Mold lawsuits fueling business

by Jason Felch Bee and Debbie Noda - Staff Writers, The Sacramento Bee
July 24, 2002 Posted: 05:55:07 AM PDT

Mary Finn adjusts her equipment as she prepares to check for mold by taking an air sample.

MANTECA -- Mary Finn is your typical busy doctor, except her patients have doors, windows and ventilation shafts instead of mouths, ears and lungs.

Finn, the 48-year-old owner of Chart Services, probes deep into walls with moisture meters, sucks air across petri dishes, and uses laser particle counters to measure airborne pollution.

While testing indoor air quality of commercial and residential buildings across the state, Finn is looking for those oddly named fungi that make buildings, and sometimes the people in them, sick: cladosporium, aspergillus, and the dreaded stachybotrys, the bad boy of the "toxic molds."

"Mold and moisture is the biggest issue in residential housing," said Finn, who opened Chart Services last year after 19 years of consulting in Iowa. "Moisture is the biggest factor in the life expectancy of a house."

Chart Services is part of a growing number of businesses benefiting from the controversial explosion in toxic mold lawsuits across the country. Up from a handful of cases in the mid-1990s, there are now an estimated 10,000 lawsuits in the United States, with a majority of them in California, lawyers say.

"The rate of filings is increasing exponentially," said Frank Perrott, an attorney with Downey, Brand, Seymour, and Rohwer in Sacramento. Perrott, who has been handling construction defect lawsuits for nine years, says almost every lawsuit has a mold complaint attached.

Media attention and high-profile lawsuits by celebrities like Erin Brockovich and Ed McMahon helped fuel the rise. Despite some fuzzy science on the dangers of mold and the difficulties in determining legal responsibility in court, many have found it a lucrative complaint.

"Mold is Gold" seminars are mushrooming.

The buzz has made consultants like Chart Services a hot commodity.

"In the field of mold we're facing tremendous problems: misinformation, public fright, greed and avarice," said Dale Thayer, a Modesto attorney who has worked on mold cases. "Mary brings a balance to this with her tremendous credentials."

Finn, who has degrees in microbiology and industrial hygiene, says mold is the new growth industry. Developers want to limit liability, and law firms like Perrott's and Thayer's hope to use experts like Finn as witnesses in mold-related lawsuits.

Finn relocated to the valley two years ago to take advantage of the booming "mold market," fueled locally by rapid new housing development. She still owns her consulting company in Iowa.

Contrary to what many think, new homes are particularly susceptible to mold, Finn said. Modern construction techniques make them airtight, which is energy-efficient. But when things get wet, they don't dry out.

Chart launched in February 2001, and its annual revenue is already approaching $1 million. Finn expects to increase her staff of technicians and support people from five to 25 by next year, and is projecting $3 million in revenues by that time.

The news may be more grim for many of Finn's clients, who include JKB Homes, McCroy Wilbur Communities and the Builder's Industry Association of Central California.

According to Perrott, mold lawsuits could be "financially catastrophic" for builders and developers if insurance companies exclude coverage for mold-related claims, as some are doing.

Others argue mold is a fad and draw parallels to the rise in asbestos lawsuits that spiked in the 1980s and declined as buildings were cleaned up. But the mold issue is unlikely to go away.

"Unlike asbestos," said Finn, "mold grows back."