Landowners -- The Next Plaintiffs' Target

LANDOWNERS -- THE NEXT PLAINTIFFS’ TARGET

by Ronald L. Hack

Landowners and lessors of industrial/commercial premises should be aware that toxic tort plaintiffs’ attorneys may sue them in the next wave of toxic tort litigation. Plaintiffs suffering from various illnesses may blame their condition on "mold" or other indoor air pollutants. The rapid expansion in asbestos litigation against landowners and lessors may be followed by litigation including lead, vinyl chloride, mold, chemical and industrial fumes, and other indoor air pollution claims.

Traditionally, a plaintiff’s discovery of a disease allegedly caused by a chemical or other product would file suit only against the manufacturers, sellers, or suppliers of those products that allegedly caused the disease. For example, a worker with asbestosis or an asbestos-related cancer would sue the miners of raw asbestos or the manufacturers and/or sellers of asbestos-containing products. However, with the ever-increasing number of bankruptcies by "traditional" asbestos defendants (41 companies at last count), plaintiffs’ attorneys around the country and in the metropolitan St. Louis area, including Southwestern Illinois, are filing suit against industrial and commercial landowners for asbestos exposures on behalf of independent contractor employees and the landowners’ employees. Asbestos insulation and asbestos-containing products were used almost universally in buildings in the 1940’s, 1950’s, 1960’s and through the middle 1970’s,. Almost every industrial and commercial building contained asbestos in floor tile, ceilings, or pipe insulation. Plaintiffs’ attorneys allege that landowners failed to remove the asbestos or to prevent it from deteriorating (becoming friable). In addition to actual damages, plaintiffs may seek punitive damages for gross negligence in failing to warn of the dangers of asbestos.

Workers Compensation statutes and Workers Compensation insurance previously served as effective shields against employee lawsuits for toxic tort exposures. To get around such statutes, plaintiffs file complaints alleging strict liability for ultra-hazardous activity, negligence, failure to provide a safe workplace, and willful wanton conduct. Similar theories have been alleged against owners of industrial properties by employees of contractors performing work on the properties. Until recently, appellate court decisions enforced the Workers Compensation statutory exclusivity provisions bar unless the plaintiff alleged intentional acts by the employer. The current trend reveals many lower courts are reluctant to grant a motion to dismiss for failure to state a claim. This forces the landowner/defendants to bear the expense, time, and effort of participating in sometimes far-reaching discovery as well as bearing the judicial risks and public relations problems of such lawsuits. Plaintiffs may include spouses and other family members exposed to dust from employees’ work clothes.

To make matters worse, a Michigan appellate court are denying insurance under the "absolute pollution exclusion" found in most modern comprehensive general liability ("CGL") policies. (The Missouri Court of Appeals in St. Louis held that friable asbestos completely confined to the landowner’s building (i.e., indoor air pollution) was a "pollutant" triggering the pollution exclusion.)

Similarly, in a Michigan case, the insurance company had no duty to defend or indemnify its policyholder in a product liability action stemming from the release of a toxic substance that injured two employees at a work site. The Court held the exclusion was unambiguous, so there was no insurance coverage for the employer/landowner in this incident. In other words, the costs to defend, settle, or pay any judgment came directly from the company’s profits.

Landowners should be careful to take mold risks seriously because substantial verdicts already have been entered against premises owners. Over $30 million dollars in actual and punitive damages were awarded in one recent judgment in a suit against a refinery landowner by an independent contractor employee in Southwestern Illinois (Madison County, Illinois). At a minimum, if the landowner suspects that it might be the future subject of such lawsuits, care should be taken to preserve records of all insurance policies. Additionally, legal counsel should be contacted to prepare or fine-tune company policies regarding record retention.

The Environmental Law/Toxic Tort Practice Group of Gallop, Johnson & Neuman helps landowners and lessors defend and prevent claims and lawsuits on a local and nationwide basis. Call any member of the Group at Gallop, Johnson & Neuman today to discuss these and other environmental and insurance issues that may arise.