Mold: 5 Reasons Why It Is Not The 'Next Asbestos'

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United States: Mold: 5 Reasons Why It Is Not The 'Next Asbestos'

23 July 2002

Article by Mr Randy Maniloff

Mold has been the subject of much discussion lately within the insurance

industry, as well as by others affected in their own right, such as lawyers,

environmental consultants and consumer groups. And it seems like every time

the subject comes up, it doesn't take long for someone to chime in that mold

is the 'next asbestos.' It's not. While mold is certainly a cause for

legitimate concern by the insurance industry, there are several reasons why

the stars are not aligned for mold to warrant such an ambitious label.

Before examining these reasons, consider what it will take for mold, or any

toxic tort, to become the 'next asbestos.' According to an April 10, 2002

article in The New York Times - front page and above the fold - American

companies and insurers have spent over $30 billion to defend and settle

asbestos lawsuits. Moreover, The Times cites industry analyst predictions

that the total bill for asbestos could exceed $250 billion.1 If mold is

going to be the 'next asbestos,' it certainly has big shoes to fill.

1. The Volume Of Mold Claims Will Not Enable Duplication Of The 'Asbestos

Business Model'

There are numerous factors that have caused asbestos litigation to reach the

dollar levels that it has. Most significantly is the unparalleled volume of

claims. This has resulted in a fundamental change in the entire approach to

litigation - to the tremendous advantage of plaintiffs. The number of mold

claims, on the other hand, will not reach the same stratospheric heights as

asbestos. Therefore, mold will not provide plaintiffs with the same tactical

advantages that they have been able to exploit so successfully in the

asbestos arena.

Faced with thousands, and sometimes even hundreds of thousands of asbestos

cases pending against an insured, along with dozens of other defendants, not

to mention the associated defense costs required to navigate such litigation

labyrinths, insurers have been left with little choice but to apply novel

approaches to the problem. To avoid becoming suffocated by the volume of

asbestos cases, the interested parties, with the complete blessing, if not

at the insistence, of courts, have been forced to dispense with some of the

traditional requirements of tort law. Enter the 'global settlement' - the

biggest thing to happen to tort law since Helen Palsgraf decided to take the

train to Rockaway Beach.2

In a global asbestos settlement, hundreds, if not thousands, of asbestos

cases are resolved with-out strict proof that a plaintiff's asbestos-related

injury was caused by exposure to a specific defendant's asbestos or asbestos

containing product. Instead, generally speaking, causation will likely be

deemed satisfied as long as there is an overlap between the plaintiff and

the defendant's asbestos or asbestos containing product being present at the

same location. Never mind that the asbestos at issue may not have been

friable or, if it was, that the plaintiff may not have been in a position to

actually inhale the specific settling defendant's asbestos. Never mind that

the amount paid by the defendant to settle, compared to other settling

defendants, may not be in equal pro-portion with the extent of exposure by

the plaintiff to the two settling defendants' asbestos. And never mind that

the plaintiff's decision to smoke a couple of packs of Lucky Strikes a day

for 30+ years might have had something to do with that shadow on the chest

x-ray, if there is even a present injury at all.

Provided that a plaintiff's case has enough evidence to defeat the defendant

's theoretical motion for summary judgment on lack of causation - which, by

the way, will likely be deposition testimony of the plaintiff, recalling the

details of specific workplace events from 40 to 50 years ago - it will

likely make it into the global settlement. There is a price that must be

paid to resolve a backlog of thousands of asbestos actions, and this sleight

of hand approach to causation is it.

Herein lies the secret (although it is certainly not a secret) to the

success of asbestos for plaintiffs' attorneys - the asbestos business model.

Individually, each asbestos case may have several weaknesses that would

prevent it from being economically worthwhile to pursue. But when thousands

of such cases are filed against a single defendant, it becomes an extremely

daunting and expensive task to identify such weaknesses. What's more, if the

cases can not be dismissed on motion for summary judgment, then any insurer

wishing to take a hard-line position on non-meritorious claims is forced to

try each and every case individually (to the probable displeasure of the

trial judge, who is likely being judged him or herself on how many cases he

or she clears off the docket). The result is the global asbestos settlement.

