среда, 19 сентября 2012 г.

Texas Judge Upholds $32 Million Award against Farmers Insurance Group. - Knight Ridder/Tribune Business News

By Terrence Stutz, The Dallas Morning News Knight Ridder/Tribune Business News

Oct. 31--AUSTIN, Texas--A state judge Tuesday affirmed a $32 million jury verdict against Farmers Insurance Group in a landmark toxic mold case that grabbed national attention and stunned the insurance industry in Texas.

State District Judge John Dietz left intact the massive judgment handed down in June by a Travis County jury that found Farmers guilty of fraud and bad faith in the handling of a water and mold claim on a Central Texas home.

'This is a victory for homeowners,' said Melinda Ballard, the Dripping Springs homeowner whose residence was ravaged by mold and who accused Farmers of allowing it to happen because of its refusal to properly fix a water leak.

'This was a verdict that penalized a major insurance company for fraudulently and knowingly deceiving their customers,' she said.

'We are disappointed, and we will appeal,' said Bill Miller, a spokesman for Farmers, the second-largest property insurer in Texas.

The judgment was awarded by a jury this year after a trial that centered on the company's handling of the water-damage claim that was filed by Ms. Ballard and her husband, Ron Allison, on their 22-room Southern mansion in the Hill Country.

The family said they were forced to leave the house in 1999 after toxic black mold -- caused by the water leak -- overran the residence and made it uninhabitable. Mr. Allison and the couple's young son, Reese, were suffering a variety of health problems when they moved out.

After the jury verdict, Judge Dietz ordered mediation in the case. But the two sides could not reach an agreement, leaving the judge to issue a final judgment.

'When Farmers sat up there during the trial and admitted all that it had done, it was easy to prove our case against them,' said Ms. Ballard, who has since become an advocate for homeowners battling their insurance companies over mold claims. Ms. Ballard also is expected to run for a Texas House seat from Central Texas next year.

She said she does not expect to receive any of the judgment from Farmers in the near future, as the case likely will be tied up for years in appeals.

Farmers argued during the trial that Ms. Ballard and her husband were at fault for failing to promptly repair the water leaks.

The house is still closed up, with a sign in front warning of the 'biohazard' inside. It will eventually have to be torn down, and one estimate indicated that would cost $1.3 million.

In the meantime, the structure is serving as a scientific site under study by Texas Tech University environmental experts.

'Hopefully, this will help them come up with solutions for this problem so other homeowners will not have to go through what we went through,' Ms. Ballard said.

The case sent shock waves through the insurance industry, which has been dealing with a surge in mold claims in Texas over the past two years. Industry officials have warned of higher premiums for homeowners insurance in the future, and the three largest companies -- State Farm, Allstate and Farmers -- have sharply restricted sales of new policies.

State Insurance Commissioner Jose Montemayor is considering limits on mold coverage in standard homeowners policies sold in Texas. He is expected to render a decision on the issue in early November.

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(c) 2001, The Dallas Morning News. Distributed by Knight Ridder/Tribune Business News.