Update: Lead Paint Litigation In New York

This newsletter provides an update, as of July 3, 1996, on our continuing coverage of lead paint litigation. There were numerous reported developments since our January update, including a landmark decision on liability from the New York Court of Appeals, the State's highest court.

Liability Decisions

On July 2, the Court of Appeals handed down its decision in Juarez v. Wavecrest Mgmt Team Ltd., N.Y.L.J. (7/3/96) at 25, col. 1. The court reversed the Appellate Division, First Department, holding that the New York City Administrative Code does not impose strict liability upon landlords for lead poisoning if lead paint is found in a multiple dwelling unit where children under seven years of age reside. Further, the Code does not require the landlord to ascertain whether children under seven reside in the unit. However, the court agreed with the First Department that the Code does impose an affirmative duty on the landlord to inspect a multiple dwelling unit for lead paint if the landlord has actual or constructive notice of a residing child under seven. If lead paint is present in the unit where the landlord has actual or constructive notice of a residing child, while not per se liable for negligence, the landlord is chargeable with notice of a hazardous condition as one element of negligence. The landlord has the right to defend against liability by presenting evidence that it acted reasonably to prevent or correct the hazard. Moreover, the landlord may challenge causation of the lead poisoning and/or of the alleged emotional, physical or intellectual deficiencies.

The court further commented on causation, holding that bare allegations by opposing counsel that there were other sources of lead is not sufficient to defeat summary judgment, where plaintiff presents evidence by witnesses with first hand knowledge that the child ingested lead paint dust or chips. Additionally, the court held that an expert affidavit suggesting that the child's purported emotional, physical or intellectual problems may be caused by bilingual confusion or the parents' educational level was "speculative" and was insufficient to defeat summary judgment.

The Court of Appeals decision amounts to a mixed change in the current law. The court reversed the most excessively anti-landlord elements of the Appellate Division ruling, strict liability and the duty to inspect for children. However, it upheld the notion that the New York City Administrative Code imposed upon landlords the duty to inspect for lead paint which is triggered by actual or constructive notice of a child under seven in a multiple dwelling unit. While the court specifically upheld the right of the landlord to argue reasonableness and causation, its comments make the causation defense extremely difficult to establish, even just to raise a question of fact to defeat summary judgment (something that is usually pretty easy to do in negligence cases). Bilingual confusion and other sources of lead are the most common causation defenses asserted, and the court's disparaging remark that such defenses are "speculative", in the face of parental testimony of ingestion, will make these defenses largely ineffective. In virtually every lead paint case, parents testify that they saw the child eat paint chips. In view of the New York law barring parental supervision claims and affirmative defenses (set forth below), there is every incentive for parents to testify that they saw ingestion by the child. Defendants rarely can present first hand witnesses as to other lead exposure and for the most part rely upon expert testimony. By its nature, causation of a specific emotional, intellectual or physical condition is speculative. The Wavecrest opinion strongly suggests that it is not speculative to assert that such deficiencies resulted from lead poisoning if the plaintiff relies solely upon expert opinion, but expert opinion presented by defendants as to other causes of the asserted condition is speculative, absent first hand proof which will almost always be impossible.

Prior to the issuance of the Court of Appeals decision in Wavecrest, the First Department continued to make law on lead paint issues that eliminated liability defenses for landlords. In two decisions, the court affirmed dismissal of affirmative defenses and proposed counterclaims that were asserted by landlords, viewing them as veiled attempts to assert negligent supervision claims against parents and to transfer a landlord's "nondelegable duty" to correct a lead paint hazard to the tenant. In Nieves v. 1097 Walton Realty Co., 633 N.Y.S.2d 115 (1st Dep't 1995), the court struck routinely asserted affirmative defenses of culpable conduct by plaintiff and assumption of the risk in a memorandum decision citing the City Administrative Code and the Multiple Dwelling Law for the proposition that the landlord's duty to remove lead paint was nondelegable, thereby precluding these affirmative defenses. This is the first published decision of which we are aware that refuses to permit some affirmative defenses. In Morales v. Felice Properties Corp., 633 N.Y.S.2d 305 (1st Dep't 1995), the court refused to permit a landlord to assert a counterclaim that it interpreted to be a veiled attempt to assert a parental failure to supervise claim. The decision does not state the language of the proposed counterclaim. While this principle does not break new legal ground, it does indicate that the First Department will view the preclusion of parental supervision claims very broadly.

Expanding further on the issue of notice to the landlord of a lead paint hazard, in Valdez v. Sherman Estates, Inc., 638 N.Y.S.2d 10 (1st Dep't 1996), the First Department rejected an argument that the City's Administrative Code required actual notice to the landlord. The court remarked that the entire regulatory scheme would be meaningless if there was such a requirement. Conspicuous by its absence was any reference to the First Department's previous ruling in Wavecrest, 627 N.Y.S.2d 620 (1st Dep't 1995), which dispensed with any notice requirement to the landlord in lead paint cases. (The Court of Appeals' reversal of this decision is discussed above.) Perhaps the panel perceived that Wavecrest was about to be reversed by the Court of Appeals. There is no doubt that the parties addressed the decision in their respective briefs.

