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The California Department Of Health Services Issues An Implementation Update For Reporting Mold Standards And Guidelines

The California Department Of Health Services
Issues An Implementation Update
For Reporting Mold Standards and Guidelines:
A Review of the Status of 2001 Mold Legislation
and Related Law

By
William C. Last, Jr.

As anyone who reads a newspaper today realizes, toxic mold litigation has become a major issue that is affecting contractors and developers. Toxic mold can impact indoor air quality, create foul odors and has been linked to digestive, respiratory, skin illnesses and neurological conditions.

Although all molds are a type of fungus and have been on earth since well before the biblical era, media articles raise the specter of toxic molds that can harm humans. Not all molds are toxic. A mold may be toxic when that mold produces mycotoxins. Mycotoxins can cause a severe reaction to anyone who comes in contact with such compounds.

In order for any mold to grow requires water, a food source and time. Typically, the food source is decomposed organic matter. Since water is a critical component, any time water is present in a structure due to water penetration through the envelope of the building; water leaking from interior pipes, or water condensing due to excess humidity in a structure, there is a possibility of mold growth. Should there be toxic mold growth in the structure, and the necessary presence of water in that structure is allegedly due to defective workmanship there is an increasing probability that designer, developer and/or contractor will be named in lawsuit seeking recovery of damages arising from the presence of the toxic mold.

The greatest concern of insurers and toxic mold defendants has been the cost of remediating a mold contaminated structure. Small amounts of certain types of mold have been determined to create health risks. The mold can be behind walls and in other inaccessible areas. In order to remove the mold it maybe necessary to remove sheet rock and other building components to make the area accessible to remedial workers. Workers who decontaminate the structure often will be required to wear protective gear and setup barriers to isolate the area being decontaminated from the rest of the structure. As a result, mold remediation can be expensive and time consuming.

Before 2002, there were no state or federal statutes or regulations concerning mold in structures. The United States Environmental Protection Agency’s website states: “Standards or Threshold Limit Values (TLVs) for airborne concentrations of mold, or mold spores, have not been set. Currently, there are no EPA regulations or standards for airborne mold contaminants.” However, in the Fall of 2001, California Legislature passed and the Governor signed several bills that were aimed at the ever increasing issue of mold. These bills were intended to be the vehicle for developing standards and acceptable exposure limits for mold. It was hoped by industry members that once standards were developed, the determination of whether or not a party’s conduct fell below the standards could be objectively ascertained.

As this article will discuss, such standards can be the benchmark for determining if a party is liable for negligence. This article will also review the status of the two laws and provide an overview of the legal basis upon which toxic mold litigation is premised.

The Status of Two New Mold Laws

A. The Toxic Mold Protection Act

The first bill (SB 732), entitled The Toxic Mold Protection Act (Health & Safety Code §§ 26100-26516) required the California Department of Health Services (DHS) to convene a task force to advise the DHS on the development of permissible exposure limits to mold; standards for assessment of molds in indoor environments as well as alternative standards for hospitals, child care facilities, and nursing homes; standards for identification, and remediation of mold. The Act also required the DHS to consider the feasibility of adopting permissible exposure limits to molds in indoor environments. If it is determined to be feasible, the DHS was “required to adopt, in consultation with the task force, permissible exposure limits to mold for indoor environments that avoid adverse health effects.” The DHS was to issue a report on its progress on developing the permissible exposure limits for molds to the legislature by July 1, 2003.

In essence, the DHS was “to determine the feasibility of adopting permissible exposure limits for indoor molds and the development of new standards or guidelines to assess the health threat posed by the presence of indoor molds, determine valid methods for fungal sampling and identification, provide practical guidance for mold removal and abatement of water intrusion, disclose the presence of mold growth in real property at rental or sale, and assess the need for standards for mold assessment and remediation professionals.” However, the program was dependent on the DHS obtaining proper funding for such a program. A subsequent funding bill, in essence, makes the program dependent on voluntary contributions. The DHS is now seeking such private funding.

1. Implementation Delayed By Lack of Funding

The DHS has indicated, in their March 2003 bulletin, that the DHS intends to implement its obligations under the Act in two phases. The first phase is creating and convening a voluntary task force of industry experts to a task force to advise DHS on the development of standards. The second phase is drafting and promulgating regulations based on the report and conclusions of the task force. The March 2003 proposed implementation plan calls for phase one to commence on starting during February 2003 and be completed by February 2004. The implementation plan calls for phase two to commence on February 2004 and be completed by February 2005. The DHS’s ability to meet such deadlines is dependent on upon obtaining adequate funding.

B. The Fungal Contamination In Indoor Environments Act

The second bill (AB 284), entitled The Fungal Contamination In Indoor Environments Act, is found at Health & Safety Code section 26200 to 26204. This Act required the California Research Bureau, which is part of the California State Library, in conjunction with the DHS to perform a study of, and publish findings on, fungal contamination in indoor environments, and to organize meetings of a review panel to assist preparation of appropriate content for study. The panel was to review the following areas relating to fungal contamination in indoor environments: (a) Medical and public health, (b) Evaluation and monitoring, (c) Remediation and prevention, (d) Educational materials, (e) Hazard communication and (f) Any other area identified by the review panel.

The report was to be completed by January 1, 2003, with findings to be delivered to the legislature and the Director of DHS. After a reasonable search, the author has been unable to find any record that such a report was delivered.

Civil Litigation Issues

Clearly, the lack of adequate funding has jeopardized the creation of concise mold guidelines and standards in California. Arguably, once the standards have been created a legal standard for determining liability would have been created. If such a legal standard is created, a contractor maybe able to ascertain if its conduct, relative to mold issues, is above or below the standard.

