
seller or
manufacturer, even
if the user was not
the immediate buyer.
An enforceable
warranty will be
created by
warrantor's express
promise or
assurance. Express
warranties are made
either orally or in
writing. In addition
to product
warranties, most
construction
contracts and
subcontracts will
include a number of
expressed
warranties. In
effect, practically
each stated
obligation can be
deemed an express
warranty. There are
also usually
included express
warranties with
respect to the work
being performed in a
"good and
workmanlike manner"
as well as
workmanship
warranties that
extend beyond
completion. Since
properly drafted
subcontracts either
include the same
provisions, or
incorporate them
from the prime
contract, a
subcontractor has
similar express
warranty
obligations. If a
contractor assures
an owner that a
certain material
will work in the
building, that it
will comply with
codes or the plans
and specifications
or that it will be
performed in a good
and workmanlike
manner, these are
express warranties.
Implied warranties
are prescribed by
law. This is so even
if the parties have
not contracted to
their terms. It is
possible to disclaim
or limit an implied
warranty through
contract, but there
must be clear
language expressing
the parties' desire
to do so. Every
construction
contract contains an
implied warranty
that the contractor
will perform his
work in a reasonable
manner and will use
suitable materials.
General and
sub-contractors are
bound to these
implied warranties.
Under the Uniform
Commercial Code,
implied warranties
also apply to sold
goods and materials.
The two statutory
warranties under the
Code are the implied
warranties of
"merchantability"
and of "fitness for
purpose".
Construction
materials and
installed equipment
which do not perform
in violation of
these implied
warranties and which
result in water
intrusion and/or
mold growth will
result in a cause of
action under
warranty theories
against those in the
chain of supply.
3. Negligence -
Negligence is the
failure to exercise
proper care in the
performance of a
legal duty, which
the defendant owed
the plaintiff, under
the circumstances.
Negligence may
consist of either a
negligent act or a
failure to act, and
may arise under
common law or
statute. A claimant
generally has to
show that there is a
physical injury to
person or property
other than that
which is subject to
the contract.
However, if while
performing a
contract 1) the
negligent act caused
injury to a third
person, 2) the
negligent act caused
injury to the
property of the
promisee other than
property that was
the subject of the
contract, or 3) the
injury arises as a
result of a specific
duty imposed by law
on a common carrier
or bailee, one may
be held liable in
negligence.
Negligence does not
require privity. The
general test is
whether the injured
party is one to whom
a duty of care was
owed, and may extend
well beyond those in
direct contractual
relationships. If
work or services
provided in the
design and
construction of a
building are
established to be
below the applicable
standards (which may
well be established
or measured within
the contract
specifications), the
injured party is one
who reasonably could
be anticipated to be
affected by the work
or services (such as
an owner, tenant,
employee of either
etc) those parties
found to have
breached the
standard of care,
including not only
the contractor and
architect, but also
subcontractors,
suppliers,
sub-consultants to
the architect, can
be held liable.
4. Negligent
Misrepresentation -
A claim for
negligent
misrepresentation
entitles the
plaintiff to damages
if, a) the defendant
supplied false
information during
the course of
business, b) the
defendant failed to
exercise reasonable
care or competence
in communicating
such information,
and c) the plaintiff
was harmed by
justifiable reliance
on the information
that was provided.
Damages are limited
to recovery for
actual loss due to
reliance on
misstatements.
In the construction
law context, a
contractors and
design professionals
can be charged with
negligent
misrepresentation
when they make
statements to the
owner regarding the
sufficiency of a
product or system
for a designated use
which product or
system, if properly
investigated, should
not have been used
for the particular
application.
Since "negligent
misrepresentation"
requires
communication, it
will typically be
available only to
the party to whom
the representation
was made.
5. Negligence per se
- When a defendant
violates a safety
statute, this may
constitute
negligence per se.
In the case of a
safety statute, the
plaintiff is
required to show
that 1) the statute
was a safety
statute; 2) the
defendant violated
the statute; and 3)
violation of the
statute proximately
caused the
plaintiff's injury.
No specific showing
that the violation
was a result of
breach of a standard
of care need be
shown.
In construction
cases, defect claims
commonly arise when
the contractor
either expressly or
impliedly warrants
that he will
construct a building
according to code,
and fails to do so,
or where the
architect/engineer
designs a building
or system that is in
violation of code
requirements.
Contractors are also
responsible for
using a reasonable
standard of care in
supervising
subcontractors and
may be held liable
for a
subcontractor's code
violation.