To be fair, the global asbestos settlement is not without consideration for

insurers either. In exchange for settling multiple cases in this manner,

insurers are relieved of the tremendous defense costs that would be incurred

if each case were to be separately handled, on its own, start to finish. As

well, insurers are also relieved of the risks of taking their insured's

cases to trial. Time and time again it has been proven that even a defendant

with a strong case on both causation and damages is rolling the dice when

putting an asbestos case before a jury. Not to mention, if there was an

offer to settle before trial that was rejected, the insurer is also risking

potential liability for the excess verdict. These are the benefits of the

bargain for an insurer that agrees to settle a case for, say, a few thousand

dollars, even if the payment feels like extortion.

Additionally, insurers that enter into global settlements typically must be

satisfied that they are receiving an adequate discount from the plaintiffs.

After all, the insurers are agreeing to settle cases earlier than they would

otherwise be scheduled for trial, with significantly reduced effort and

expense on the plaintiffs' part and pursuant to this relaxed standard of

causation. However, lots of companies achieve success by selling their

products cheap and making up the difference in volume. Given the

extraordinary number of cases in their " inventory " (yes, this is actually

the term that asbestos plaintiffs' attorneys use to describe their clients),

asbestos plaintiffs' attorneys can afford to follow this same business

model.

On the other hand, mold does not lend itself to hundreds of thousands of

plaintiffs suing dozens of defendants through the use of form complaints and

other pleadings and cookie-cutter discovery (more on this in reasons 2 and

3). Therefore, mold is not likely to provide the plaintiffs bar with the

ability to attempt to settle such claims en masse, based on fictional

causation and other corner-cutting of decades of jurisprudence that has

attempted to keep the tort playing field level.

Instead, mold claims are much more likely to have to be litigated in the

more traditional manner. In other words, plaintiffs' attorneys will have to

incur significant effort and expense to prepare each case for trial or

settlement. If each mold suit must be 'worked-up' in the traditional manner,

then it is unlikely that such claims will achieve the volume levels that

would be required to replicate the asbestos business model.

2. Most Mold Claims Are For Property Damage Under First-Party Policies

As stated above, mold claims do not lend themselves to hundreds of thousands

of plaintiffs suing dozens of defendants. As a result, the plaintiffs bar

will not enjoy the tactical litigation advantages that come from the

necessity of insurers to resolve such a large number of cases. But if mold

is supposedly everywhere, why can't it rival asbestos in terms of the number

of claims?

There are a few reasons for this. While it may be true that mold is

everywhere, not all mold lends itself to a cause of action against parties

allegedly responsible for the situation. Case in point. The available data

suggests that most mold claims have nothing at all to do with liability and

arise under homeowners' policies.

As well, even though there is the potential for mold " liability " claims

being brought in bulk, say, by large numbers of occupants of a public

building, all alleging mold bodily injury on account of its faulty

construction, such situation still does not rival asbestos in terms of the

number of potential plaintiffs. It is therefore not likely to contribute to

replication of the 'asbestos business model'. A major contribution to the

volume of asbestos plaintiffs has been the fact that a defendant's liability

can often times be traced back to a single source, such as its incorporation

of asbestos into a product that it manufactured. Mold, of course, is not a

product. Therefore, while it may be true that mold is everywhere, it is not

the same mold that is everywhere. In other words, the mold in one building

likely has absolutely no relationship to the mold in another building. As a

result, while mold can result in multiple-plaintiff litigation, the number

of potential plaintiffs that will be in a position to trace their injuries

to the same source is likely to be substantially fewer than is the case with

asbestos, where the same product may have been distributed on a national

basis and therefore come in contact with millions of people.

Any count of the number of mold insurance claims that have been filed must

be qualified by an explanation of the type of policies at issue, the nature

of the mold-related damage and its alleged cause. For this reason, any data

purporting to offer the number of mold claims at issue, without such an

explanation, is of little value to any assessment of the overall size of the

problem. As well, without such qualification, any comparison between data

from different sources is apples and oranges.

