LEGAL DEVELOPMENTS RESPECTING TOXIC MOULD

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• LEGAL DEVELOPMENTS RESPECTING TOXIC MOULD
• Michael Peerless
• Matthew Baer

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Toxic Mould Areas of Interest

• Mould Overview
• Types of Mould Litigation
• U.S. Mould Litigation
• Canadian Mould Litigation
• Canadian Mould Headlines
• Who is Most at Risk
• Theories of Mould Liability
• Legal Costs of Mould Litigation
• Risk Management

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What are Moulds?
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What are Moulds?

• Microscopic fungi
• Over 20,000 varieties
• Written history of mould contamination dates back
  to Bible
• Priest instructed to tear out contaminated stones
  from a building and throw them into an unclean
  place outside of town (Leviticus)

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What Makes Moulds Grow?

• Moulds reproduce by making spores
• Moulds require
• Moisture
• Heat (temperature between 35 and 104 degrees F)
• Nutrients (i.e. building materials)
• Moulds do not require light

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Where Does Mould Grow?
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Where Does Mould Grow?

• Drywall
• Carpeting
• Panelling
• Ceiling tiles
• Insulation
• Paint
• Wallpaper
• Doors
• Drains
• Behind walls
• Under floors

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Why are Moulds a Concern?

• Some moulds release chemicals and spores which
  may effect health
• Possible Symptoms of mould exposure
• Breathing difficulties (strong link to asthma)
• Memory loss
• Hearing loss
• Dizziness
• Flu-like symptoms
• Chronic fatigue
• Irritability
• Head aches

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Signs of Mould

• Discolouration of walls and ceilings
• Smell / Odour

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Preventing Mould

• Reduce indoor humidity
• Find and fix water leaks
• Discard clutter/excess stored materials
• Clean and maintain regularly
• Regularly replace furnace filters
• Keep water drains in good shape
• Cut down on potted plants
• Prevent condensation by adding insulation
• Ensure good ventilation
• Respond promptly when a leak or spill occurs

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Types of Mould Litigation

• PERSONAL INJURY
• Plaintiff claims to have been injured by toxic
  mould
• PROPERTY DAMAGE
• Plaintiff seeks costs of repairs as well as costs
  associated with preventing further mould
• (not mutually exclusive)

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U.S. Mould Litigation

• Mould claims against insurers have increased
  dramatically over the past few years in the
  United States
• Year No. of Claims
• 1999 12
• 2000 499
• 2001 10,000

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Notable U.S Cases

• Ballard v. Fire Insurance Exchange (2001)
• A homeowner was awarded 32 million against an
  insurer on a property damage bad faith claim
• Involved a multi-million dollar mansion in which
  the homeowner experienced a plumbing leak in the
  bathroom which was not properly fixed
• The insurer was warned that dangerous moulds
  could grow in the sub-floor and that the flooring
  needed to be pulled out to avoid such a problem
• The insurer did not follow the advice and
  disregarded the warning
• The homeowner recovered for direct damages,
  punitive damages, emotional distress and costs,
  but personal injury claims were dismissed before
  trial for lack of scientific support

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Notable U.S. Cases (Cont)

• Stroot v. New Haverford Partnership
• A Delaware jury awarded a former tenant in a
  residential building over 1 million in personal
  injury damages which she allegedly suffered as a
  result of her exposure to various mould toxins
  while living in the defendants complex
• Anderson v. Allstate Insurance Company
• A California jury awarded a policyholder 18
  million in punitive damages arising out of a
  mould coverage action (award was later reduced to
  2.5 million by the judge)

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U.S. Mould Class Actions

• Mould Class Actions are difficult to certify
• In Michigan, homeowners sought class
  certification where a contractor allegedly
  installed a defective ventilation system that led
  to mould infestation
• In Washington, students and teachers sought class
  certification alleging that mould spores in the
  school affected the indoor air quality and caused
  illness
• In Davis v. Henry Phipps Plaza, 490 residents of
  a residential apartment building in New York City
  accepted a settlement of 1.17 million