6. Contribution and
Indemnity - One
potentially liable
party may be liable
to other defendants
to offset some or
all of the other
defendants'
liability to the
plaintiff under
indemnity. Indemnity
obligations can
result from a
contractual
agreement, by law or
negligence.
Indemnification
responsibility
allows one defendant
to pass liability
onto a second
defendant, and may
also include claims
for defense costs,
including counsel
fees.
In construction
projects it is not
unusual to find a
series of
contractual
indemnification
clauses within the
various contracts.
These typically
follow "downstream".
That is, there will
often be clauses
within the
owner/architect
agreement calling
for the architect to
indemnify the owner
for claims arising
out of the
architect's
performance. Similar
clauses will be
found in the
owner/contractor
agreement. The
contractor, in turn,
will include
indemnification
responsibilities on
the part of
subcontractors in
its subcontracts.
Also, leases will
usually include some
level of
indemnification
clause that requires
the tenant to
protect the
landlord.
One significant
limitation does
exist in New Jersey
with respect to
indemnification
claims on
construction
projects. A typical
indemnification
clause, particularly
where the
"bargaining power"
in the contract
relationship is
unequal, will place
an obligation on the
weaker party (indemnitor)
to provide
indemnification for
all claims, even if
resulting from
actions of the
stronger party (indemnitee).
Under NJSA 2A:40A-1
et seq. makes
indemnification
provisions that
attempt to transfer
liability where the
claim is a result of
the indemnitee's
sole negligence
unenforceable in the
construction
context. As an
example, if the
architect/engineer
designed a roof
that, even if
installed properly
would cause water
penetration, an
effort in the
owner/contractor
contract that
attempted to place
full indemnification
responsibilities on
the contractor
(since these are
often AIA forms,
they always protect
the architect) would
be held
unenforceable except
to the extent that
the contractor's own
actions contributed.
Contribution is
another theory by
which co-defendants
will seek protection
from others. It is
available on tort
claims where
multiple parties may
be found liable. In
essence, it allows
each party to spread
the ultimate
financial liability
that may be owed to
a plaintiff,
proportionately to
the percentage of
negligence found to
be the cause of
plaintiff's
injuries.
7. Fraud - In New
Jersey, a plaintiff
may have a cause of
action under common
law fraud and/or
under the New Jersey
Consumer Fraud Act.
In order to file an
action for common
law fraud, the
plaintiff must prove
that:
1) the defendant
made a definite and
specific
representation
relating to a
material past or
existing fact;
2) the
representation was
false;
3) the defendant
knew the
representation was
false;
4) the defendant
intended the
plaintiff to rely on
the statement; and
5) the plaintiff
incurred injury.
The most important
element of a common
law fraud action is
the defendant's
knowledge and intent
to induce the
plaintiff to rely on
the false statement.
The statement must
be specific and
cannot be based on
puffery or an
assertion of an
opinion.
In addition, the
legislature has
provided generous
protection for both
commercial and
non-commercial
consumers under the
Consumer Fraud Act.
Conduct prohibited
by the act includes
any use or
employment of
unconscionable
commercial practice,
deception, fraud,
false pretense,
promise,
misrepresentation or
knowing concealment,
suppression or
omission of a
material fact with
the intent to have
others rely on it in
connection with the
sale or
advertisement of
merchandise. In the
residential, repair
and renovation
construction
context, the
Regulations found in
NJAC 13:45A-16 must
also be reviewed.
These establish
various practices as
being unlawful under
the Consumer Fraud
Act.
For a plaintiff who
can show that the
cause of the water
penetration or
growth of mold
resulted from an
action that violated
the Consumer Fraud
Act significant
remedies are
available. Losses
resulting from the
violation can be
trebled and counsel
fees incurred in
pursuing the
consumer fraud
issues can be
recovered.
In a construction
case, it may be
possible for a
finder of fact to
find fraud or
consumer fraud
liability against a
contractor who makes
an over-statement of
its experience or
qualifications or
who knowingly
represents that
inferior products or
the elimination of
components will be
satisfactory. If the
owner reasonably
relies on these
representations (in
common law fraud
situations) or
simply accepts the
representations (in
consumer fraud) and
the proximate result
is faulty
construction that
allows water
penetration and/or
mold growth, the
enhanced penalties
of fraud (punitive
damages) or Consumer
Fraud (treble
damages/counsel
fees) may be
available.