One group that has examined the number of mold insurance claims that have

been filed is Policyholders of America, a non-profit organization founded by

Melinda Ballard, who was awarded $32.1 million in 2001 in a homeowners'

coverage action for mold damage.3 While Policyholders of America

acknowledges that its list may not be all-inclusive, it calculates that from

1987 to February 5, 2002, there have been 16,059 first-party mold claims

filed (in which the policyholder retained counsel), consisting primarily of

homeowners' claims. By comparison, Policyholders of America reports that

there have been only ten cases against contractors that have resulted in an

award or settlement of $1 million or more, and only six cases where

litigation against commercial or municipal building owners resulted in

awards or settlements of $1 million or more.4

Even if these claims figures are not exact, they clearly illustrate that the

vast majority of mold claims arise under homeowners' policies,5 which do not

cover bodily injury to the home's resi-dents.6 Moreover, even claims for

property damage under homeowners' policies are by no means slam-dunks.

Consider that homeowners' policies actually contain exclusions for certain

types of mold damage,7 not to mention that attempts are currently underway

to broaden such exclusions. This is not to say that mold exposure for

insurers under homeowners' policies is anything to sneeze at (no pun

intended).8 However, without the potential for recovery for bodily injury,

and its pain and suffering component, as well as the fact that homeowners'

policy property damage claims will likely have too many unique aspects to

lend themselves to Henry Ford-like automation, they are unlikely to become

the basis for a high-volume plaintiffs' practice or even pique many

plaintiffs' attorneys' interests (unless, of course, the attorney sees a

potential bad faith aspect to the claim 9).

As well, a homeowners' property damage claim is only intended to make the

insured whole. Many insureds will likely be underwhelmed by the idea of

involving a lawyer in their homeowners' claim, after discovering that, as a

result, they will now only be made about 60% whole. A 33% to 40% contingent

fee is much easier for a plaintiff to swallow when it is part of a

settlement that has a pain and suffering component, since it is not reducing

the plaintiff's recovery for out-of-pocket losses.

3. Mold Exclusions Will Likely Be Far More Effective Than Asbestos

Exclusions In Limiting Insurers' Financial Exposure

Even if the vast majority of mold claims will likely arise under homeowners'

policies, the potential for claims being brought in bulk, by large numbers

of occupants of a public building, all alleging bodily injury caused by

mold, is very real. Such claims would likely be brought against the building

owner and those responsible for its construction, such as the general

contractor, its numerous subcontractors, the manufacturers of the

construction materials, and a host of other potential defendants. The theory

of liability here will likely be that the building was constructed in a

defective manner, allowing for the penetration of water, and, as a result,

the growth of mold.

Thus, there exists the potential for numerous bodily injury plaintiffs, each

of whom can easily prove their extended presence in a building (for example,

because they went to work there every-day), bringing actions against

defendants who will each tender the claim to their commercial general

liability insurer(s). Such insurers issued policies that provide coverage

for third-party bodily injury. Even if this situation will not likely result

in a replication of the 'asbestos business model', doesn't it at least

resemble the model, and therefore present an attractive case to the

plaintiffs bar? Of course. But the insurance industry has begun to respond

to the mold epidemic by incorporating mold exclusions and mold sublimits

into commercial general liability policies.10

Insurance Services Office, Inc. has recently promulgated endorsements for

use on CGL and various other types of liability policies to exclude or

reduce (through the use of a sublimit) the coverage available for mold

claims to commercial insureds. These endorsements are expected to be

implemented in various states between April and June 2002. 11

The precise extent to which mold exclusions and sublimits take hold in CGL

policies will likely vary from state to state. However, the effect will be

the same - to severely limit or preclude insurance coverage to defendants in

a multiple-plaintiff mold bodily injury action. While the loss of the

availability of insurance coverage is not a bar to the prosecution of the

underlying action, the likely reality is that without insurance dollars to

pay any settlement or judgment, the plain-tiffs bar's motivation to bring

the case (and especially on a contingent fee) will be lost.

