Mold spawning litigation
By Tony Quesada
The Business Journal of Jacksonville

 Feb. 12, 2006

JACKSONVILLE -- Ten years ago lawyer Michael Freed had never litigated a case related to mold damage.
Last year, he filed about a dozen mold-related lawsuits for plaintiffs and represented about an equal number of defendants in such cases. He expects both numbers to rise this year.

Twenty percent to 30 percent of his cases now involve mold, said Freed, the Jacksonville-based managing partner for the Florida offices of Brennan, Manna & Diamond LLC. The demand for mold litigators is high, and the only thing limiting how much of his caseload focuses on it is his preference to maintain a diversified practice.

"There's room for a mold litigation boutique firm in Jacksonville," he said.

Mold litigation is more than a decade old, but it picked up steam after 2000. A spate of high-profile cases and large awards attracted media attention, which in turn created public awareness leading to more litigation.

In many ways the market for mold inspection and removal, which continues to grow without a peak in sight, owes its prosperity to the increased concern -- some would say hysteria -- for health and liability arising from litigation.

By some accounts, the total money paid to mold plaintiffs through trials or from settlements exceeds that resulting from asbestos cases.

The largest recent case concluded in October 2005 in California when a lumber company settled with a plaintiff for $13 million. That combined with settlements from co-defendants brought the case's total to $23 million.

In 2003, a class-action suit in Washington state against a paint maker ended with a $55 million settlement for 5,000 state residents and a $107.5 million settlement for national members of the class.

A Texas jury in 2001 ordered an insurance company to pay a couple $32 million, although the award was reduced to $4 million on appeal.

And in 1996 in Florida, Martin County was awarded $14.2 million in its lawsuit against a construction manager and several insurance companies involved in building its county courthouse.

Meanwhile, more lawyers are getting involved in mold litigation, and the rise in mold torts has fueled a cottage industry for those who provide expert testimony on both sides of such cases.

Richard Lipsey, a former toxicology professor who has taught at the University of Florida and the University of North Florida, gave that up in 1986 to be a full-time consultant. Lipsey, whose office is in
Downtown Jacksonville, bills himself as the only mold toxicologist with a Ph.D. consulting on mold litigation in the U.S. While his cases involve many kinds of toxic substances, his experience in mold
mirrors the trend in that area of litigation.

In the 1980s and 1990s, Lipsey worked two or three mold cases a year. That number jumped to about 20 by 2000 and went up again to about 30 by 2002. Mold litigation now makes up about 60 percent of
his total workload, which is around 100 cases a year, and he doesn't see it dropping soon.

"It's going to keep growing," he said, "but it's going to keep growing smarter."

Many working in mold litigation concede the rise in lawsuits and the number of lawyers filing them is partially driven by the opportunity for a large payday.

"More and more lawyers," Freed said, "are willing to take the chance of getting involved in something they may not be totally familiar with in hopes of getting a big verdict."

But he and others also point to newer construction and design methods.

"Buildings are not made as well. They use a lot of particle board," Lipsey said. "Douglas fir, when it gets wet, will dry out fine. When particle board gets wet, it gets saturated and becomes a breeding ground for mold."

Another problem, Freed said, is that many "newer buildings suck." By that he means that some houses and buildings have air-conditioning systems that fail to maintain a higher or equal pressure inside than
the pressure outside, resulting in drawing in warm, hot air.

As an example, Freed cited one of his cases that ended in September. He won a $475,000 judgment for a company that sold two newly built hotels in Jacksonville at a big loss because they were infested with
mold before they opened.

The court concluded that the main cause was improper ventilation system design by the subcontractor handling that part of the construction.

Whatever the reason, there are many who say mold litigation is out of control. Those worried about its economic effect became so bothered that the U.S. Chamber of Commerce's Institute for Legal
Reform held a conference in July 2003 on "The Growing Hazard of Mold Litigation."

James Copland, director of the Center for Legal Policy at the Manhattan Institute, who was one of the event's main panelists, said there is good cause for concern.

"The [American Bar Association] journal called it black gold, the next asbestos," Copland said. "Unlike asbestos, which is gone from the marketplace, mold litigation could go on forever."

Copland argues that because mold is so naturally prevalent and "virtually impossible to stop," putting liability on builders and property managers is tantamount to a "substantial tax" on renting an apartment or buying a home.

"How these cases are handled is going to have a substantial impact on the cost of housing," he said.

The main outcome from the 2003 conference was a report arguing that science does not support claims that mold can be toxic.

"Since then, the state of science has buttressed what we said in our paper and at the panel," Copland said. "The claims of mold toxicity are provably wrong and have been rejected by the scientific
evidence."

Media attention on mold litigation seemed to peak a few years ago in the wake of several high-profile cases.

In 2003, the Insurance Information Institute estimated 10,000 mold-related lawsuits were pending in the country. But since then none of the organizations opposing the rise in such cases has kept a tally
on how many there are at a given time.

Nevertheless, those involved in mold litigation say the volume of active cases is either holding steady or growing.

Daniel Bryson, a North Carolina lawyer who led a national conference on construction defects and mold litigation in November 2005, said the field is poised for an uptick. All that's needed for a dramatic
change is for researchers to identify more links between mold and health problems.

"If the science can catch up to the claims, I think you'll see an increase in cases," Bryson said. "What we're waiting for is more science to help prove the personal injury claims."

On the other hand, some people see changes in the insurance industry reducing mold litigation. Many of the large early mold lawsuits involved claims of bad faith by insurers, but since then policies have been changed to exclude mold coverage.

Leslie O'Neal-Coble, an Orlando lawyer who tried the Martin CountyCourthouse case, said bad-faith claims present a chance for greater damages. Such claims will continue under older policies but they'll
become less common and less successful.

"It takes a while for policy changes to go into effect," she said. "You'll see fewer bad-faith claims stick."
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