Mold Litigation
General Information:

According to a white paper quoted in the Mortgage Servicing News, there were few insurance
mold claims before 2000 and those that did exist were generally settled for a few thousand dollars.
It was only after a series of high-profile cases (Texas & California among them) that mold
litigation began its boon. 1

Multimillion-dollar mold claims filed by celebrities such as Ed McMahon, Erin Brockovich,
Bianca Jagger and Michael Jordan also have added to the visibility of the issue. 2

As of June 2005, mold claims by homeowners routinely exceeded $100,000, and mold claims in
the commercial setting often exceed $1 million.
o From 2001 to 2003, the cost of mold claims has more than doubled.
o U.S. insurers paid out $1.3 billion in mold-related claims in 2001, and more than $3
billion in mold-related claims in 2002.3

Several sources estimated the average number of daily mold claims in 2004 was ten. 4

The Insurance Information Institute, New York City, estimated that as of June 2005, over 10,000
lawsuits were currently pending across the country alleging mold-related injuries.
o 2005 number was a 300-percent increase since 1999.
o 5,000 bad-faith claims against insurance companies
o 2,000 claims against property management companies and homeowner associations
o 2,000 claims against designers and contractors
o 1,000 claims against sellers of single-family residences. 5

An article in the Mondaq Business Briefing noted that in cases of mold, “the plaintiff has the
burden of showing that the mold caused by the defendant's alleged negligence caused their
injuries”.
1 Mold Also a Concern for Commercial Servicers
01 July 2005 Mortgage Servicing News Vol. 9, No. 6
FEDERAL STUDY Breaking the mold
BY EMILY BREGEL. THE BALTIMORE SUN. The Baltimore Sun is a Tribune Co.
23 July 2004 Newsday
2
3 Protecting against ... a rise in toxic mold litigation.(Controlling Liability)
Morgan, Richard Schoenwetter, Charles 01 June 2005
Buildings Volume 99; Issue 6
4 Collateral DAMAGE 01 July 2004
Mortgage Banking Volume 64; Issue 10
5 Protecting against ... a rise in toxic mold litigation.(Controlling Liability)
Morgan, Richard Schoenwetter, Charles 01 June 2005
Buildings Volume 99; Issue 6
o
o
o
Mold testing other environments—plaintiff's work place, gym, etc may show the plaintiff
is exposed higher levels of mold at those places.
if the plaintiff is allergic to other environmental allergens, such as pet dander, pollen, or
dust mites, their doctor may not be able to testify that their symptoms are, more likely
than not, caused by the mold exposure.
failure to mitigate is often a viable defense/once a person is no longer exposed to mold
their allergenic symptoms generally cease 6

Nicholas Money, Ph.D claims in “Builder” article that moisture measurements are overrated but
important in legal cases because “the jury will not be impressed if the expert witness answers
'really wet' or 'my glasses steamed up' when questioned about the dampness of a property”
o His advice to expert witnesses: Give the jury numbers, and defend your numbers as if
your life depended upon them" 7

Plaintiffs often have very difficult time proving causation 8

According to an article in “Business Insurance,” by 2004 insurance companies had grown wise to
increased mold suits and claims and had begun implementing absolute mold exclusions. 9

Mold cases that are actually litigated are relatively few compared to the over 10,000 mold cases
currently pending in state courts across the country. Defense victories are never publicized to the
same extent as runaway jury verdicts or huge damages claims (which are later settled silently). 10
Landmark Cases (State by State)
Arizona
2004

Official Title Unknown, Case Dismissed
o tenant sued apartment owner, alleging exposure to mold resulted in a brain injury and
other health issues.
6 Just Add Water - Growing Mold Claims. By Mr Matthew King.
10 March 2004 Mondaq Business Briefing
7 Say hello to Dr. Mold: scientist, author, and expert witness Nicholas Money scratches the surface on fungi, mold litigation, and
job security.(mold litigations, expert witness) Curry, Pat 01 July 2005 Builder 63 Volume 28; Issue 9.
8 Broker: Commercial Carriers Gain Confidence in Mold Underwriting
21 February 2006 Best's Insurance News
9 Mold liability woes creeping up on commercial lines
RUPAL PAREKH 16 August 2004
Business Insurance Volume 38; Number 33
10 Protecting against ... a rise in toxic mold litigation.(Controlling Liability)
Morgan, Richard Schoenwetter, Charles 01 June 2005
Buildings Volume 99; Issue 6
o
o
o
study by Institute of Medicine of the National Academy of Sciences surmised that while
mold can cause allergies and exacerbate the symptoms of individuals with asthma, it
cannot cause severe illness or injuries such as cancer or neurological problems.
This study was cited in this case.
The Arizona court ruled in favor of the defendant, indicating there was insufficient
evidence linking the plaintiff’s health issues to the existence of mold. 11
California

