MOLD LEGAL GUIDE Table of Contents

Chapter 1 Mold lawsuits in the news	101

1.1 Mold lawsuits up by 300%--------------------------------------------------------------------	102
1.2 Denver International Airport faces mold lawsuits-----------------------------------------------	103
1.3 Mold forces cuts in hours in Tulare County Court----------------------------------------------	104
1.4 Mold-stricken Ed McMahon files lawsuit------------------------------------------------------	105
1.5 Tennessee jail mold makes staffers ill; kills inmate----------------------------------------------	106
1.6 Mold claims spread to cars--------------------------------------------------------------------	107
1.7 Beware of illegal and unregistered fungicide----------------------------------------------------	109
1.8 The reasons behind the rise in mold lawsuits---------------------------------------------------	109
1.8.1 Population shifts-----------------------------------------------------------------------------	110
1.8.2 The rise of new buildings--------------------------------------------------------------------	110
1.8.3 Rising property values-----------------------------------------------------------------------	110
1.8.4 More plumbing------------------------------------------------------------------------------	110
1.8.5 Advances in medical science-----------------------------------------------------------------	110
1.8.6 Increased public awareness------------------------------------------------------------------	111
1.8.7 Government action--------------------------------------------------------------------------	111
1.8.8 Mold industry-------------------------------------------------------------------------------	111
1.8.9 Numerous successful mold litigations---------------------------------------------------------	111

Chapter 2 Filing class action lawsuits	201

2.1 What is a class action?------------------------------------------------------------------------	201
2.2 Class action prerequisites and legal procedure-------------------------------------------------	201
2.2.1 Prerequisites to a class action----------------------------------------------------------------	201
2.2.2 Class actions maintainable-------------------------------------------------------------------	201
2.2.3 Determination by order whether class action to be maintained; notice; judgment; actions
conducted partially as class actions----------------------------------------------------------	202
2.2.4 Orders in conduct of actions-----------------------------------------------------------------	203
2.2.5 Dismissal or compromise of class action-----------------------------------------------------	203

Chapter 3 Legal implications of mold contamination of HVAC systems	301

3.1 Sick building syndrome and IAQ lawsuits------------------------------------------------------	301
3.2 HVAC manufacturing and design defects------------------------------------------------------	302
3.3 Legal liability of HVAC manufacturers for mold-related injuries--------------------------------	303
3.4 Proposed HVAC design solutions-------------------------------------------------------------	303

Chapter 4 Possible causes of action and potential damage awards for mold contamination	401

4.1 Common causes of action---------------------------------------------------------------------	401
4.2 What is a tort?--------------------------------------------------------------------------------	402
4.3 Four elements of tort--------------------------------------------------------------------------	402
4.4 Duties of a landlord----------------------------------------------------------------------------	403
4.5 Legal grounds to file lawsuit against defendants------------------------------------------------	403
4.5.1 Negligence----------------------------------------------------------------------------------	404
4.5.2 Strict Liability-------------------------------------------------------------------------------	404
4.5.3 Breach of Warranties------------------------------------------------------------------------	405
4.5.4 Constructive Eviction------------------------------------------------------------------------	405
4.5.5 Workers Compensation---------------------------------------------------------------------	405
4.5.6 Failure to Disclose---------------------------------------------------------------------------	406
4.6 How to claim workers compensation----------------------------------------------------------	407
4.7 California mold disclosure law-----------------------------------------------------------------	408

Chapter 5 Damages recoverable in mold Cases	501

5.1 Diminution of value and cost to repair----------------------------------------------------------	501
5.2 Cost of remedying the defects-----------------------------------------------------------------	501
5.3 Personal exception rule------------------------------------------------------------------------	501
5.4 Personal injury--------------------------------------------------------------------------------	502
5.5 Prejudgment interest---------------------------------------------------------------------------	502
5.6 Attorney�s fees--------------------------------------------------------------------------------	502
5.7 Punitive damages------------------------------------------------------------------------------	503
5.8 Emotional distress damages--------------------------------------------------------------------	503

Chapter 6 Statute of Limitations for mold cases	601

6.1 Purpose of statute of limitations----------------------------------------------------------------	601
6.2 Delayed discovery rule------------------------------------------------------------------------	601
6.3 Interruption of one-year statute of limitations---------------------------------------------------	602

Chapter 7 Verdicts and settlements of mold cases	701

7.1 Recent published verdicts and settlements of mold cases in California--------------------------	701
7.2 Recent publicized old cases in other states-----------------------------------------------------	702
7.3 Legal liability of insurance companies----------------------------------------------------------	703

