Subrogation Mold Claim Is Dismissed

Linda and Eric Lerner suffered a flood in their basement and submitted a claim to their carrier. The carrier offered to send a vendor to address the water damage, but instead the Lerners opted to hire “Whistle Clean.” Whistle Clean removed standing water using a wet vacuum and mop. When the Lerner home was inspected by the carrier one week later, mold and mildew were discovered. An additional claim was made and paid for mold and mildew remediation.

The carrier brought a subrogation lawsuit against Whistle Clean alleging they failed to use dehumidifiers and otherwise failed to adequately dry the walls, floor and ceiling, and herefore allowed the mold and mildew damage to occur.

Whistle Clean filed a motion to dismiss the lawsuit, which the court granted [1]. Ms. Lerner signed an affidavit on behalf of Whistle Clean stating that she only told them to clean up standing water and never contracted with them to take steps to prevent mold and mildew. (Note: it’s highly unusual for an insured to sign an affidavit in support of the defendant!) In opposition, the carrier filed an affidavit of an industrial hygienist stating that more steps should have been taken to prevent mold and mildew, but the court didn’t find the affidavit to be of any use. There was no question that the Lerners only hired Whistle Clean to vacuum out the water and they did not hire them to take steps to completely remove all moisture so as to prevent mold and mildew. Because there was no such agreement, the lawsuit was dismissed.

Bottom Line: A carrier may subrogate for mold and mildew damage if a contractor had been contracted to prevent mold and mildew damage yet fails to do so. If the insured chooses his or her own contractor to address a water damage situation, he or she should be advised to take care to prevent mold and mildew damage. Any contract with a clean-up company should specify the scope of duties, including a requirement to use dehumidifiers and otherwise take steps to prevent mold and mildew damage.


[1]  State Farm a/s/o Lerner v. Whistle Clean, 2008 NY App.Div. LEXIS 599 (2nd Dept January 29, 2008)

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