Appellate Court Links Building Mold and Illness

The problem of mold recently got more dangerous for New York owners. Four years ago, a key appellate court decision in Manhattan blocked millions of dollars in legal claims for damages for the health effects of mold in buildings, saying that the scientific evidence that mold caused illness was in dispute.

But that conclusion was recently overturned by a split 3-2 decision by another five-judge panel in the same court. The panel found that the scientific literature was now “indicative of a causal relationship.”

Case Facts

A tenant sued her former building owner for personal injuries based on her exposure to mold and other toxins in her first-floor apartment. Her complaint seeks $11.8 million in damages, primarily for health problems. In 2002 and 2003, the building basement below the tenant's apartment was damaged by flooding. And in 2003, a steam pipe burst in the apartment and water from the basement leaked out.

Soon after that, the tenant noticed mold in her bathroom and experienced body rashes, shortness of breath, fatigue, disorientation, and headaches. The prior landlord told her to clean the bathroom with bleach and install a dehumidifier. She did so, and her symptoms disappeared.

Later that year, the building was sold and the new owner began renovation work in the basement. The tenant again experienced symptoms that didn't respond to medication. She moved out and stopped paying rent, and the owner sued her for nonpayment.

The housing court ruled for the tenant and gave her a complete abatement. The tenant then sued the owner. And the trial court granted the owner's request to dismiss the case without a trial.

The tenant appealed, and the case was reopened. The former owner of the building had argued that it wasn't possible to link her conditions to mold dust that wafted up from the basement during the brief period when a work crew began removing debris from the basement in 2003.

Eventually, the appeals court ruled that the tenant had grounds for the case and sent the case back to the lower court for trial. The new appellate decision said the previous decision hadn't ruled out the possibility that “dampness and mold can ever be considered the cause of disease.” And it found that several new studies added to the weight of evidence on the theory [Cornell v. 360 West 51st Street Realty, LLC, March 2012].

Mold-Related Violations

The concern for New York's real estate industry is that this will lead to a new wave of personal-injury lawsuits for mold injuries, driving up insurance rates and costs for building owners.

Last year, housing inspectors issued 15,942 violations for mold-related conditions, a 19 percent increase from 2007. The number of the most serious category of violations rose by 67 percent during the same period.

But personal-injury mold suits went into a lull after the 2008 appellate court decision involving a family living in a co-op apartment in a basement and first-floor co-op apartment on East 52nd Street. That decision, known as the Fraser decision, found that there was no scientific consensus that air-borne mold spores caused illnesses. It barred testimony from experts who blamed mold for health problems.

The majority opinion in the recent case, written by Justice Sallie Manzanet-Daniels, said the suit can proceed, noting several new studies on mold illness. But a dissent by Justice James Catterson said the tenant's lawyers had failed to show that her theory of mold illness “is generally accepted by the scientific community.”