A Return to the Hotel California: Out of State Plaintiffs Must Bring Their Causation “Baggage” With Them

Out of state plaintiffs flock to California courts to take advantage of its laws, including its more relaxed causation standard for asbestos injuries. However, a recent California appellate decision highlighted the fact a plaintiff may not evade the application of his own state’s causation standard when his asbestos exposure occurred entirely in that state – notwithstanding a California venue.1

Swanson v. The Marley-Wylain Company held the trial court erred by permitting a causation instruction based on California law, when Michigan’s causation standard properly applied. Swanson involved a Michigan-based plumber who, from 1969 to 1976, was allegedly exposed to asbestos while working on boilers manufactured by a Marley-Waylain (“MW”) subsidiary. He moved to California in 1979, was diagnosed with mesothelioma in 2014, and filed suit in California for his injury. Swanson’s exposure to MW’s product took place entirely in the state of Michigan, and given there was conflict between Michigan’s stronger “but for” standard of proximate cause test and California’s “substantial factor” test, MW asked the trial court to order Michigan’s causation standard applied. Although the trial court denied MW’s motion, the Court of Appeal issued a writ of mandate ordering Michigan’s causation law applied. The case proceeded to trial. Plaintiffs persuaded the court to issue a jury instruction setting forth California’s substantial factor test; the trial court ultimately instructed the jury the plaintiff “may meet the burden of proving exposure to defendant’s product was a substantial factor causing the illness by showing that in reasonable medical probability it was a substantial factor contributing to the plaintiff’s or decedent’s risk of developing cancer.” The jury returned a verdict against MW.

On appeal, MW argued the jury had been improperly instructed under California law, and there was insufficient evidence under Michigan law of a causal link between plaintiff’s exposure and his disease. Although the court found the causation evidence could have been sufficient to support the jury’s verdict under Michigan law, it found that the trial court committed prejudicial error by instructing the jury on California’s “substantial factor” test and reversed the judgment and remanded the matter to the trial court for retrial.

The Swanson decision is important for multiple reasons, particularly its affirmation that the location of a plaintiff’s exposure properly frames the applicable causation standard. Even the fact that plaintiff moved to California in 1979 and was a California resident for 35 years before his diagnosis did not compel a different result. California law requires an issue by issue and defendant by defendant choice of law analysis. When, as here, such analysis mandates the application of out-of-state law, a plaintiff may not bypass that mandate with creatively fashioned jury instructions, or through a court’s prejudicial error by so instructing a jury.

The key takeaway for those defending California cases with plaintiffs whose exposure took place entirely out of state is to evaluate and seek to apply the causation standard of the locus of exposure. Even when a plaintiff is a California resident, the “issue by issue” evaluation process mandates application of the causation standard from the state where the exposure occurred.

1 This follows on the heels of other California cases seeking to rein in forum shopping by enterprising plaintiff’s lawyers, such as this one which sought to limit the use of “nominal” or “sham” defendants to defeat forum non conveniens motions.

Does Seller’s Real Estate Agent Have A Duty To Purchaser?

A recent Michigan Court of Appeals decision, Alfieri et al. v. Bertorelli et al., dated October 18, 2011 re-visits the issue of whether a real estate agent has a duty to disclose environmental information to a prospective purchaser in the absence of privity.

The take-away in this and similar cases is that the result is often dependent upon the specific facts presented, and even then, according to the Property Investment in New Zealand the result may vary depending upon the law of the state at issue. For example, New York strongly adheres to the doctrine of caveat emptor, which imposes no liability on a seller (let alone the seller’s agent)  for failing to disclose information regarding the premises in an arms length transaction, unless there is some conduct on the part of the seller which constitutes active concealment.  In New York, the purchaser of contaminated property would arguably have a difficult time, in the absence of some affirmative misrepresentation and a showing of reasonable reliance, holding seller’s agent liable.

Although the Alfieri case is based on Michigan, not New York, law, its holding is instructive. Alfieri arose out of plaintiffs’ purchase of a condominium unit in what had once been an abandoned factory. The factory had been contaminated with trichloroethylene, and in the process of converting it into condominiums, a vapor barrier was installed. Nonetheless, the former factory property was never properly decontaminated. However, plaintiffs were led to believe that the contamination had been cleaned up. In part, plaintiffs relied upon a sales brochure, prepared by Coldwell Banker, the seller’s agent, indicating that the site had been decontaminated. The plaintiffs purchased the condominium without conducting any independent diligence of their own and only learned following the closing that the property was seriously contaminated.