The New Jersey
Economic Loss
Doctrine
Under the New Jersey
Economic Loss
Doctrine, a
commercial buyer
that seeks damages
solely for economic
loss, such as repair
or replacement
costs, lost profits,
or diminution of
value can recover
for breach of
warranty. However,
the commercial buyer
cannot recover under
strict liability or
negligence theories
purely for economic
loss. In the limited
number of
construction defect
cases that have
discussed the
economic loss
doctrine, the courts
have reached varying
conclusions with
regard to whether
physical injury to
the product can
amount to anything
more than economic
loss. An example
would be a claim
involving the cost
of
repairing/replacing
a roof that leaks.
While warranty
theories may be
available,
negligence theories
would be subject to
the doctrine.
Exceptions to the
economic loss
doctrine exist in
cases where there is
accidental damage,
damage to other
property, or a claim
for personal
injuries is
involved. If these
arise, a commercial
plaintiff is
permitted to recover
under a strict
liability and
negligence theories.
The economic loss
doctrine will
similarly not limit
breach of contract
claims and has been
generally limited in
its application
against consumers.
Moreover, a
plaintiff can still
recover under a
fraud or
misrepresentation
theory.
Evidentiary Issues
Prior to 1993, many
courts adopted the
evidentiary standard
for expert witnesses
adopted in Frye v.
United States
wherein the United
States Court of
Appeals held that
scientific expert
testimony is only
admissible if the
expert's conclusions
are generally
accepted in the
scientific
community. Under the
Frye test, a court
has the duty of
ascertaining the
expert's
methodology, and
whether this
methodology falls
within the expert's
field. In 1975, the
Federal rules of
evidence were
adopted and Federal
Rule 702, which
addresses the
admissibility of
expert testimony,
did not adopt the
Frye "general
acceptance"
standard. In 1993,
the United States
Supreme Court
rejected the Frye
test in its decision
in Daubert v.
Merrell Dow
Pharmaceuticals,
Inc. In Daubert, the
court held that
nothing in Federal
Rule 702 established
the "general
acceptance" standard
espoused in Frye,
and developed a
two-part test for
determining the
admissibility of
scientific evidence.
The Court held that
the trial judge is a
"gatekeeper" in
making admissibility
determinations. It
presented a list of
factors that a court
should use to
determine whether an
expert's theory is
admissible:
1) whether the
theory can be, and
has been tested;
2) whether the
theory or technique
has been subjected
to peer review and
publication;
3) the known
potential rate of
error; and
4) whether the
methodology or
technique has
achieved "general
acceptance" in the
relevant scientific
community. In 1999,
the Supreme Court
extended the Daubert
standard in Kumho
Tire v. Carmichael,
holding that Daubert
not only applies to
testimony that is
based on scientific
knowledge, but it
also applies to
testimony that is
based on technical
or specialized
knowledge as well.
The court reasoned
that Rule 702 does
not distinguish
between testimony
that is based on
scientific knowledge
and testimony that
is based on
technical or other
specialized
knowledge. Testimony
given by any type of
expert witness must
be both relevant and
reliable.
The federal courts
in New Jersey now
follow the more
lenient standards
for presentation of
expert testimony
according to the
Daubert Standard.
The Third Circuit
has held that the
proponent of expert
evidence has the
burden of proof of
showing by a
preponderance of the
evidence that the
expert opinion is
reliable. In toxic
tort cases, New
Jersey State courts
have also adopted
the Daubert
Standard.
A determination as
to admissibility of
the expert testimony
regarding a mold
case under the
Daubert/Federal Rule
702 Standard can be
made in a number of
different ways
including through a:
1. summary judgment
motion;
2. motion in limine;
3. preliminary
Daubert hearing with
the court; and
4. during the voir
dire of the
witnesses at trial.
Expert testimony is
almost an absolute
necessity in either
water penetration or
mold cases. Even in
the most elementary
level water
penetration case,
issues will
inevitably arise
regarding the
precise point of
entry. Water stains
appearing on a
ceiling could result
from leaking
condensate from
ductwork or HVAC
equipment directly
above the stain, or
many feet away. It
may result from a
roof leak directly
above, or many feet
away. If resulting
from a roof leak, it
could be the roof
itself, or poorly
flashed penetrations
such as pipe or
ductwork for rooftop
HVAC equipment. It
may result from
leaks in the siding
above the ceiling
where the water has
traversed along a
beam. The leak may
result from poor
installation, poorly
manufactured
equipment or
materials or from
poor design. It may
be the result of any
number of
subcontractors who
may have been
involved in either
work on the faulty
area, or just in the
vicinity (resulting
in damage to the
area). It may be the
result of failure of
the owner and/or a
servicing contractor
to maintain certain
systems.