Toxic mold claims have created a cottage industry of experts – among them the L.A. law firm of
Wood Smith Henning & Berman, which has gone from nine lawyers to 83 since opening its doors
in 1997. 12

Mold is a big issue in the western area of the country where litigation is growing when it comes to
dealing with new construction, according to Stuart Wolfe, a partner with Wolfe & Wyman LLP
here.13
1998

2005

Official Title Unknown $12 million settlement
o Wood Smith, which had handled construction defect and personal injury claims, ran
across its first toxic mold case in 1998
o firm represented a third party defendant in a Beverly Hills suit
o largest toxic mold settlement of it’s time 14
Gorman vs. Crenshaw (Official title unknown) $22.6 million settlement
o Family claimed that moldy lumber used to build their house severely injured their son.
o Gormans contend their son, Kellen, suffered serious neurological brain damage because
of exposure to toxic molds growing on framing studs that had been improperly stored at
Crenshaw Lumber Co. in Gardena, Calif.
o Kellen's father also complained of cognitive and neurological problems such as memory
loss, which the plaintiffs' medical experts testified is associated with exposure to certain
fungi, Witzer said. 15
11 The Mold Crisis Cole, Cassandra R; McCullough, Kathleen A
01 April 2005 Journal of Insurance Regulation Volume 23; Issue 3;
Law Firm Makes Its Name by Breaking the Mold Cases
AL STEWARD 12 December 2005 Los Angeles Business Journal
12
13 Mold Issue Affecting New Construction in West
By Jennifer Harmon
820 Words
20 September 2004 Vol. 29, No. 1
Law Firm Makes Its Name by Breaking the Mold Cases
AL STEWARD 12 December 2005 Los Angeles Business Journal
14
15 Toxic mold case in California settles for $22 million.
13 January 2006
Daily Record (Kansas City, MO)
o One of the first successful mold lawsuits against a lumber yard - and the largest to
involve a single-family home
o Loss perhaps due to disorganization of defense.
o seventeen defendants agreed to pay $13 million, but admitted no wrongdoing.
o The other defendants in the suit agreed to pay a combined $9.6 million as part of the
settlement. 16

Dr. Sanette Gite vs. Home Depot, et al. Dismissed
o Plaintiff Dr. Sannette Gite claimed physical ailments from microbial exposure including
permanent brain damage, upper and lower respiratory problems, lung incapacity, voice
impairment, low white blood cell count, dizziness, lethargy, shortness of breath,
gastrointestinal problems, bloating, diarrhea, angina, hair loss, headaches, memory loss,
stuttering, rashes and skin discoloration.
o She claimed all her personal property had been subjected to microbial contamination and
was incapable of cleaning
o She sued Home Depot and its trade contractor for the mold growth which purportedly
was caused by water wShich entered through the threshold of French doors installed in
the family room of her home.
o Gite made a settlement demand prior to trial for $26 million. This included her claim for
future loss of earnings due to her alleged inability to ever work again.
o Despite the presence of stachybotrys, penicillium/aspergillus and a host of other molds,
the defense successfully established the absence of any negligence.
o after six weeks of trial, the jury threw out the $26 million claim. 17
Colorado
2002

Official Title Unknown, Outcome Uncertain
o Richmond American Homes, Colorado's largest home builder
o spent nearly $19 million to repair Front Range homes plagued by mold and water
damage”18
o alleges insurance companies refused to reimburse the home builder after it submitted
repair claims under several general liability insurance policies 19
o homes were built between 1993-2002
o Richmond is seeking triple damages - more than $50 million20
16 Toxic mold case in California settles for $22 million.
13 January 2006
Daily Record (Kansas City, MO)
Law Firm Makes Its Name by Breaking the Mold Cases
AL STEWARD 12 December 2005 Los Angeles Business Journal
17
18 The Mold Crisis Cole, Cassandra R; McCullough, Kathleen A
01 April 2005 Journal of Insurance Regulation Volume 23; Issue 3;
19 The Mold Crisis Cole, Cassandra R; McCullough, Kathleen A
01 April 2005 Journal of Insurance Regulation Volume 23; Issue 3;
2003