Chapter 8 The mold-illness relationship	801

8.1 Hysteria or reality?----------------------------------------------------------------------------	801
8.2 Scientific proof and the implications of legal liability--------------------------------------------	802
8.3 Other reports linking mold to serious health and property damage------------------------------	803

Chapter 9 Mold insurance primer	901

9.1 Types of insurance----------------------------------------------------------------------------	901
9.2 Traditional mold insurance---------------------------------------------------------------------	902
9.3 Mold insurance? or incidental mold coverage?-------------------------------------------------	903
9.4 Review your policy carefully & understand your coverage's------------------------------------	903
9.5 The basics of mold contamination insurance coverage------------------------------------------	904
9.6 Property damage coverage--------------------------------------------------------------------	905
9.7 Third-party liability coverage------------------------------------------------------------------	906
9.8 Call your insurance agent & report a suspected claim immediately------------------------------	906
9.9 Protect all property from any further damage---------------------------------------------------	907
9.10 Photograph, videotape and inventory all damaged property-----------------------------------	907
9.11 Handling insurance claims: where to get the information---------------------------------------	908
9.12 Your obligation to cooperate with insurance company investigation---------------------------	908
9.13 Never sign anything without proper legal advice----------------------------------------------	910
9.14 Get a second or even third opinion regarding estimates---------------------------------------	910
9.15 You don�t have to use insurer�s �approved contractors�--------------------------------------	911
9.16 Get professional help if you need it-----------------------------------------------------------	911
9.17 Statute of limitations--------------------------------------------------------------------------	911
9.18 Report all unfair claim handling to your department of insurance or insurance regulator--------	912

Chapter 10 Toxic mold legislation	1001

10.1 2003 toxic mold legislation-------------------------------------------------------------------	1001
10.1.1 Illinois--------------------------------------------------------------------------------------	1001
10.1.2 Louisiana----------------------------------------------------------------------------------	1001
10.1.3 Massachusetts-----------------------------------------------------------------------------	1001
10.1.4 Montana-----------------------------------------------------------------------------------	1001
10.1.5 Oklahoma---------------------------------------------------------------------------------	1002
10.1.6 Oregon------------------------------------------------------------------------------------	1002
10.1.7 Pennsylvania-------------------------------------------------------------------------------	1002
10.1.8 Rhode Island-------------------------------------------------------------------------------	1002
10.1.9 Texas--------------------------------------------------------------------------------------	1002
10.2 Toxic mold insurance legislation--------------------------------------------------------------	1003
10.3 The Comprehensive Loss Underwriting Exchange (CLUE)-----------------------------------	1008
10.4 Reporting mold damage to your insurer-------------------------------------------------------	1008
10.5 Things to consider when reporting mold problem to your insurer------------------------------	1009
10.6 Additional Living Expense (A.L.E.) Coverage------------------------------------------------	1009
10.7 Coverage for personal items------------------------------------------------------------------	1010
10.8 The role of your mortgage company----------------------------------------------------------	1010
10.9 Resolving disputes with an insurer or claims adjuster------------------------------------------	1010

Chapter 11 Effectively handling mold and water damage claims	1101

11.1 I have identified a potential water damage claim. What should I do?--------------------------	1102
11.2 What can I expect from my insurance company when I report water damage?----------------	1103
11.3 What can my insurance company expect from me?-------------------------------------------	1104
11.4 What can I do if I feel my insurance company is not being responsive?------------------------	1104
11.5 Should I test my home if I find mold growing?------------------------------------------------	1105
11.6 Should I move out of my home if I discover a mold problem?---------------------------------	1106
11.7 I had to move out of my home. What can I expect from my insurance company regarding
Additional Living Expense (ALE) coverage?--------------------------------------------------	1106
11.8 How can I control my ALE expenses?-------------------------------------------------------	1107
11.9 How can I select a qualified remediator? How can I ensure the mold remediation and repair
process is handled correctly and efficiently?--------------------------------------------------	1107
11.10 Should my belongings be cleaned or replaced?----------------------------------------------	1108
11.11 What other information do I need?----------------------------------------------------------	1109

Chapter 12 Texas Department of Insurance suggested practices for insurers	1201

12.1 What should the claimant expect when reporting water damage claims?	1201
12.2 How can the overall water damage claims handling process be improved?	1202
12.3 Should the home be tested?	1203
12.4 What factors should be considered when determining whether a dwelling is wholly or partially
untenantable and Additional Living Expense (ALE) is necessary?-----------------------------	1203
12.5 What additional information, assistance and education can the insurer provide the insured?	1204

Chapter 13 Mold in construction defect cases	1301

13.1 Is mold a construction defect?----------------------------------------------------------------	1301
13.2 Statute of limitations in construction defect cases----------------------------------------------	1301
13.3 Mold-related construction defect cases-------------------------------------------------------	1302

