Insurer and Environmental Consultant Have No Duty To Warn of Mold
July 2009
A tornado tore the roof of Haney's house.
Haney hired a contractor to repair the damage and filed a claim for damages
with his homeowner's insurer. Before the repairs were completed, rains
further damaged the house.
by J.
Kent Holland Jr.
ConstructionRisk.com
LLC
The insurer, Fire Insurance Exchange (FIE), hired an environmental
consultant to perform an environmental study. The findings by the consultant
were that "dangerous and toxic airborne mold and fungal spores … in
concentrations posing a health risk to humans" existed in the house. The
consultant provided this report to the claims adjuster as well as a second
report, which stated that the molds could produce mycotoxins "which could be
poisonous to individuals if inhaled."
FIE did not warn the contractors working for homeowner about the mold
that had been discovered in the house or about the risks the mold could
pose. Several employees of the contractor subsequently filed suit against
FIE, the claims adjuster, and the environmental consulting firm, alleging
that they had sustained personal injuries due to mold exposure. The trial
court dismissed all the claims. That decision was affirmed on appeal.
Reason for Dismissing Claims against Insurer
The court concluded that although the complaint described a dangerous
mold condition, it was not a condition that was caused by the insurer or
adjuster. Neither the insurer nor the adjuster owned or controlled the
property. They "had no relationship with Plaintiffs that would impose any
duty to warn of or rectify the condition…." The court found that the
plaintiffs' claims were based on "premises liability" rather than general
negligence. "Premises liability," says the court, is triggered by assertions
that "the cause of the injury or damage was an unsafe or defective condition
of the property itself." Such liability is limited to those who own or
control the property.
The contract between the insurance company and the environmental firm was
deemed by the court to be solely for the benefit of the insurer and not the
homeowner. As stated by the court:
A defendant who contracts with another generally owes no duty to
a plaintiff who is not a party to that agreement, nor can a non-party sue
for negligent performance of the contract.
According to the court, the "factual allegations warrant no finding that
[Consultant] undertook to provide services for anyone except FIE." For these
reasons, the court affirmed the trial court's dismissal of the action
against the insurer.
Reasons for Dismissing Claims against Environmental Consultant
The trial court found that the consultant was hired by the insurance
company to perform testing and prepare a written report. The consultant
performed the work as requested and in a timely manner. The consultant thus
discharged its contractual duty to its client, the insurance company. It
owed no separate duty to the homeowner since "there was no legal
relationship or privity of contract between the parties and [Consultant] did
not possess or control the [ ] premises."
Once again applying the principle of privity of contract, the court
explained that in the claim against the consultant, "a defendant who
contracts with another generally owes no duty to contract nonparties, nor
can a nonparty sue for negligent performance of the agreement." The court,
therefore, affirmed the trial court's dismissal of the claim against the
consultant, stating:
This general rule of privity is designed to protect contractual
parties from exposure to unlimited liability and to prevent burdening the
parties with obligations they have not voluntarily assumed.
For these reasons, the court held there was no basis for a claim to be
filed by the contractors against the insurance company, its adjuster, or its
environmental consultant. Haney v. Fire Ins. Exch.,
277 S.W.3d 789 (Mo. 2009).
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