Best Practices Construction Law : Construction Lawyer & Attorney : Matthew DeVries : Stites & Harbison Law Firm : Green Building & LEED Litigation

You’ve heard about Nashville’s historic flood almost six weeks ago and all the damage that it has caused to thousands of homes throughout Middle Tennessee. Just this morning, Nashville Metro government sent 305 buyout letters to homeowners whose homes were damaged within the floodway, the area where water flows most swiftly during a flood. Today’s post is about a decision released yesterday by the Court of Appeals of Tennessee regarding what may occur when a restoration contractor fails to remediate toxic mold following significant water damage. 

In Victoria Dutton v. Farmers Group, the Plaintiffs’ home was flooded and incurred severe water and mold damage when the hot water tank burst. The Plaintiffs began to experience various illnesses after moving back into the home. Despite assurances from ServePro (the remediation contractor) and the Plaintiffs’ insurance carrier that the home was safe, the Plaintiffs discovered that their home was contaminated with toxic mold almost three years after moving back into the home. The Plaintiffs filed suit against various defendants alleging distinct causes of action.

The trial court held that the Plaintiffs’ claims were barred by the applicable statute of limitations. The Court of Appeals reversed, holding that the discovery rule tolled the applicable statute of limitations.  In Tennessee, the discovery rule provides that a cause of action accrues and the statute of limitation begins to run when the plaintiff knows or should have known that an injury has been sustained as a result of some wrongful or tortuous conduct by the defendant. 

In this case, the Plaintiffs did not connect their illnesses to the toxic mold exposure in the home until close to three years after they moved back in the home. The Court found that the defendants attempted to remediate the mold issues in 2002 and the Plaintiffs had a good faith belief that the problem was resolved. The Plaintiffs did not discover until 2005 that the flooring throughout the home was not removed as originally advised in the 2002 cleanup of the home. After testing, it was found that the linoleum flooring was severely contaminated with toxic mold spores. The Court reasoned:

Without the obvious signs of mold contamination in the home, Plaintiffs had no indicators that mold contamination caused their health problems. . . . Eventually, [the insurer] retested the home, which confirmed that Plaintiffs’ home was contaminated with toxic mold. Until a doctor mentioned a possible allergic reaction as to the cause of [Plaintiffs] injuries, Plaintiffs did not have sufficient facts to investigate their potential claims. Under these circumstances the discovery rule tolled the statute of limitations.

The Victoria Dutton case is a good example of how the courts will apply the discovery rule to personal and property damages cases involving residential construction.  Factually, the case also highlights the severity and seriousness of toxic mold exposure following a significant flooding event. Finally, the case demonstrates that there may be certain substantive defenses in your state that preclude you from recovering on a claim including, but not limited to, a statute of limitations, the discovery rule, and the tolling of the statute of limitations.

Image: Eric Hamiter

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On Saturday, it rained ... and rained ... and rained.

On Sunday, it flooded.

On Monday, I took off from work to help stage a shelter at my local church for a number of Nashville flood victims.

On Tuesday, I spent part of the day with displaced residents whose homes were completely demolished.  I spent the rest of the day dealing with email problems.

On Wednesday, I started fielding calls from clients and other flood victims about what they needed to do following flood losses to their businesses and homes.

Today, I hope to outline some steps about what residents and businesses in Nashville should do about all the chaos, including lost property (personal and business), FEMA claims, insurance claims, and the daunting process of remediation and repair of your home or business. 

1. For both homeowners and businesses, locate your insurance policies.  There are a lot of rumors about flood coverages (what is required, whether you can get flood insurance, whether the loss covers contents or the building).  The only way to get to the truth is to review your policy.  If the actual written document was destroyed, then call your agent for a copy of the policy ... even if they tell you that you do not have coverage for floods.
2. If you don't have any insurance, or you do not have coverage for flood losses, then identify what resources are available to you.  As of today, Cheatham, Davidson, Dyer, Hickman, McNairy, Montgomery, Perry, Shelby, Tipton and Williamson counties have all now been granted Federal disaster designation by the President.  That means, you may qualify for assistance through FEMA.  You can apply for assistance online or by telephone.  FEMA requires that losses be submitted with 60 days.
3. Document your losses.  This may be difficult given your conditions, but it will require making a list of the damaged property, as well as taking pictures and videos. While it may be a no-brainer, separate the good from the bad ... what is recoverable and usable from what is completely destroyed.
4. Contact your advisers, including your insurance agent and attorney.  The process of filing a claim begins with giving "notice" to your insurance carrier.  Even if you are not sure about your coverage, make sure to provide the required notice.  If you are denied for any reason, then an attorney will be able to advise you about your rights. (Remember, though, you need your policy!)
5. Carefully walk through the remediation and repair process.  Whether or not you have insurance, you will want to work remediation and repair contractors who have experience with these types of losses.  As with any disaster, there will be those individuals who want to take advantage of the situation to offer their services at what may seem to be a discount.  You should check whether the company is registered with the Nashville Better Business Bureau.  To verify whether a repair contractor is properly licensed through the State of Tennessee, please use please use http://verify.tn.gov or http://licsrch.state.tn.us/
6. For businesses, evaluate whether you have "business interruption" coverage.  Again, this will depend on the actual policy.  Business interruption coverage is generally not sold as a separate policy, but is added or included in a policy package.  It usually covers: profits, operating expenses, and sometimes temporary relocation expenses. 

There is certainly a lot of advice on the Internet ... some good ... some bad.  There are going to be significant claims in the coming months resulting from the floods in Nashville and it is important that you find reliable information to help you through the process.

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