United Airlines vs. Denver (Official title unknown)
o employees filed a lawsuit seeking class-action damages against the city and county of
Denver
o claimed that the city and county failed in their "duty to maintain the airport in a
reasonable safe condition" which resulted in "reoccurring respiratory conditions and other
problems"21
Florida

2004

2006

General Description of Reoccurring Cases
o Lawsuit filed against school districts
o presence of mold in the schools that allegedly caused students to develop respiratory or
other health problems
o Several of these cases involve multiple plaintiffs and multiple schools. 22
Official Title Unknown, Settlement of $25 million
o class action suit by tenants of Archstone-Smith's Harbor House South high-rise apartment
property
o Bal Harbour, Florida
o resulted in a settlement of $25 million (Kirk, 2004). 23
Card vs. FEMA (Official title unknown) Likely to be dismissed
o Tracy Card of Edgewater says she has lived in a FEMA camper for nearly 13 months
with her fiancé and 5-year-old disabled son due to serve mold damage to her home
o City staff tells her she should have made repairs sooner with more than $20,000 in
reimbursement funds to stop the damage from getting worse
o She has held out to try for total replacement costs, and even sued her insurance company.
o City officials say the family was slow to repair the house, making matters worse with
each rain and new storm.24
20 MOLD REPAIR TAB GROWS ; RICHMOND SPENT $19M, SUED INSURERS FOR LOSSES John Accola, Rocky Mountain News 12
June 2004
Rocky Mountain News
21 The Mold Crisis Cole, Cassandra R; McCullough, Kathleen A
01 April 2005 Journal of Insurance Regulation Volume 23; Issue 3;
22 The Mold Crisis Cole, Cassandra R; McCullough, Kathleen A
01 April 2005 Journal of Insurance Regulation Volume 23; Issue 3;
23 The Mold Crisis Cole, Cassandra R; McCullough, Kathleen A
01 April 2005 Journal of Insurance Regulation Volume 23; Issue 3;
24 Time running out in fight over home; FEMA may take Edgewater family’s trailer today
KELLY CUCULIANSKY - STAFF WRITER 18 February 2006 Daytona Beach News Journal
Hawaii
2003

Official Title Unknown
o A year after it opened in 2001, the 25-story, 453-room Kalia Tower at the Hilton
Hawaiian Village in Waikiki was shut down because of a persistent mold problem
o The tower had cost $95 million to build, and Hilton Hotels spent $55 million on the
cleanup, which lasted 13 months.
o Hilton has sued two dozen businesses and individuals, including architects, construction
companies and engineers, saying they were responsible for construction defects that
allowed the gray fungus to flourish 25
Illinois
2005

General Description of Reoccurring Cases
o presence of mold in the schools that allegedly caused students to develop respiratory or
other health problems
o Several of these cases involve multiple plaintiffs and multiple schools. 26

Guy vs. Allstate (Official title unknown)
o Luann Guy alleges that Northbrook, Ill.-based Allstate did not inform her about mold
coverage and never sent an inspector out to look for the destructive fungi.
o She's suing the company for breach of contract, claiming she hasn't received any of the
$10,000 policy limit for mold.27
Nevada

75 percent of the construction defect cases filed in the past six months in the state have some sort
of mold claim.28
25 Is mold becoming the next asbestos?
Terry Pristin
The New York Times
03 June 2004
International Herald Tribune
26 The Mold Crisis Cole, Cassandra R; McCullough, Kathleen A
01 April 2005 Journal of Insurance Regulation Volume 23; Issue 3;
27 Woman brings mold suit against Allstate
Grant Boxleitner
12 March 2005
New Jersey
2003

Official Title Unknown, Settled for $2 million
o condominium owners sued their management company, as well as the firm that
sponsored the construction, claiming that flawed design and improper construction
allowed water to leak into the wall, causing mold damage.
o The lawsuit was settled for $2 million (National Law Journal, 2003). 29
New York
2002

