A court of appeals has thrown out a significant portion of the $32 million originally awarded to Melinda Ballard in her lawsuit against Farmers Insurance Group.
Only $4 million in compensatory damages remains from the award, with attorney fees -- to be paid by Farmers -- still being recalculated. Punitive damages and money for pain and suffering were thrown out.
"Basically, the court decided that Farmers acted in bad faith, but not on purpose," says D.S. Berenson, of Johanson Berenson LLP, a McLean, Va., firm specializing in construction law. In other words, the insurance company was negligent in responding to Ballard's claim but had no idea of the severity of the consequences that resulted. Thus, Farmers hadn't violated what is known as "unfair or deceptive acts or practices" law. Ballard and her family became ill when a leak in their Texas home allowed Stachybotrys atra, a toxic mold, to develop. The original decision held Farmers liable because it failed to cover repairs of the leak adequately.
Berenson, noting that large awards are often reduced on appeal, says this decision shouldn't affect other mold-related litigation. "This is still a landmark case," he notes.