Recent Court VERDICTS FAVORING OWNERS in MOLD LAWSUITS 

The courts have handed property owners two important victories in mold-related lawsuits. In the first, an owner was able to use the recently-released federal study on the health effects of mold exposure (see the EEF May Update at:

http://www.enviro-ed.org/Plan/INSTITUTEOFMEDICINE.pdf)to successfully defend itself again a resident's claims that exposure to mold in her apartment caused her to develop a brain injury, a seizure disorder, a movement disorder, a neurocognitive impairment and an immune system disorder. (Kilian v. Equity Residential Trust, U.S. District Court for the District of Arizona District, No. CV-02-1272-PHX-FJM ORDER.)

In its ruling, the Court stated that "we agree with the conclusion of the Institute of Medicine of the National Academy of Sciences that there is insufficient evidence of an association between neuropsychiatric symptoms and the presence of mold....We thus exclude the expert testimony in this case that sought to establish causation between the presence of mold and plaintiffs symptoms."

The reference to the Institute of Medicine study is important as in this study they also call for the implementation of an O&M plan [building operational specifications and building maintenance specifications].

In a second case, which reaffirmed the importance of developing a mold O&M plan for dealing with moisture intrusion, a jury deliberated 30 minutes before returning a verdict in favor of the property manager. The plaintiffs alleged that management was negligent in dealing with a leak in a water heater closet and that the ensuing mold caused physical harm to the occupants and their possessions. (Shapiroholland v. Equity Residential Property Management, Orange County Superior Court, No. 03- 03767). The sole issue decided at trial was whether the property manager had acted negligently when alerted to the problem; all other

causes of action were dismissed. The property owners had dealt promptly and effectively with indoor dampness in properly repairing the leak. After the trial, the jurors noted they were particularly impressed with the response of the management company and the extraordinary lengths taken to relocate and address resident concerns.

Here are more in depth details on the Shapiroholland lawsuit:

Orange County Jury Returns Defense Verdict in Mold Case Involving Alleged Bodily Injuries;

July 22, 2004

Jury Deliberates for Less Than 30 minutes

SANTA ANA, Calif., July 22 /PRNewswire/ -- An Orange County jury returned a defense verdict in a closely watched case involving claims of serious bodily injury from exposure to mold in a town home located in Mission Viejo, California. Jury deliberations were less than thirty minutes according to trial lawyers Kevin Smith and Sam McDermott with the law firm of Wood, Smith, Henning & Berman which represented defendant, Equity Residential Property Management Corporation.

The eight day trial of Shapiroholland v. Equity Residential Property Management (Orange County Superior Court case 03CC0376) stemmed from the rental of a town home

located in Mission Viejo, California. During the tenancy of the rental, the property management company noticed a water leak emanating from a water heater closet in an

outdoor patio of the plaintiff's unit. Within two days, repairs were made including extraction of all water that had saturated parts of the carpeting in the living room

of the unit. The occupants of the unit, husband/wife/seven year old minor child, all complained they suffered debilitating health effects due to exposure to mold.

The Plaintiffs were relocated from the unit while mold remediation work was performed, including air testing at the conclusion of the remediation which underscored successful abatement. All of the property in the unit was removed and/or cleaned during the remediation work. Despite the fact the unit was abated and air testing reflected there was no elevation of the indoor air quality, Plaintiffs refused to move back into the unit until January, 2003 -- more than three months after the initial water leak was repaired.

Subsequently, Reginald and Sari Anne Shapiroholland, along with their young son Zachariah, brought suit against Equity Residential, the property management company. In their suit, the plaintiffs claimed a host of physical ailments as a result of their exposure to mold, including asthma, allergies, chronic fatigue, gastrointestinal problems, bladder problems, headaches, skin rashes, febrile seizures, memory loss, bronchitis, sleep apnea, colds, sore throats, diarrhea, emotional distress and a reoccurrence of cancer. Plaintiffs also claimed that virtually all of their personal property was lost, damaged or destroyed as a result of the repairs effected to the unit. In deposition testimony, plaintiffs claimed they lost "millions" for personal property and emotional distress damages.

In support of their claims, Plaintiffs engaged Scott Environmental to perform mold testing of the unit. Bulk samples of drywall in the water heater closet did reveal the presence

of the mold stachybotyrs. Scott also took a swab sample on a wooden beam near the air conditioning unit and discovered cladosporium mold. Notably, the air testing performed by Scott did not find any elevation of mold spores in the unit, actually concluding the unit seemed to be a healthy living environment.

Superior Court Judge Randall Wilkinson allowed plaintiffs' medical expert Dr. Roger Katz to testify at trial over objections that his testimony lacked foundation and was based on testing methodologies not generally acceptable under the Kelly-Frye doctrine. Thereafter, Dr. Roger Katz, testified during trial that the Plaintiffs were in fact allergic to stachybotyrs. Dr. Katz also concluded, based on his review of Scott's mold reports, that Plaintiffs were exposed to stachybotyrs mold while living in their unit.

Plaintiffs' attorneys asked for property and personal injury damages. They also projected future medical expenses. According to defense attorney Kevin Smith, the settlement demand decreased with the passage of time, dropping eventually from $500,000 to $125,000 during trial. Smith also advised that all causes of action were effectively thrown out prior to the trial by the court, with the jury only deciding the negligence cause of action. The jury deliberated for less than thirty minutes, and then returned the defense verdict. The jury found for the defendants 10-2 on the negligence cause of action. After the trial, the jurors noted they were particularly impressed with the response of Equity Residential which went to extraordinary lengths to relocate and address the concerns of its residents.

On a national level, this case is believed to be the 20th mold bodily injury case to proceed to trial and verdict. Of this number, 11 have been verdicts favorable to the defense. Five of the 20 cases have proceeded to trial in Orange County, California, of which two of the five have been verdicts where nothing has been awarded on the claims of bodily injury from exposure to mold. Notably, trial lawyers Kevin Smith and Sam McDermott tried both of these Orange County cases.

Observers in the construction, property management and insurance industry have taken particular interest in the outcome of trials in this emerging area of law. Mold claims have been blamed for skyrocketing insurance premiums and insurance carriers pulling out of markets entirely. Recent defense verdicts, particularly in cases where experts are allowed to testify as to exposure and injuries, underscore the difficulty for plaintiffs in succeeding when the decision is left to the capable hands of the juries.