Mold suit pays damages of $25M

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http://www.miami.com/mld/miamiherald/business/7350730.htm

Wed, Nov. 26, 2003

COURTSMold suit pays damages of $25MA Bal Harbour apartment building owner expects to pay $25 million dispensing with a mold lawsuit that is one of the first settlements of its kind in the country.BY DOUGLAS HANKS IIIdhanks@...

The owner of a luxury Bal Harbour apartment complex expects to pay millions of dollars to settle a class-action lawsuit that claimed the tower was infested with mold.

Under the settlement, Archstone- will reimburse tenants for medical bills and property damage allegedly linked to a mold outbreak last year at Harbor House South, where units rent for about $1,500 a month. Plaintiff lawyers say about 800 families or groups of roommates are already identified as potential plaintiffs, meaning thousands of people could ultimately join the suit.

The exact scope and cost of the settlement remains in doubt, though in a September regulatory filing Archstone- said it estimated the suit and settlement and related repairs would cost $25 million. That comes on top of a $38 million tab for ridding the 452-unit tower of mold -- a total that the company says included repairs planned before the mold problems arose last year, as well as about $12 million relocating tenants and replacing their damaged furniture and clothing.

In a statement released Tuesday, Archstone- said it thinks it would have won the suit, but decided to settle ``given the unusual circumstances . . . unique to Harbor House South.''

The resolution of the case in Miami-Dade County Circuit Court marks one of the first settlements of a class-action mold suit against the owner of a privately-held building.

Mold suits have emerged as one of the fastest-growing sectors in liability law, a phenomenon builders and insurers blame largely on opportunistic attorneys. Lawyers counter mold problems are real, and often caused by either shoddy construction or lax maintenance.

Either way, the insurance industry says the rising number of mold claims threaten its ability to back homeowner policies, particularly in humid Florida, where mold is a chronic nuisance.

An Archstone- spokesman said Tuesday the company hoped to recover a ''significant'' portion of the settlement costs from its insurance carriers.

Archstone-, a publicly-held company and the country's largest apartment owner, said it moved quickly to fix the mold contamination once it discovered the problem in the summer of 2002. But plaintiffs say mold was an issue from the time the Englewood, Colo.-based company bought the building at 10275 Ave. in November 2000, and that the lawsuit forced Archstone- into action.

''It took the litigation to obtain the appropriate response from Archstone,'' said plaintiff lawyer Joy Spillis Lundeen, of the Sterns Weaver firm in Miami. She said once the clean-up started, Archstone- acted ''aggressively'' to clean the mold and get tenants back into the building.

Lundeen is part of the legal team awarded $4 million in fees as part of the settlement, as well as $300,000 in expenses.

The suit is open to all Harbor House residents and their long-term guests since Nov. 2000, when Archstone- bought the building. Payouts will be determined individually, Lundeen said.