Multiple Chemical Sensitivity Archives

Toxic mold

Saturday, June 2
Court finds insurer at fault in mold case

http://www.austin360.com/statesman/editions/saturday/news_2.html

By Kevin Carmody
American-Statesman Staff
Saturday, June 2, 2001

A Travis County District Court jury on Friday awarded a Dripping Springs family $32 million in a landmark toxic mold case, finding that a subsidiary of Farmers Insurance Group mishandled the family's homeowner's claim for mold damage.

The jury concluded that Farmers Insurance Exchange committed fraud in the way it dealt with Melinda Ballard and her husband, Ron Allison. The couple said the company failed to adequately and swiftly cover repairs for a water leak, allowing the toxic mold stachybotrys to overrun their 22-room mansion and damage their family's health.

"The message this sends is how important it is for insurance companies to deal with people's problems promptly, instead of using delay tactics to try to coerce people into taking less," said Fred Hagans, a Houston lawyer who represented Ballard. Hagans argued that instead of trying to fix the problem, the company looked for every possible way to cut its costs, even failing to acknowledge that the toxic mold had spread to the family's separate living quarters.

Lawyers say it is the first mold case nationally in which a jury has awarded a homeowner damages from an insurance company, although people have previously won personal injury cases against builders and building owners.

With the number of homeowner claims and lawsuits involving mold damage increasing dramatically in the past two years, this case has been closely watched by the insurance industry and plaintiffs lawyers for a lesson in how a jury would react, said Colleen McLaughlin, editor of the national newsletter Mealey's Litigation Report: Mold.

Bill Miller, a spokesman for Farmers, said the company would decide whether to appeal the case after seeing if Judge John Dietz reduces the jury's award when he enters the judgment. "If an appeal is necessary, we're confident we will prevail," said Miller, who declined further comment.

Jerry Johns of the Southwestern Insurance Information Service, an insurance trade group based in Austin, said he couldn't comment on the legal significance of a specific case. "The message is we need to continue to protect our policy holders and to go forward," he said.

The jury agreed 11-1 to award the family $6.2 million in actual damages, finding that the house will have to be decontaminated, leveled and rebuilt. They also awarded $12 million in punitive damages as an example to other insurers, $5 million for mental anguish and $8.9 million in lawyers' fees.

Lawyers for Farmers agreed Ballard's home was contaminated but said she was due $1.8 million to cover cleanup of the house. They argued that Ballard contributed to the problem by refusing to make repairs with the insurance checks that were issued.

Hagans countered that the company repeatedly agreed to pay for repairs weeks or months past the point when those repairs would have fixed the growing problem. "At one point, it could have been remediated for $1.1 million," he said, "but they (Farmers) chose not to take care of it."

The family originally sought $100 million based in part on allegations of severe health problems, such as the neurological damage that has forced Allison to leave his career as an investment banker. However, Dietz ruled that lawyers could not introduce medical testimony on the health effects of mold because a Texas Supreme Court decision mandates a level of scientific proof that has not yet been reached.

Beyond any legal milestone, the case is symbolically important for others who say they share Ballard's experiences with slow-moving insurers or incompetent cleanup companies.

"This is a victory for many people if insurance companies take it as a lesson not to do this to other families," Ballard said. "Now I'm going to get back to my campaign to educate people about toxic mold."

You may contact Kevin Carmody at kcarmody@statesman.com or 912-2569.

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