While the insurance industry responded to the asbestos crisis by making an

asbestos exclusion a part of CGL policies, the nature of asbestos bodily

injuries are such that this solution came too late to prevent most of the

damage. Asbestos exclusions were generally incorporated into CGL policies

between the mid-1980's to the mid-1990's. However, the typical asbestos

plaintiff alleges exposure to asbestos starting from the 1950's and going

straight through to the present. Based on any trigger theory other than

manifestation, numerous years of pre-asbestos exclusion policies will likely

be obligated to respond to the claim. In addition, for allocation purposes,

the adoption of " joint and several liability " has avoided leaving plaintiffs

with the prospect of having to collect a share of their recovery directly

from the insured, which may not be feasible. Indeed, even some courts that

have rejected joint and several liability in favor of pro-rata time on the

risk

do not require allocation to the insured for periods when coverage is " not

available, " on account of asbestos exclusions.12

Accordingly, notwithstanding the adoption of asbestos exclusions, the latent

nature of asbestos injuries, in conjunction with various trigger theories

that have been adopted by courts, has still left billions of insurance

dollars on the table for the payment of such claims. Mold bodily injuries, h

owever, may not lend themselves to a latent injury period, thereby enabling

pre-mold exclusion CGL policies to be triggered. Thus, mold exclusions will

likely be far more effective than asbestos exclusions in limiting insurers'

financial exposure.

4. Mold Is Likely To Have A Much Shorter Trigger Period Than Asbestos

Mold exclusions and sublimits in homeowners' and liability policies are

politically-charged is-sues. Thus, it is possible that these exclusions and

sublimits will not achieve the same level of across-the-board incorporation

as asbestos exclusions. However, even if this occurs, the nature of mold

injuries, both bodily injury and property damage, does not likely lend

itself to long trigger periods. Simply put, the nature of mold claims is not

likely to offer plaintiffs the annualization of the policy limits of decades

of coverage that has served to create the asbestos trough.

The trigger of coverage for mold bodily injury will be directly tied to the

medical etiology of the injury. Just as with asbestos and property damage

caused by hazardous waste, the courts will be guided by the science behind

the injury in crafting a trigger theory. For mold, however, this presents an

interesting situation, considering that there is an on-going debate

concerning whether exposure to mold even causes bodily injury.

Recognizing that many involved in the mold - bodily injury debate have a

bias, here is what the Center for Disease Control has to say about the issue

in its publication " Questions and Answers on Stachybotrys chartarum and

other molds " :

Q 1. I heard about toxic molds that grow in homes and other buildings.

Should I be concerned about a serious health risk to me and my family?

A. The hazards presented by molds that may contain mycotoxins should be

considered the same as other molds which can grow in your house. There is

always a little mold everywhere - in the air and on many surfaces. There are

very few case reports that toxic molds (those containing certain mycotoxins)

inside homes can cause unique or rare, health conditions such as pulmonary

hemorrhage or memory loss. These case reports are rare, and a causal link

between the presence of the toxic mold and these conditions has not been

proven. . . .

Q 10. What are the potential health effects of mold in buildings and homes?

A. Mold exposure does not always present a health problem indoors. However

some people are sensitive to molds. These people may experience symptoms

such as nasal stuffiness, eye irritation, or wheezing when exposed to molds.

Some people may have more severe reactions to molds. Severe reactions may

occur among workers exposed to large amounts of molds in occupational

settings, such as farmers working around moldy hay. Severe reactions may

include fever and shortness of breath. People with chronic illnesses, such

as obstructive lung disease, may develop mold infections in their lungs.13

The debate concerning the causal connection between exposure to mold and

various injuries is not going to be resolved here.14 However, assuming that

the link is established, it may be the case that the injury manifests itself

shortly after a person's initial exposure to the mold, and not significantly

later, as is commonly the case with asbestos. If so, then there are likely

to be short trigger periods for coverage purposes. Therefore, even if

coverage is not precluded for a multiple- plaintiff mold claim brought

against a building owner and those responsible for its allegedly defective

construction, the amount of coverage available for such a claim will likely

be limited to one or maybe two years worth.15

The trigger of coverage for mold property damage may be an easier issue to

evaluate because it may not contain a controversial causation component, as

in the case with bodily injury. In general, numerous courts have adopted a

manifestation trigger in the context of construction defect claims, even in

states that have adopted continuous triggers for purposes of asbestos bodily

injury and environmental property damage.16 In addition, mold requires

moisture to grow and can begin growing within 24 to 48 hours of a water

event.17 Thus, it is likely that a manifestation trigger will apply to mold

property damage claims. If so, then, by definition, mold property damage

claims will only trigger a single year of coverage.