During a trial the finder of fact typically listens to and evaluates expert testimony concerning a number of issues related to the type of mold found in the structure and what caused the mold to grow. Such testimony includes, but is not limited to: (a) the toxicity of the mold in question; (b) the cause of the moisture that lead to the growth of the mold; ( c) the methods for remediating the mold; (d) how the defective workmanship that lead to the water intrusion fell below the standard of care; and (e) the cost of remedying the mold. As a result, the outcome of trial can be dependent on who wins the battle of competing expert testimony.

Until such time as toxic mold guidelines and standards are created judges and juries will be left with the dubious task of determining, based on expert testimony, whether or not a party is responsible for the moisture intrusion that may or may not have caused the formation of the toxic mold.

Without legislative created minimum standards, basis of liability in a toxic mold lawsuit will primarily rest on common law legal principles. Common law is founded on the traditional Anglo-American system of general legal concepts and principles that have been developed through the precedents of decisions of the courts rather than statutes and regulations.

A. The Basis for Civil Liability

As most contractors know, construction defect lawsuits are now including allegations that a party’s defective workmanship has resulted in the growth of mold. Typically, construction defect lawsuits that include demands for the cost of remediating mold are based on allegations that the contractors substandard workmanship caused leaky roofs, leaky windows, plumbing leaks and walls to leak. The lawsuits go to allege that as a result of the accumulation of the water, the toxic mold or microbial contamination has grown within the structure.

The toxic mold plaintiff’s lawsuit can include causes of action based on the following legal theories: (1) strict liability, (2) negligence, (3) breach of contract, (4) breach of Implied and Express Warranties, (5) fraud, and (6) express and implied indemnity. The aforementioned causes of action contractors are generally joined in mold lawsuit on a negligence, breach of contract or indemnity cause of action.

The predominate cause of action that is alleged against contractors is negligence. A negligence claim is predicated on the breach of a legal duty to conform to a certain standard of care for the protection of others from unreasonable risks. Negligence is present when there has been a breach of the standard of care and the breach is the proximate cause of the resulting injury.

The determination of what the standard of care is based on a number of factors. Those factors in a construction defect or mold case can include geography, climate and weather conditions, topography, governmental jurisdiction, use and occupancy type, the state of the construction art, local construction practices, the nature of ownership of the structure, the level of quality the owner/developer has requested, contract requirements, and published trade and manufacturing standards.

Until such time as Californiaor the federal government develops permissible mold exposure limits, standards for assessment of molds in indoor environments, standards for identification of mold, the determination of whether or not a contractor fell below standard of care and is thus negligent will be left for judges and juries to decide.

The other major basis for joining a contractor in a mold lawsuit relates to indemnity theories. Indemnity clauses are the primary contractual device that is used to shift the common law and statutory risks associated with a party’s negligent acts from one party to another. In essence, one party promises (indemnitor) to pay the other party’s (indemnitee) attorney’s fees and any judgment that may result from both parties’ wrongful conduct. If there is no express or written indemnity clause the basis for an indemnity cause of action a claim can be based on implied indemnity. If there is no indemnity clause in a contract, the liability and resulting damages for the negligent acts of multiple parties will be allocated according to the comparative fault of each of the respective parties. Implied indemnity is predicated on a claim that the nature of the parties who can be charged with liability is such that the law implies an indemnity duty.

Closing Comments

Until such time as mold related standards are developed, a contractor’s best defense is avoiding situations that can lead to the formation of mold. Obviously, to decrease the likelihood of your next project resulting in a defect claim, it is necessary to monitor every aspect of the project to ensure that the work is defect free.

Generally, the earlier a defect is discovered and corrected, the less likely a homeowner will commence litigation. Contracts with homeowners should, in addition to those clauses required by the CSLB, include clauses that attempt to limit the contractor's liability for mold damages. The contracts with owners should be written to obligate them to use reasonable diligence in discovering conditions that lead to mold and promptly remedying those conditions. New homeowners should receive written guidelines that set forth their responsibility such as keeping the relative indoor humidity below fifty percent, using dehumidification systems when appropriate and promptly drying wet surfaces.

Indemnity and insurance contract clauses should be closely reviewed in context of the risk that is being assumed by entering into the contract. The contractor is assuming the greatest risk should endeavor to modify the clause so that risk is being fairly allocated amongst the parties. Insurance issues should be reviewed by an insurance professional that is aware of your business and the risks that are associated with the work that you perform.

In closing, if you are interested in the toxic mold issue and can provide a certain degree of industry expertise relative to the issue, the DHS Toxic Mold Protection Act Implementation Update indicates that the DHS is still looking for volunteers to join the task force that will be responsible for developing standards. Anyone who is interested joining the task force should send contact information to dpaniagu@dhs.ca.gov. Finally, the DHS is asking for public contributions to fund the program.

This article, copyright 2003, was written by William C. Last, Jr. The quoted text and other parts of the article are from SB 800. Parts of the article are from the Civil Code section 1375. Mr. Last is an attorney who has been specializing in Construction Law for over eighteen years. Mr. Last also holds a California A&B contractors license. If you have any questions Mr. Last can be contacted at 415-764-1990 or 650-425-7679 or by e-mail at wclast@lastlawfirm.com. He has other articles on his web site: lhfconstructlaw.com. This bulletin is published periodically to provide general information about current legal issues. If you have a specific legal question or need legal advice, you should contact an attorney.

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