Motion For Appeal Filed in $32M Mold Case
The appeals court decision that dramatically reduced the $32 million award in a celebrated Texas mold damage case wont discourage lawyers from continuing to file such suits, the attorney who brought the action told National Underwriter.
Attorney Fred Hagans also said that parties in the case have filed motions that might eventually bring the issue before the Texas Supreme Court.
On Dec. 19, 2002, the Texas Third District Court of Appeals in Austin struck down $17 million in punitive and mental anguish damages awarded to Melinda Ballard of Dripping Springs, Texas, but upheld the jury finding of a bad faith violation of the states Deceptive Trade Practices Act.
Fire Insurance Exchange, a member of the Farmers Insurance Group, the defendant in the original suit filed in 1999, was cleared of fraud.
Ms. Ballards complaint centered on water leaks from frozen pipes, which eventually developed toxic stachybotrys mold. The insurer, she alleged, was unfair, negligent and deceptive in failing to pay the cost of adequate repairs.
According to a complaint filed by Ms. Ballards husband, Ronald Allison, he suffered toxic encephalopathy brain damage as a result of mold exposure.
Kirk Hansen, director of claims for the Alliance of American Insurers in Downers Grove, Ill., said that although the case centered around a bad faith allegation, in the publics mind and throughout much of the media reports, "this case was tied to mold" and led to a rash of lawsuits.
The Alliance said the appeals court decision should "help quell the national mold hysteria," and Mr. Hansen said that hopefully "the rush to the courthouse steps has been slowed."
But in Mr. Hagans view, the cases at issue are primarily centered on bad faith and the Alliance is "being silly."
"The Ballard case didnt cause such cases to be filed, and I dont think it will cause cases to drop off," he said.
He said the claim involved had expanded "like a microscopic melanoma" that grows into a fatal cancer because the company "delayed and delayed and never fixed the problem."
Mr. Hagans said he is filing a motion asking the Court of Appeals to rehear its decision. "If they choose not to rehear, we will file with the Texas Supreme Court" for leave to appeal the case, he said.
As he sees it, the key issue is whether the appeals court can apply a more stringent standard for a finding that a company has committed a knowing violation.
Los Angeles-based Farmers, at the time the decision was issued, called it a "step in the right direction" and said it was heartened there was no finding of fraud.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, January 13, 2003. Copyright 2003 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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