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U.S. Mould Class Actions (Cont)

• Jana Andrejevic, et al. v. Board of Education et
  al.
• In this June 4, 2003 decision from Illinois,
  certification was sought on behalf of a group of
  school children allegedly exposed to mould
  causing respiratory conditions and other injuries
• Certification was denied because it was found
  that individual questions predominate over every
  aspect of a mould exposure case
• Examples of individual issues
• Amount of exposure
• Duration of exposure
• Date of exposure
• Location of exposure

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Canadian Mould Litigation

• First significant decision in Canada dealing with
  mould occurred in 1989, when a tribunal in Quebec
  found that significant growth of toxic mould in
  the work place was a violation of Quebec health
  and safety legislation
• Many Canadian mould cases have failed for the
  following types of reasons
• Failure to show economic loss
• Failure to prove presence of mould
• Failure to prove illness
• Damage caused by mould not covered by insurance
  policy

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Canadian Mould Class Actions

• In Taub v. Manufacturers Life Insurance (1998),
  certification was sought on behalf of residents
  of an apartment building where mould was
  allegedly present. Certification was denied as
  there was not deemed to be enough of an
  evidentiary basis to grant a certification order
• In McDonald v. Dufferin_Peel (2000),
  certification was sought on behalf of 22,000
  children allegedly exposed to toxic mould in
  school portables causing illness. Given the
  number of individual issues involved, it was
  found that a class proceeding was not preferable.

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McDonald v. Dufferin Peel (2000)

• Plaintiff, on behalf of a proposed Class of
  Plaintiffs, claimed that she became ill upon
  being moved from a permanent school building into
  a portable classroom due to exposure to
  Stachybotrys atra and other noxious mould and
  other harmful and dangerous toxins and substances

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Stachybotrys atra
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Stachybotrys atra
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McDonald v. Dufferin Peel (2000)

• Since the claim of illness was very general in
  nature, the Board collected the attendance data
  for the Plaintiffs school for the period she
  claimed in the class action and the worlds
  largest retrospective study of the effects of
  mould exposure on health was undertaken
• A review of the attendance data indicates that in
  fact students are absent from school due to
  illness less often if they are housed in a
  portable or Relocatable Classroom Structure (RCS)
  than if they are housed in the main school
  building

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Mean Number of Absent Days by Location
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Mean Number of Absent Days by Location
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Recent Canadian Mould Headlines

• Aging portables blamed for fertility problems
• Two doctors claim to have developed leukemia from
  exposure to toxic mould due to poor building
  ventilation
• Litigation due to mould caused by leaky
  condominiums
• Courthouses closed to remove mould
• Toxic moulds have been found in schools all
  across Canada causing closures while cleaning
  takes place and in other circumstances, closure
  of the buildings all together
• A medical officer ordered all 186 portables in
  Halton region be inspected for mould
• In 2000, Ontario paid 40 million in grants to
  school boards to correct mould contamination
  problems in schools

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Who Is Most At Risk?

• Insurance companies
• Landlords
• School Boards
• Contractors
• Suppliers
• Architects

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Theories of Mould Liability

• Negligence
• Breach of duty to warn
• Risk of future illness
• Emotional Distress
• Economic Loss
• Breach of contract

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Legal Costs of Mould Litigation

• Microbiologists
• Environmental engineers
• Chemist
• Mould experts
• Architects
• Construction experts
• Air quality specialists
• Ventilation experts
• Industrial hygienists
• Medical experts in neurology and immunology

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Risk Management

• Specific insurance agreements
• Contract clauses with contractors/suppliers

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• Contact
• Michael Peerless
• Matthew Baer
•  
• SISKINDS THE LAW FIRM
• 680 Waterloo Street
• London Ontario N6A 3V8
•  
• Telephone [phone]
•  
• Michael ext. 369 E-Mail
  mike.peerless_at_siskinds.com
• Matthew ext 405 E-Mail
  matt.baer_at_siskinds.com