Tex., Dec. 19 (AP) — In a prominent case involving a mold-damaged home,
a state appeals court reduced a jury verdict against Farmers Insurance
Group today to $4 million plus interest and lawyers' fees, from $32
court, the Third District Court of Appeals, said a Farmers affiliate
violated the state's Deceptive Trade Practices Act, but it rejected the
jury's findings that Farmers committed fraud and did not deal fairly with
the homeowner, Melinda Ballard, who had sued over water and mold damage in
her 22-room house in Dripping Springs, a suburb west of Austin.
appeals court left intact a $4 million award for actual damages but threw
out $17 million for mental anguish and punitive damages. It also threw out
assorted small fees and ordered that $8.9 million in lawyers' fees be
recalculated and probably reduced.
Ballard's case is probably the most prominent of many mold claims filed
recently against insurers in Texas. The huge jury verdict for her last
year sent shock waves through the homeowners insurance industry, which has
cited rising claims for mold and water damage as a main reason for
which is based in Los Angeles, said it saw a measure of redemption in
today's ruling. "We are pleased
that the court affirmed everything that we said all along; that we did not
commit fraud or knowingly act in bad faith," Michelle Levy, a
spokeswoman for the insurer, said.Farmers is the second-largest home
insurer in Texas, with about 700,000 customers here.
Ms. Ballard said she would appeal the reduced verdict, which could take the case to the Texas Supreme Court.
appeals court ruling means "an insurance company can rape and pillage
without any form of penalty," Ms. Ballard said. "It's going to
be a blood bath."
"If there are no penalties to punish bad behavior," she said, what "is going to stop them?" Ms. Ballard and her husband, Ron Allison, said they had to leave their home in 1999 after toxic black mold made it uninhabitable.
lawsuit against a Farmers affiliate, Fire Insurance Exchange, went to
trial here in Travis County. The couple said the company did not to cover
repairs for a water leak adequately and swiftly, thereby allowing the
toxic mold Stachybotrys chartarum to overrun their home and damage their
Alliance of American Insurers, a trade group based in Illinois that counts
more than 300 property-insurance companies as members, said Ms. Ballard's
case and its large award prompted "mold hysteria" nationwide.
Insurance companies had pointed to the $32 million judgment as a target
for trial lawyers to bring even more lawsuits, prompting more expensive
premiums for policyholders.
a result of today's ruling, "enterprising plaintiffs' attorneys will
discover that mold isn't as golden as they once thought," Joe Woods,
the alliance's vice president for the Southwest, said.
The consumer group Texas Watch criticized the ruling, saying it was bad for policyholders.
"Unfortunately this decision sends a message to insurance companies that says you will not be held responsible if you delay, deny, hassle and mistreat Texas families or Texas claimants," said Dan Lambe, the executive director of Texas Watch.
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