To determine any of
the above, one or
more experts, each
of whom must make it
past the
"gatekeeper" will
need to be employed.
Deciding the precise
location and cause
of the leak will
require expert
opinion. This is
particularly so
where there are
multiple actual or
potential
defendants, each of
whom will be
engaging their own
experts to opine
that the water entry
point is elsewhere,
or was caused by
someone else. Once
location and cause
of the leak is
established (albeit,
probably contested),
an expert will
usually be required
to further establish
that the reason for
the leak was due to
the failure of one
or more parties to
meet required
standards of care -
that they were
negligent. This is
statutorily required
where the claim is
being made against
an architect or
engineer under NJSA
2A:53A-26 et seq.
Those experts, or
perhaps yet other
experts, must also
render opinions with
respect to damages
for
repair/replacement
of the damaged
building components.
If the plaintiff
seeks damages for
loss of use, lost
business or other
consequential losses
resulting from the
water penetration,
the plaintiff may
then require yet
another level of
expert to render an
opinion as to the
quantum of such
reasonably incurred
consequential
losses.
Based on the
foregoing, on even a
garden variety water
penetration/leak
case, it is possible
to anticipate 5
levels of expert
opinion, without
even trying. When
mold issues become
involved along with
actual or potential
health concerns and
injuries, the number
of potential expert
opinions multiplies.
Many different types
of experts can
testify at a mold
trial. An expert
from a
microbiological
Laboratory will need
to test, analyze and
testify with regard
to the types of mold
that are present in
the structure.
Further expert
testimony by
building
environmentalists or
CIH's will be needed
to connect the
presence of the mold
to specific causes
that would establish
liability on one or
more targeted
parties. If
remediation is
involved, expert
testimony regarding
appropriate remedial
measures and costs
may be needed.
Since mold is a
naturally existing
organism that will
be present in many
different
environments to
which a plaintiff
may be exposed, not
all molds are health
threatening, not all
people are affected
by the same
organisms, the level
of mold
concentration is a
significant factor,
an individual may
contract certain
illnesses from
different sources
and illnesses from
mold exposure are
not always easily
diagnosed, with
regard to the
medical claims
sought to be
attributed to the
presence of mold, in
addition to all of
the foregoing
experts, the
following expert
witnesses may be
required to testify:
1. General
practitioner/family
doctor;
2. Allergist;
3. Pulmonologist;
4. Neurologist;
5. Mental health
doctor including
either Psychiatrist
and/or Psychologist;
6. Toxicologists;
7. Rheumatologists;
8. Occupational
medicine specialist;
and
9. Orthopod
In addition,
Economists and
Vocational
Rehabilitation
Counselors will be
needed to testify
regarding economic
and future damages.
In each case, a cost
component is added
to the plaintiff's
case, as well as to
defending parties
who wish to defend,
deflect or limit the
plaintiff's claims.
Insurance Coverage
for Toxic Tort
Claims
In mold cases, many
defendants will look
to their insurance
carriers to provide
a defense for
liability. They may
attempt do so
through their own
policies or third
party liability
policies that were
issued to the owner
or lessee of the
property, or to the
business owner. If
the named defendants
are architects and
engineers, they may
look to their
professional service
errors and omissions
policies.
There are several
considerations that
must be taken into
account in
determining whether
there is insurance
coverage. First, an
insurance company
may not have a duty
to defend a claim.
In general, the duty
to defend arises
when the complaint
against the insured
"states a claim
constituting a risk
insured against." To
determine whether an
insurer has a duty
to defend, the
complaint is "laid
alongside the
policy" to compare
the allegations with
the language of the
policy. The duty to
defend arises when
the comparison
reveals that if the
allegations of the
complaint are
sustained, the
insurer will be
required to pay any
resulting judgment.
Any doubts are
resolved in favor of
the insured.
Generally, insurance
policies cover
losses resulting
from "occurrences"
that take place
during the policy
period. New Jersey
courts follow the
"continuous trigger"
theory of liability.
The damage that
triggers liability
in toxic tort cases
usually cannot be
linked to one
specific event, but
rather damage
results from events
that begin, develop,
and intensify over a
sustained period of
time. For these
reasons, the damage
has "occurred or
been triggered along
a continuous
timeline" and
several successive
policies were issued
to the policy-
holder and in
affect. The trigger
ceases when the
insured has
knowledge of
liability. The
burden is on the
insured to show when
injury occurs. The
continuous trigger
approach involves a
factual inquiry in
each specific case.