In rejecting Coldwell Banker’s motion for summary judgment, the Michigan court discussed two of plaintiffs’ theories of recovery – silent fraud and negligent misrepresentation. The court explained that common law fraud or fraudulent misrepresentation involves: (1) a defendant making a false representation of material fact with the intention that a plaintiff would rely on it; (2) the defendant either knowing at the time that the representation was false or making it with reckless disregard for its accuracy; and (3) plaintiff actually relying on the representation and suffering damage as a result. Silent fraud is essentially the same, except that it is based on a defendant suppressing a material fact that he or she was legally obligated to disclose, rather than making an affirmative misrepresentation. A silent fraud may be a misleadingly incomplete response to the purchaser’s inquiry concerning a particular concern.

The court did not accept seller’s agent’s argument that Michigan jurisprudence did not impose upon the seller’s agent a duty of disclosure, in contrast to the duty imposed on the sellers themselves. The court held that a duty of disclosure may be imposed on seller’s agent to disclose newly acquired information that is recognized by the agent as rendering a prior affirmative statement untrue or misleading. In this case, there was evidence that the plaintiffs made direct inquiries of defendants about the condition of the property. The Michigan Department of Environmental Quality provided information to the seller which suggested that the sales brochure contained inaccurate and misleading information. What is troubling about the court’s holding is that the agent for the seller prepared the sales brochure on the basis of information obtained from the client. Did the agent have reason to believe that the contents of the sales brochure were not true until the plaintiffs filed suit? The decision does not provide a clear answer. However, the court apparently believed that there was a sufficiently genuine issue of material fact to deny the agent’s motion for summary judgment.

No General Causation? No Specific Causation? No Problem!

BNA Toxics Law Reporter reported on December 31, 2009, that a Michigan Appeals Court affirmed a mold exposure verdict for $303,260, finding that expert testimony was not necessary under Michigan State law to prove either general causation or specific causation.  In Genna v. Jackson, Mich. Ct. App., No. 285746, the Michigan Court Of Appeals (Oakland Circuit Court) affirmed the trial court’s denial of defendant’s post-judgment motion for judgment notwithstanding the verdict (JNOV) and for a new trial. Based upon a review of the decision, it is not disputed ( at least by this writer) that defendant’s negligent conduct resulted in substantial  flooding in the plaintiffs’ home and the gross mold contamination that resulted. Plaintiff’s microbial expert identified two molds in the home–penicillum and aspergillus–which he testified at trial could affect human health and pose safety issues.  Plaintiffs’ children began to experience what the court described as "flu-like symptoms including: diarrhea, vomiting, congestion and nosebleeds".  Over a period of months, these symptoms worsened and the symptoms did not respond to aggressive treatment.  Plaintiffs did not call an expert to testify that these symptoms were the result of the mold contamination. Nonetheless, the appeals court held that plaintiff did not have to demonstrate that the alleged toxin is "capable" of causing injuries like those suffered by the children, let alone requiring the plaintiffs to prove that these children’s symptoms were caused by mold exposure. The court reasoned as follows: "This is not a complicated case: the children were removed from the home, the mold was discovered, and the children recovered".  Thus, the court based its decision on "circumstantial evidence that would ‘facilitate reasonable inferences of causation, not mere speculation’."  With due respect to the appellate panel, which was obviously impressed with the graphic description of "patches of mold of all different colors all over the walls and ceilings in her kitchen, family room and dining area", this is a really bad decision and a potentially dangerous precedent in Michigan!  It is a mistake to base toxic tort causation on a temporal relationship,i.e., the "children were removed from the home, the mold was discovered, and children recovered."  Flu-like symptoms can be caused by……well, the flu.  That the children’s symptoms went away could signify that they had recovered from a prolonged bout of the  flu. Based upon this court’s reasoning, the children’s illness could have been caused just as easily by lead paint poisoning, contamination of their drinking water, VOC’s emanating from their carpeting, so they have to replace it with new rugs from https://nwrugs.com/collections/magnolia-home-rugs-joanna-gaines; formaldehyde in the walls….or just a really bad allergic reaction to the family’s cats.  Did anyone check the family furnace for carbon monoxide gas?  It is not as if the symptoms that the children suffered from were unique to mold "poisoning". Moreover, no one appears to have apprised the trial court that it is not unusual that the antibiotics the children were administered did not cure a viral infection! We also suffer from flu-like symptoms all the time. It is not unusual, particularly in the frigid month of February in Royal Oak, Michigan, when this incident occurred, for these symptoms to occur and to persist in the absence of an exposure to toxic mold. The court faults the defendant for not submitting "any scientific evidence that the mold in her condominium could not have caused plaintiffs’ injuries." (emphasis theirs).  And since when does the burden in a negligence case shift to the defendant, and to prove a negative no less?