Chapter 14 Real estate brokers� rights and responsibilities	1401

14.1 What real estate professionals must do-------------------------------------------------------	1401
14.2 Conduct a reasonably diligent visual inspection-----------------------------------------------	1401
14.3 Watch for moldy conditions------------------------------------------------------------------	1402
14.4 Disclose any known mold problems----------------------------------------------------------	1403
14.5 Incorporate mold considerations into sale and lease agreements-------------------------------	1404

Chapter 15 Landlord rights and responsibilities	1501

15.1 Obligations and duties of landlords-----------------------------------------------------------	1501
15.2 Your options if the landlord won�t make required repairs-------------------------------------	1502
15.2.1 Repair and deduct-------------------------------------------------------------------------	1502
15.2.2 Wait---------------------------------------------------------------------------------------	1503
15.2.3 Do the repair-------------------------------------------------------------------------------	1503
15.2.4 Let your landlord do the repair-------------------------------------------------------------	1503
15.2.5 Get your money back----------------------------------------------------------------------	1503
15.3 How many times can I do this?---------------------------------------------------------------	1504
15.4 Can I use repair & deduct for cosmetic purposes?--------------------------------------------	1504
15.5 Can I use repair & deduct to put accommodation for my disability----------------------------	1504

Chapter 16 Tenant rights and responsibilities	1601

16.1 What the landlord is required to do-----------------------------------------------------------	1601
16.1.1 Maintain facilities---------------------------------------------------------------------------	1601
16.1.2 Comply with building codes----------------------------------------------------------------	1602
16.1.3 Keep common areas safe------------------------------------------------------------------	1602
16.1.4 Keep premises in safe and habitable condition----------------------------------------------	1602
16.2 What the tenant is required to do-------------------------------------------------------------	1603
16.3 Checking into your apartment or house-------------------------------------------------------	1604
16.4 Renter�s insurance---------------------------------------------------------------------------	1605
16.5 Lawn upkeep--------------------------------------------------------------------------------	1605
16.6 Quiet enjoyment-----------------------------------------------------------------------------	1605
16.7 Repairs and mold remediation to your rental--------------------------------------------------	1606

Chapter 17 Landlord and tenant disputes	1701

17.1 Withhold rent--------------------------------------------------------------------------------	1701
17.2 Abandonment of lease-----------------------------------------------------------------------	1701
17.3 Small claims court----------------------------------------------------------------------------	1701
17.4 What you need to show as tenant in small claims court----------------------------------------	1702
17.5 Evictions-------------------------------------------------------------------------------------	1703
17.6 Security deposits-----------------------------------------------------------------------------	1703
17.7 Landlord�s obligations during the lease-------------------------------------------------------	1703
17.8 Landlord�s obligations at the end of the lease-------------------------------------------------	1704
17.9 Normal wear and tear damage---------------------------------------------------------------	1704
17.10 What to do if landlord unlawfully withheld excessive security deposit------------------------	1705

Chapter 18 Suing your landlord	1801

18.1 Suing your landlord under �warranty of habitability�-------------------------------------------	1801
18.2 Local code enforcement----------------------------------------------------------------------	1801
18.3 Moving out �vacating your rental-------------------------------------------------------------	1802
18.4 Rent escrow---------------------------------------------------------------------------------	1802
18.5 Landlord retaliation is illegal------------------------------------------------------------------	1802
18.6 How to sue your landlord--------------------------------------------------------------------	1802
18.7 How to find the landlord �the owner of the land----------------------------------------------	1803
18.8 Serving the right person with the court papers------------------------------------------------	1804

Chapter 19 Consumers� home-buying and home remodeling guide	1901

19.1 What to do before you buy-------------------------------------------------------------------	1901
19.2 Demand full disclosure-----------------------------------------------------------------------	1902
19.3 Conduct a general home inspection-----------------------------------------------------------	1902
19.4 Follow up------------------------------------------------------------------------------------	1902
19.5 Hire a professional home inspector-----------------------------------------------------------	1902
19.6 Inspection: when and how it should be done--------------------------------------------------	1903
19.7 Building a new home-------------------------------------------------------------------------	1904
19.8 Home-buying FAQ--------------------------------------------------------------------------	1904
19.9 Guard yourself against poor construction work-----------------------------------------------	1906
19.10 What the new home buyer should know before close of escrow-----------------------------	1907
19.11 What is binding arbitration?-----------------------------------------------------------------	1911
19.12 Russian roulette-----------------------------------------------------------------------------	1912
19.13 Just who Is really being harmed the most by the arbitration clause?--------------------------	1913