Herein lies the insurance industry's most important safeguard against mold

reaching the same dollar levels as asbestos. Unlike asbestos, the likely

short trigger periods for mold bodily injury and property damage will limit

the amount of insurance dollars available (even without the benefit of mold

exclusions and sublimits). Since construction defect cases often times

involve multiple defendants and are therefore labor intensive, a diminished

amount of available insurance dollars - while certainly not preventing mold

litigation - will surely make the litigation less attractive for a plaintiff

's attorney deciding how best to use the finite number of hours in his or

her work day.

5. The Present Financial State Of The Insurance Industry Does Not Bode Well

For Mold

While the insurance industry is not known for engendering sympathy, the fact

is that the industry is presently going through a rough financial period.

According to information released on April 15, 2002 by Insurance Services

Office, Inc. and the National Association of Independent Insurers, the

property/casualty industry suffered a $7.9 billion net loss after taxes in

2001, its first ever net loss for a full year. Compare this with 2000, in

which the industry had net income of $20.6 billion. The combined ratio -

which measures losses and underwriting expenses per dollar of premium - rose

to a staggering 116% in 2001. According to ISO and the NAII, factors

contributing to these results are September 11th claims and sharply lower

gains on investments, as a result of declining interest rates and stock

markets. The insurance industry is also facing significant potential

exposure from the collapse of Enron (and possibly other companies that are

waiting to implode in accounting scandals).

The media has been full of reports recently concerning enormous increases in

premium being charged for various lines of coverage, including property and

liability insurance. The reason, in part, is the P & C industry's financial

woes, as well as the practice during the 1990s when insurers fought for

customers by aggressive price cutting. There have also been many reports of

businesses that are suffering, and even laying off employees as a result of

the financial stress being caused by the increases in their insurance

premiums.18

But what does this have to do with mold? It is likely that the proliferation

of asbestos was helped by the fact that it arose at the same time as the

longest bull market in history, which began in August 1982. Surely courts

are more receptive to pro-plaintiff and pro-coverage arguments during a

period when insurers are flush with cash. Indeed, with the bull market over,

arguments are now being made to Congress that it is time for it to step in

with a solution to the asbestos crisis. Such arguments are based mainly on

the economic havoc that asbestos is wreaking on American businesses.

Mold, on the other hand, has arrived at a time when the industry can

ill-afford the financial consequences of another asbestos. Thus, courts that

reach decisions that are designed to over-come some of the coverage-limiting

arguments raised herein will only be passing the industry's losses back onto

the insurance consumer, in the form of even higher premiums. Knowing this,

courts may be unwilling to contribute to the economic hardship to businesses

that comes from the lack of affordable insurance.

Conclusion

While mold is not the 'next asbestos,' its potential exposure for the

insurance industry is nonetheless very real. Even if mold does not result in

litigation factories, there is still much damage that can be done to

insurers by those cases that can justify being handled by plaintiffs in the

traditional litigation format. For example, mold bodily injury cases brought

by multiple plaintiffs against building owners and contractors for alleged

defective construction are surely attractive cases for plaintiffs. Even if

they only trigger one year of coverage, they can still present significant

exposure for insurers. As well, the defense costs associated with these

types of construction defect cases can be astronomical. Additionally, even

if homeowners' policy property damage claims are not appealing on their face

to the plaintiffs bar, attempts are being made to raise the profitability of

such cases by turning them into bad faith claims. So while mold is not the

'next asbestos,' it would be short-sighted to dismiss it and call it the

next Electromagnetic Fields (power lines).

