AWARD SLASHED IN MOLD CASE

The Third Court of Appeals in Austin found that Farmers Insurance Group had both acted in bad faith and violated the state’s deceptive trade practices law in a landmark case that originally saddled the company with a $32 million judgment. The appeals court, however, determined that Farmers had not acted knowingly or fraudulently, and threw out the punitive and mental anguish elements of the original award—originally made in May 2001 to Melinda Ballard against Farmers—and cut it to approximately $4 million. The appeals court also ordered the lower court to reconsider and recalculate the nearly $9 million in attorneys’ fees that were originally awarded. Policyholders of America (POA), a group spearheaded by Ballard, said the ruling of the three member panel—made up of Chief Justice Aboussie, Justices Patterson and Puryear—excused the company’s bad faith violations and gave the insurance industry a free pass to commit bad faith and not be penalized. According to the Alliance of American Insurers, however, the court’s decision may bring some sanity to the feeding frenzy among plaintiff attorneys, many of whom have founded entire practices on mold-related claims. Joe Woods, assistant vice president of the Alliance’s Southwest Region, said the “Ballard case is more about bad faith than mold,” adding that the original award was so inflated it triggered a mold hysteria in both Texas and the nation. Kirk Hansen, Alliance director of claims, noted that “With the elimination of the punitive and mental anguish damages, enterprising plaintiffs attorneys will discover that mold isn’t as golden as they once thought.”