Chapter 20 Insuring projects with mold coverage	2001

20.1 How builders should manage and insure their risks and assets---------------------------------	2002
20.2 Building industry liability crisis----------------------------------------------------------------	2002
20.3 General liability insurance---------------------------------------------------------------------	2003
20.4 Eight-point plan to manage your risks---------------------------------------------------------	2004
20.5 What builders must do when mold and fungus arise-------------------------------------------	2006
20.6 Mold and pollution exclusion-----------------------------------------------------------------	2008
20.7 Subcontractor exclusion endorsements-------------------------------------------------------	2009
20.8 �Discharged�, �dispersed,� and other terminologies used by courts----------------------------	2010
20.9 Is mold a �pollutant�?------------------------------------------------------------------------	2011
20.10 New insurance language that excludes coverage for mold------------------------------------	2012
20.11 New insurance products to deal with mold--------------------------------------------------	2012
20.12 CGL policies and the liability crisis----------------------------------------------------------	2013
20.13 From �buyer beware� to �builder beware�--------------------------------------------------	2013
20.14 What builders must do to survive------------------------------------------------------------	2014

Chapter 21 The mediation alternative to lawsuits	2101

21.1 Mediation definition and overview------------------------------------------------------------	2101
21.2 Who can mediate a case?--------------------------------------------------------------------	2102
21.3 Mediate or Litigate?--------------------------------------------------------------------------	2102
21.4 Will the court make me mediate?-------------------------------------------------------------	2102
21.5 How do I start the mediation process?-------------------------------------------------------	2103
21.6 What if mediation does not settle my case?---------------------------------------------------	2103
21.7 What is the secret to a successful mediation?-------------------------------------------------	2103
21.8 Seven (7) things your lawyer should do to succeed at mediation------------------------------	1701
21.8.1 Choose a mediator carefully----------------------------------------------------------------	1701
21.8.2 Prepare for mediation as if preparing for trial-----------------------------------------------	1702
21.8.3 Negotiate at a time and place it is advantageous--------------------------------------------	1703
21.8.4 Share information strategically--------------------------------------------------------------	1704
21.8.5 Prepare the mediator-----------------------------------------------------------------------	1705
21.8.6 Use the mediator as a messenger-----------------------------------------------------------	1706
21.8.7 Seal the deal in writing---------------------------------------------------------------------	1707

Chapter 22 The dark side of arbitration	2201

22.1 The abuse of binding arbitration in new-home contracts---------------------------------------	2201
22.2 The nature of binding arbitration--------------------------------------------------------------	2201
22.3 Lack of consumer protection for new homebuyers--------------------------------------------	2202
22.4 History of arbitration in home contracts-------------------------------------------------------	2204
22.5 Interim studies by the Texas House of Representatives----------------------------------------	2205
22.6 Homebuilders with arbitration clauses--------------------------------------------------------	2206
22.7 Lack of an �Alternative� Dispute Resolution (ADR) system-----------------------------------	2208
22.8 Other available Alternative Dispute Resolution (ADR) systems--------------------------------	2208
22.9 The benefits of arbitration to the homebuilding industry.---------------------------------------	2209
22.10 High cost of arbitration----------------------------------------------------------------------	2210
22.11 Biased arbitrators---------------------------------------------------------------------------	2211
22.12 Exceptions to the arbitration clause----------------------------------------------------------	2212
22.13 Recommendations and conclusions----------------------------------------------------------	2212
22.14 Arbitration FAQs: Is binding arbitration faster, cheaper, better?-----------------------------	2213
22.14.1 Is binding arbitration faster than our court system?-----------------------------------------	2213
22.14.2 Is binding arbitration cheaper than our court system?--------------------------------------	2213
22.14.3 Do I have a choice to select arbitration over our court system?----------------------------	2214
22.14.4 Should I buy a new home with a mandatory arbitration clause in the contract?-------------	2214
22.14.5 Which builder in Texas have mandatory arbitration clause?--------------------------------	2214

Chapter 23 Mold victims can become medical malpractice victims	2301

23.1 Types of medical malpractice-----------------------------------------------------------------	2301
23.2 Damages for medical malpractice-------------------------------------------------------------	2302
23.3 Medical records-----------------------------------------------------------------------------	2302
23.4 Limits on recoveries--------------------------------------------------------------------------	2302
23.5 Surgical injuries------------------------------------------------------------------------------	2302
23.6 Surgical injury statute of limitations-------------------------------------------------------	2303

Appendix A: Legal form � Tenant legal notice to landlord of mold infestation-----------------------	2401
Appendix B: Legal Form � Tenant legal notice to landlord that tenant is withholding rent-----------	2403
Appendix C: Legal form � Tenant legal notice to vacate--------------------------------------------	2405
Index----------------------------------------------------------------------------------------------	2501

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