A potential barrier
to coverage may be
late notice of
liability. An
insurance policy
creates a duty in
the insured to give
notice as soon as an
occurrence takes
place. However, New
Jersey courts have
held that the
carrier carries the
burden of proving
that it suffered
appreciable
prejudice by reason
of the insured's
failure to comply.
Another potential
barrier to coverage
may exist if mold is
considered to be
exempt because of a
pollution exclusion.
Under its plain
meaning, mold is
usually considered a
pollutant or
contaminant. EPA
materials describe
mold as an indoor
air pollutant. Many
jurisdictions follow
plain meaning rules.
As with all
insurance coverage
issues, what is
covered, what is
excluded, and when
must a claim be made
to generate coverage
must each be
analyzed.
There may also be
instances where an
injured party may
look to his/her own
policy and make a
claim. Most business
and homeowner
policies provide,
however, very
limited coverage in
water and mold
cases. In addition
to the pollution
exclusion mentioned
above, most policies
will exclude damages
that result from
faulty construction
and design. They
will exclude damages
from water intrusion
and leaks from most
sources. Careful
review of the policy
coverage and
exclusions (and
exceptions to
exclusions,
limitations to
exceptions to
exclusions and so
on) must be made in
light of the
determinations of
location and cause
of the penetration.
With respect to
mold, while it may
be subject to the
pollution exclusion,
if it arises from a
"covered event"(i.e.
- burst pipe, which
is one of the
typical, few, water
events that are
covered) coverage
can be argued
successfully.
Personal Injury
Claims
Two specialized
types of illnesses
that have been
typically claimed to
result from exposure
to mold are Sick
Building Syndrome
("SBS") and Building
Related Illness
("BRI"). Almost by
definition, these
two illnesses are
multi-symptomatic
and are often
difficult to
distinguish from
many other
illnesses. In
addition, exposure
to mold has been
found to cause
respiratory
diseases, asthma,
sinus problems,
allergic responses,
problems with
pregnancy, cancer
and a potential link
to Chronic Fatigue
Syndrome and lung
disease.
In a personally
injury case, the
plaintiff must prove
1) that there was
tortuous conduct; 2)
injury; and 3)
proximate cause. The
most difficult
element of a tort
cause of action for
personal injury is
proving causation.
In order to prove
causation, "there
must be a sufficient
nexus between the
defendant's conduct
and the plaintiff's
injury." In toxic
tort cases, there is
often a long period
between exposure to
the contaminant and
manifestation of the
illness. The
plaintiff must then
prove that the mold
was the direct cause
of injury and
intervening forces
did not come into
play.
Damages, if
causation is proven,
will run the gamut
of those damages
available in any
personal injury
action, from direct
costs of treatment
to pain and
suffering to future
treatments to loss
of income to loss of
consortium and so
on.
The New Jersey
Supreme Court
recently awarded
damages for medical
surveillance
expenses in a case
arising from
contamination of
water by toxic
pollutants in a
township aquifer
coming from the
landfill. In
Jackson, the court
refused to award
damaged for the
unquantified
enhanced risk of
disease. However,
the court held that
medical science can
properly intervene
when there is a
significant but
unquantified risk of
disease. Periodic
medical examinations
to monitor
plaintiffs' health
and facilitate early
diagnosis and
treatment of disease
is appropriate. It
is consistent with a
public health
interest of
fostering access to
medical testing for
individuals whose
exposure to toxic
chemicals creates an
enhanced risk of
disease. By analogy,
such additional
future potential
cost may be
available in a mold
exposure claim if
the necessary
showings can be
made.
Conclusion
Water penetration
cases, particularly
where there is
resultant mold
growth are becoming
more common. With
the advent of
sealed, climatically
controlled buildings
on the one hand and
a tremendous
quantity of aging
buildings on the
other, moisture and
mold are all but
inevitable. The
scientific and
medical communities
have developed the
ability to make the
connections between
cause and effect.
The laws have
evolved to create
new causes of
action. A water
penetration case,
however,
particularly where
there is a mold
component represents
a significant
challenge and risk.
Potential parties
are innumerable,
possible causes of
action and defenses
are can be
overwhelming, the
need for countless
layers of expert
analyses and
opinions is
seemingly endless,
the time and expense
in either
prosecuting or
defending such cases
can be astronomical
and the willingness
of a judge to
schedule a
weeks/months long
trial with possibly
dozens of parties,
twice or more that
number of fact
witnesses, an equal
number of experts,
the inevitable
collateral
declaratory judgment
actions, endless
discovery, summary
judgment and in
limine motions and
hundreds of pounds
of paper is all but
non-existent.
Bon appetite!
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