2005

Official Title Unknown
o $400 million mold lawsuit pending in New York State Supreme Court
o management board and unit owner in Park Avenue sued the building's architects,
engineers and developer, alleging that mold had caused property damage and health
problems. 30
Dicker vs. the Housemaster, Dismissed
o Housemaster & Charles Hennessy cleared of negligence and breach of contract.
o Defendants applied to the Court for an order dismissing the complaint pursuant to CPLR
§3211 (a)(1), asserting the existence of a defense based upon documentary evidence.31
North Carolina

General Description of Reoccurring Cases
o Lawsuits filed against school districts in North Carolina due to the presence of mold in
the schools that allegedly caused students to develop respiratory or other health problems
o Several of these cases involve multiple plaintiffs and multiple schools. 32
28 Mold cases growing for valley builders By Jennifer Shubinski
30 January 2004 In Business Las Vegas
29 The Mold Crisis Cole, Cassandra R; McCullough, Kathleen A
01 April 2005 Journal of Insurance Regulation Volume 23; Issue 3;
30 Mold liability woes creeping up on commercial lines
RUPAL PAREKH 16 August 2004
Business Insurance Volume 38; Number 33
31
Decision of Interest; Nassau County Supreme Court; DOI; Gross Negligence Not Alleged, Thus House Inspector Not
Liable for Water Leak Damage or Mold in Home; Background Facts; Discussion
Case Digest 24 February 2006 New York Law Journal p.19,col.3 Volume 235 37; Issue
32 The Mold Crisis Cole, Cassandra R; McCullough, Kathleen A
01 April 2005 Journal of Insurance Regulation Volume 23; Issue 3;
2004

Official Title Unknown
o Employees at IBM's North Carolina research campus filed a lawsuit against the company,
alleging health issues caused by the presence of mold in the work environment (Kirk,
2004). 33
2005

Hutchison vs. Hornaday Construction Co. (Official title unknown)
o Jean Hutchinson is suing the house builder, Hornaday Construction Co, and two
subcontractors, Suntree Landscaping Inc. and Cape Fear Air
o Hutchinson hired Hornaday in March 2004 to build a $283,000 house.
o The house had water damage before it was completed, the suit says
o Hutchinson complained about the water problems at least 12 times during construction,
according to the lawsuit.
o She told Hornaday that she was allergic to mold and showed symptoms of mold toxicity.
Her doctors ordered her to leave the house. In June, Hutchinson had new health
problems, and her immune system crashed, the suit says 34
Ohio

General Description of Reoccurring Cases
o Lawsuits filed in Ohio due to the presence of mold in the schools that allegedly caused
students to develop respiratory or other health problem
o Several of these cases involve multiple plaintiffs and multiple schools. 35
2006

Official Title Unknown
o NBD International Inc, mold remediation company, closed down temporarily and called
in a company to test its air after a series of allegations were raised by a disgruntled
employee. 36
o Armour Applied Science was called in after someone sent e-mail and letters to authorities
alleging problems with black mold and improper venting at the NBD International
facility37
33 The Mold Crisis Cole, Cassandra R; McCullough, Kathleen A
01 April 2005 Journal of Insurance Regulation Volume 23; Issue 3;
Dream home is a nightmare
By Al Greenwood, The Fayetteville Observer, N.C.
05 March 2006
KRTBN Knight Ridder Tribune Business News
35 The Mold Crisis Cole, Cassandra R; McCullough, Kathleen A
34
01 April 2005 Journal of Insurance Regulation Volume 23; Issue 3;
36
Company responds to complaints; Employee letters over black-mold fear prompt Ravenna operation to close
for testing By Gloria Irwin Beacon Journal business writer 08 March 2006 Akron Beacon Journal (OH)
Pennsylvania
2004