If the insurance industry's total exposure to date for asbestos is $30

billion, and projected by some analysts to reach $250 billion, then perhaps

the strongest argument why mold is not the 'next asbestos' is the simplest

of them all - there is presently no need for it to be.

ENDNOTES

1. Berenson, " A Surge in Asbestos Suits, Many by Healthy Plaintiffs, "

The New York Times, April 10, 2002, at A1.

2. In Palsgraf v. The Long Island Railroad Company, 162 N.E. 99 (N.Y. 1928),

the most famous tort case of them all, Judge Cardozo, writing for the Court

of Appeals of New York, addressed negligence under the following facts. A

man was running to catch a train after it began to move. He jumped on, but

was about to fall. The conductor, who had held the door open, reached

forward to help. In doing so, a newspaper-wrapped package that the man was

carrying fell upon the tracks. The package contained fireworks, which

exploded. The shock of the explosion knocked down some scales at the other

end of the platform, many feet away, causing injury to Helen Palsgraf, who

was waiting for her train to Rockaway Beach. Judge Cardozo held that there

was no liability on the part of the conductor for Mrs. Palsgraf's injuries

because there was no duty owed to her, as an unforeseeable plaintiff.

3. On June 1, 2001, a Texas jury awarded Melinda Ballard in excess of

$32,000,000 after finding that her homeowners' insurer acted in an unfair,

deceptive and fraudulent manner when evaluating a mold property damage

claim. " Jury Awards $32 Million to Texas Homeowner in Mold Coverage

Action, " Mealey's Emerging Insurance Disputes, Vol. 6, Iss. 12 (6/20/01) at

p. 11.

4. " Burgeoning Mold Claims, " Hazardous Times (GeneralCologne Re), February

2002. In addition, in an April 24, 2002 article, The Wall Street Journal

reported that there are between 8,000 and 10,000 mold lawsuits pending

nationwide. See Ray A. , " Apartment Owners Face Growing Liability, "

Wall. St. J., April 24, 2002 at B8. However, The Journal article does not

state how many of these lawsuits are bodily injury and how many are property

damage.

5. For further support of the proposition that, at present, the majority of

mold claims are for property damage, see Oster, " Insurers Blanch

at Proliferation of Mold Claims, " Wall St. J., June 3, 2001. As well, an

October 9, 2001 presentation by P. Hartwig, Ph. D., Vice President

and Chief Economist of the Insurance Information Institute titled " Mold and

the Insurance Industry: Truth and Consequences " , is nearly exclusively

related to the effect of mold on homeowners' insurers. Available at

http://iiisrv.thing.net/yy_obj_data/binary/580622_1_0/mold.ppt.

6. The fact that homeowners' policies do not cover bodily injury to the home

's residents did not deter one policyholder from filing a homeowners'

coverage action for mold property damage and also alleging an entitlement to

coverage for medical expenses. See Gallop, et al. v. State Farm Insurance

Companies, et al., New York Supreme Court, County of Onondaga, Index no.

2001-8259, reported in Mealey's Litigation Report: Insurance, Vol. 16, Iss.

24 (4/30/02).

7. A lot has been written about the availability of coverage for mold damage

under homeowners' policies, especially concerning the treatment of the mold

exclusion. It is not the intent of this article to examine this issue. For

an excellent article on this subject, and others, see Bill , " Toxic

Mold Claims, " available at

ttp://vu.iiaa.net/Lib/Ins/PL/Homeowners/ToxicMold.htm.

8. According to the Texas Department of Insurance, between January 1, 2000

and June 30, 2001, insurers incurred $276,548,402 on account of loss and

loss adjustment expenses associated with mold claims in the state. However,

this amount includes costs directly related to mold (remediation, testing),

as well as costs not related to mold, such as non-mold water damage, slab

damage, and other repairs not associated with mold. Texas Department of

Insurance, " Mold Data - All Claims, " September 18, 2001, available at

ww.tdi.state.tx.us/commish/molddata2.html.

