Vanderbilt Law Review

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At the dawn of the 21st century, a new plague is leeching across the nation's legal landscape. "Some call it the Perfect Storm-a confluence of events that merged into a financial crisis for the insurance industry and a politically charged catastrophe for... homeowners, threatening disaster for the.., economy." What exactly is this Perfect Storm quickly overwhelming both the legislative and judicial systems? Mold. Not the harmless mold growing in a neglected bathtub, but toxic mold that can ravage homes and other buildings from the inside out, while allegedly causing the inhabitants to suffer nasty fates. Mold destroying dwellings is nothing new; even the original Israelites suffered its wrath in the arid confines of the Promised Land. "[I]f the mildew has spread in the house, it is a destructive mildew; the house is unclean. It must be torn down-its stones, timbers and all the plaster-and taken out of the town to an unclean place." As this passage illustrates, human aversion to mold is nothing new.

What is new is the growing recognition of mold infestation as a cause of action for both personal and property damage claims. Indeed, mold litigation is growing at such an alarming rate that legal commentators across the country are asking the one question sure to send insurance adjusters scrambling: Will mold cases be the next version of asbestos? It is still much too early to tell with any certainty. The first instance of an appellate court allowing testimony as to the scientific legitimacy of health-related toxic mold claims was in 1997. Just four years later, a Texas jury awarded the Allison family $32 million after finding that their insurance carrier acted in both bad faith and a deceptive manner when evaluating various mold claims for personal injury and property damage. On national television, the family claimed that toxic mold in their home caused their young son to develop asthma and scarred lungs. They invited the cameras of CBS's 48 Hours into their home to film the alleged danger, claiming mold had contaminated all of the family's possessions, which they later abandoned along with the home. Now high-profile mold claims are spreading rapidly to other parts of the country. Indeed, many defense attorneys claim that the proliferation of mold litigation is primarily a result of overblown media coverage.

Nevertheless, the dramatic appearance of mold litigation has the potential to severely disrupt vast sectors of the economy. In the near future, homeowners insurance may no longer be available to many Americans as more insurers conclude they cannot afford the risks associated with mold claims. Insurance is a statistical exercise of calculating risks, and no insurer can cover a loss that is likely to occur in a large percentage of its open policies.' Even the best-run companies will fail when an expensive loss such as losses that mold can create affects too large a number of its insureds. Although the insurance industry does not typically engender much sympathy, if mold litigation is allowed to bankrupt major sureties, the entire economy will suffer.

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