Anderson vs. State Farm Fire and Casualty Co (Official title unknown), Dismissed
o Anderson alleged State Farm Fire and Casualty Co. did not pay or handle their residential
water-damage claim and subsequent mold problem as required by the insurance
agreement.
o Judge William H. Yohn Jr. of the U.S. District Court for the Eastern District of
Pennsylvania dismissed the action with prejudice.
o The Andersons' complaint alleged six counts: breach of contract, bad faith, negligence
toward minor plaintiff Ryan Michael Anderson, negligence toward minor plaintiff David
Michael Anderson, personal injuries to plaintiff Kathleen B. Anderson, and personal
injuries to plaintiff Kathleen F. Anderson.
o State Farm alleged that the breach-of-contract claim failed to state a valid claim under
Pennsylvania law and was time-barred by the limitations period. 38
Texas
2001

Official Title Unknown, awarded $32 million, reduced to $4 million, later settled
o Texas couple, Melinda Ballard and Ron Allison
o Awarded $32 million because of mold damage to their 22-room mansion
o Farmers Insurance Co. was required to pay the award, along with $1.4 million in
remediation costs before the jury verdict. 39
o Amount later reduced to $4 million 40
o Subsequently settled for an undisclosed amount 41
o following the initial verdict in this case, mold damage claims in Texas increased by more
than 1,000 percent
o Described by some as “legendary” 42
37
Company responds to complaints; Employee letters over black-mold fear prompt Ravenna operation to close
for testing By Gloria Irwin Beacon Journal business writer 08 March 2006 Akron Beacon Journal (OH)
38 Settlement Reached in Toxic-Mold Insurance Dispute
31 March 2004 Volume 02; Issue 14
39 A growing problem; Mold, water damage and accompanying litigation hamper building industry
Melody Finnemore 01 September 2004 Northwest Construction Volume 7, Number 9
40 Toxic mold can put health at risk in home CHRIS O'MALLEY The Indianapolis Star
01 February 2004 English
41 The Mold Crisis Cole, Cassandra R; McCullough, Kathleen A
01 April 2005 Journal of Insurance Regulation Volume 23; Issue 3;
2003

Fiess vs. State Farm Lloyds, Dismissed
o Houston federal court deemed State Farm's mold exclusion ``clear and unambiguous'' and
dismissed the plaintiffs' claims for statutory and common law bad faith

Ballard et al. vs. Fire Insurance Exchange, $32 million, later reduced to $4
o Considered landmark case
o awarded against Fire Insurance Exchange, a member of the Los Angeles-based Farmers
Insurance Group, to cover mold-related damages to Melinda Ballard's 22-room Dripping
Springs, Texas, home. 43
2004

Official Title Unknown, $15 million settlement
o Three years after two San Benito campuses were rid of mold, the company that installed
the district's heating and cooling systems has agreed to pay $15 million44
o A statement was made that no mold was found in any of these schools and that the school
board has not done any mold remediation over the last 2 years since moisture concerns
were raised.45
o Company claims case was shaped by the district's mold consultant, Assured Indoor Air
Quality who gained millions of dollars to assess the cause of moisture in the schools and
resolve the problem 46
o settlement falls short of the $180 million in damages and attorney fees that the school
district was seeking in a lawsuit that was headed to trial 47
Washington
42 Protecting against ... a rise in toxic mold litigation.(Controlling Liability)
Morgan, Richard Schoenwetter, Charles 01 June 2005
Buildings Volume 99; Issue 6
43 Mold liability woes creeping up on commercial lines
RUPAL PAREKH 16 August 2004
Business Insurance Volume 38; Number 33
44 Honeywell settles mold lawsuit with San Benito, Texas, schools
By Pallavi Agarwal, Valley Morning Star, Harlingen, Texas
02 September 2004
45 Honeywell settles mold lawsuit with San Benito, Texas, schools
By Pallavi Agarwal, Valley Morning Star, Harlingen, Texas
02 September 2004
46 Honeywell settles mold lawsuit with San Benito, Texas, schools
By Pallavi Agarwal, Valley Morning Star, Harlingen, Texas
02 September 2004
47 Honeywell settles mold lawsuit with San Benito, Texas, schools
By Pallavi Agarwal, Valley Morning Star, Harlingen, Texas
02 September 2004
2004

Gifford v. Matejka, Dismissed
o Court held that expert testimony regarding both the presence of mold in the home, and
the plaintiff suffering health effects while in that home, is sufficient evidence of causation
to defeat the defendant's summary judgment motion.48
48 Just Add Water - Growing Mold Claims. By Mr Matthew King.
10 March 2004 Mondaq Business Briefing