Control Mold to Reduce Liability

High-profile mold growth cases involving new construction and alleging negligent construction and design have dominated headlines over the last few years. The most prominent has been discovery of mold growth within a year of Hilton opening its $95-million, 3,000-room Hilton Kalia Tower on Waikiki Beach, HI. After months of investigation and the mass disposal of carpet, furniture, drapes and wallpaper, Hilton filed suit against several of the Tower's designers and contractors seeking recovery of the more than $50 million it spent cleaning up and rehabilitating the hotel.

On the legal stage, in cases like the Kalia Tower case, hoteliers play the role of the injured party seeking millions in damages from negligent designers and contractors. Despite the added element of mold growth, these cases are generally straightforward construction litigation matters. As in all construction projects, the only preventative measure available to the hotel owner is to take care to hire competent designers and contractors. Even then, presuming care was taken by Hilton with the Kalia Tower, such measures may still fail to prevent mold infestation.

Newly constructed hotels are not the only fertile grounds for mold growth, and associated litigation arising from exposure of hotel guests and employees to microbial contamination. Mold also has a soft spot for HVAC systems, especially inadequate, poorly maintained and poorly operated HVAC systems. As recognized by the American Society of Heating, Refrigeration and Air-conditioning Engineers (ASHRAE), ineffective HVAC systems can cause, or aid, the accumulation of moisture in all buildings, including hotels. And mold growth requires moisture.

Unfortunately, there is little relief for hotel owners facing legal liability over claims of mold exposure caused by poorly maintained or operated HVAC systems. Unlike cases of new construction, owners of older or even more recently constructed hotels may be unable to chase negligent contractors or designers for relief from mold exposure-related personal injury claims. Many states have “statutes of repose” that bar legal claims against negligent contractors or designers after only a few years after construction is completed. In Massachusetts, for example, the statute of repose bars suits against designers and contractors after six years. Additionally, general liability insurance carriers are increasingly excluding coverage for mold-caused damage or injuries, shifting the loss back to the hotel owner.

The good news is that, while “a pound of cure” may be difficult for hotel owners to find, an ounce of prevention is readily available. Hoteliers can often control HVAC related causes of mold growth, and therefore minimize potential legal liability to their guests and employees from mold exposure, by evaluating their HVAC systems and implementing proper operation and maintenance procedures. In its February 6, 2005 position paper entitled “Minimizing Indoor Mold Problems through Management of Moisture in Building Systems,” ASHRAE outlines HVAC-related sources of moisture as well as practices that can minimize moisture and mold problems in buildings.

Failure to adequately evaluate and address an HVAC system can lead to a myriad of legal headaches. Mold exposure can result in employee work-place illness claims, which can lead to either increased workers compensation claims by hotel employees exposed to toxic mold, or to Occupational Safety and Health Administration (OSHA) citations resulting from OSHA investigations of employee complaints. While workers compensation laws in virtually every state will shield hotel owners from personal injury liability to employees, a rash of such claims can seriously impact workers compensation insurance premiums.

Although OSHA has not yet issued either directives or standards for mold exposure, hotel employers are not off the OSHA hook. The Occupational Safety and Health Act's general duty clause, as well as various OSHA air quality standards, can form the basis of OSHA citations resulting from toxic mold exposure. While OSHA fines are relatively small compared to damages awarded in some personal injury suits, OSHA carries criminal as well as civil penalties. Moreover, OSHA violations generally carry abatement orders that could require hoteliers to take expensive rehabilitation and repair measures, including the overhaul of entire HVAC and plumbing systems.

More troubling, and certainly more costly, hotels may face personal injury suits brought by hotel guests over injuries caused by toxic mold exposure. These suits may track other hotel “sick building” cases such as the Legionnaire's disease outbreak that occurred in a Philadelphia hotel in 1976. While scientific links between mold exposure and adverse health conditions are less clear than other airborne toxic exposure, juries have awarded millions of dollars in personal injury cases involving exposure to toxic mold growth. In addition to costly litigation with million-dollar damages awards, the stigma created by adverse media coverage of such lawsuits could be devastating. In fact, the stigma associated with mold growth in buildings is so acute that several state courts have recognized “stigma damages” resulting from the diminished property values of buildings known to have been afflicted with mold growth. No one wants to stay in the “Mold Motel,” and efforts by hotel owners to reestablish consumer goodwill could take years.

As with most legal issues, high-profile mold growth cases garner most of the attention. But hotel owners are just as likely to be brought into the toxic legal arena of mold exposure by the everyday, mundane issues of inadequate HVAC system operation and maintenance. As if just running a hotel were not enough work.

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John Martin is an attorney in the design/construction practice group at the law firm of Gadsby Hannah LLP. He can be reached at


Mold Prevention Tips

  • Maintain low indoor humidity, below 60 percent relative humidity (RH).

  • Fix leaky plumbing and leaks in the building envelope as soon as possible.

  • Watch for condensation and wet spots. Fix source(s) of moisture problem(s) as soon as possible.

  • Prevent moisture due to condensation by increasing surface temperature or reducing the moisture level in air (humidity). To increase surface temperature, insulate or increase air circulation. To reduce the moisture level in the air, repair leaks, increase ventilation (if ouside air is cold and dry), or dehumidify (if outdoor air is warm and humid).

  • Keep heating, ventilation and air conditioning (HVAC) drip pans clean, flowing properly and unobstructed.

  • Vent moisture-generating appliances, such as dryers, to the outside where possible.

  • Perform regular building/HVAC inspections and maintenance as scheduled.

  • Clean and dry wet or damp spots within 48 hours.

  • Don't let foundations stay wet. Provide drainage and slope the ground away from the foundation.

Source: Upland-CA-based Green Suites International (

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