9. A lot has been written about the insurance industry's handling of mold

claims, especially since the lion's share of the damages awarded in the

Ballard case were extra-contractual. While it is not the intent of this

article to examine this issue, not enough can be said about the importance

of handling mold claims in such a manner to prevent a straight-forward

property damage claim under a homeowners' policy from mushrooming into a

Ballard-type situation.

10. Another potential source of numerous mold claims are by owners of new

homes that bring bodily injury and property damage claims against their

builders for mold-caused damages. Here as well, mold exclusions and

sublimits on CGL policies would operate to preclude or severely limit

coverage.

11. J. Wielinski, " Policy Modifications and Endorsements Relating to

Liability Insurance Coverage for Mold, " International Risk Management

Institute, Expert Commentary, March 2002, available at

http://www.irmi.com/expert/articles/wielinski008.asp.

12. See Owens-Illinois, Inc. v. United Ins. Co., 650 A. 2d 974 (N.J. 1994);

Stonewall Insurance Company v. Asbestos Claims Management Corporation, 73 F.

3d 1178 (2d Cir. 1995).

13. Center for Disease Control, " Questions and Answers on Stachybotrys

chartarum and other molds, " available at

www.cdc.gov/nceh/airpollution/mold/stachy.htm.

14. It is possible that a sixth reason why mold is not the 'next asbestos'

is because the nature of mold injuries are generally not as serious as

asbestos, which often times involve cancers. However, given the lack of

agreement in the scientific community concerning causation between exposure

to mold and bodily injury, this reason was not included herein. However, it

can not be ignored that a sixth reason why mold is not the 'next asbestos'

may be that the plaintiffs bar will lack the motivation to bring cases for

injuries that frequently resemble allergy symptoms.

15. In Liberty Mutual Insurance Company v. Ravannack, 2002 U.S. Dist. LEXIS

5167, the United States District Court for the Eastern District of Louisiana

denied summary judgment for an insurer that had issued an occurrence based

CGL policy to an exterior insulation and finish system ( " EIFS " ) installer

from January 18, 2000 to January 18, 2001. The underlying action giving rise

to the cover-age issues involved property damage to a home that had

manifested in 1999. Construction of the home had been completed in 1992.

While the court seemed prepared to find for the insurer for the property

damage claims on the basis that its policy was not on the risk at the time

of manifestation, the court applied an exposure trigger to the claims for

bodily injury to the children living in the home, who had alleged continuous

exposure to mold while living in the home. Thus, because the children had

been allegedly exposed to mold during the policy period, coverage was

possible. Therefore, summary judgment for the insurer was inappropriate. It

would be an overstatement to read Ravannack as standing for the proposition

that mold bodily injury claims have a long trigger period. The Motion for

Summary Judgment was decided under Louisiana's " exposure " trigger and the

court did not address the link between exposure to mold and manifestation of

the injury. Just as in the case of asbestos, once a mold bodily injury

manifests, coverage is likely precluded under all subsequently issued

policies by the " known loss " or " loss in progress " doctrine.

16. See Assumption of the Blessed, et al. v. Formost Insurance Group, 764 A.

2d 1116 (Pa. Super. 2000) (unpublished opinion); Aetna Cas. & Sur. Co. v.

Ply Gem Industries, Inc., et al., 778 A. 2d 1132 (N.J. Super. App. Div.

2001).

17. Texas Department of Insurance, " Effectively Handling Water Damage and

Mold Claims, " April 2002, available at

www.tdi.state.tx.us/consumer/moldpub.html.

18. Oster, " Businesses' Insurance Costs Surge, But They Shouldn'

t Blame September 11, " The Wall. St. J., April 11, 2002, at A1. _

The author is a shareholder at Philadelphia-based Christie, Pabarue,

Mortensen and Young, P.C., where he concentrates his practice in the

representation of insurers in coverage disputes. The views expressed herein

are solely those of the author and are not necessarily those of his firm or

its clients. The author expresses his appreciation to firm associate Amy

Trojecki for her insightful suggestions and editing.

Copyright 2002 by the author. Replies to this commentary are welcome.]