The First Department, however, took the opportunity in Valdez to set yet another precedent, overturning longstanding common law in holding that a mother could recover for loss of services of her child in a lead paint case. The court remarked that evidence presented at trial by an expert that the child would have difficulty doing such chores as going to the store and getting an entry level job was sufficient to award damages. Defense rebuttal testimony that the child did not suffer any "substantial organic change" was not sufficient. The decision appears to shift the burden of proof on the issue of loss of services in its comment that "no fair interpretation of the evidence supports a finding that plaintiff mother suffered no loss of services at all." The opinion fails to address the obviously speculative nature of the alleged future loss of services. Neither does the decision address the numerous cases holding that a parent does not receive any compensable services from an infant.

Citing the First Department decision in Wavecrest, the Supreme Court in Lane v. Ruiz, N.Y.L.J. (5/29/96) at 29, col. 3 (Sup. Ct., Qns C'nty), granted summary judgment to plaintiff on liability holding that the landlord was strictly liable for failing to correct a lead paint hazard prior to the child tenant's diagnosis. The brief opinion makes no mention of the issue of causation of the child's lead poisoning.

The Appellate Division, Second Department set new precedent in Cortes v. Riverbridge Realty Co., 642 N.Y.S.2d 692 (2d Dep't 1996), holding that a landlord is not entitled to assert a CPLR Article 16 defense in lead paint cases, but that managing agents can assert the defense unless it is shown that the agents were in "complete and exclusive" control of the premises. In fact, the court went further and held that agents cannot be liable in lead paint cases unless they are in such control. CPLR Article 16 contains the tort reform sections enacted by the state legislature in 1986 which preclude a personal injury plaintiff from collecting disproportionate "non-economic loss" from a defendant who is found to be 50% or less liable in a case involving more than one defendant. Non-economic loss is defined as pain and suffering, loss of consortium, mental anguish and any other damages that are not out of pocket expenses. This decision holds that even if the landlord is found only 10% liable by the jury, the plaintiff could make him pay 100% of all damages and force the landlord to try to collect the apportioned liability shares from the other defendants. The Second Department reasoned that the landlord's duty to correct a lead paint hazard was non-delegable, citing two First Department cases that followed Wavecrest, Nieves and Morales (both discussed above). The court cites Wavecrest directly only on the issue of managing agent liability, but the opinion seems to impliedly adopt the Wavecrest notice holding.

Recent Reported Verdicts and Settlements

Alacantara v. 115 Realty (Sup. Ct., Bx C'nty, Oct. 11, 1995). This case was settled for $450,000. The child at issue possessed a lead level of 39 ugms/dl before moving into the multiple dwelling at issue. The child's levels were 18-25 ugms/dl while he lived in the apartment, and a subsequent inspection discovered lead violations. At the time of settlement the child was seven years old and learning disabled with dyslexia.

Valdez v. Leeds Mgmt Co., No. 15180/91 (Sup. Ct., Bx C'nty, 1995). The jury returned a defense verdict finding that the landlord was negligent but there was no causation of alleged neurological deficiencies. The apartment was painted by the landlord before the child moved in, but nonetheless lead paint violations were found. The child was diagnosed with 34 ugms/dl lead poisoning at 18 months of age after approximately one year in the apartment. Plaintiff's expert was Dr. Leon Charash.

Rodriguez v. Jan Jan Realty, No. 21038/89 (Sup. Ct., N.Y. C'nty, Oct. 23, 1995). This case was settled for $225,000 (present value). The child was originally found to have a lead level of 8 ugms/dl at 13 months of age but nevertheless the parents were warned to monitor the level and that paint was the usual source. Within six months, the child's level rose to 42 ugms/dl before dropping to 31 ugms/dl. Subsequently, the level was successfully diminished by chelation. Defendant contended that the father painted the apartment negligently but the court struck the defense, holding that the landlord's duty to remove lead paint in apartments where children under seven are found is nondelegable. Defendant further contended that the parents took no action to remove the child from the apartment and missed several doctor's appointments. As to damages, defendants claimed that the child's IQ of 90 was within normal limits but low and that asserted learning problems were caused by bilingual and multicultural confusion.

Diaz v. 2275 Holding, Ltd. (Sup. Ct., Bx C'nty, Oct. 23, 1995). This matter settled for $290,000 (present value). The child had a lead level of 46 ugms/dl when diagnosed at age 5 and underwent chelation therapy. Lead paint violations were found in the apartment and subsequently abated. Summary judgment on liability was granted against the landlord but denied as to managing agents. Defendants intended to argue that the child's 87 IQ and poor academic history were caused by inherited and environmental factors.

Castillo v. Drofan Realty, No. 13421/92 (Sup. Ct., Bx C'nty, Dec. 12, 1995). The jury returned a $30,000 verdict for past pain and suffering in a damage trial only and the case was settled for $150,000 pursuant to a $450,000/$150,000 high/low agreement. Defendant previously conceded liability. The child was diagnosed at age 2 with a level of 30 ugms/dl that remained between 20-27 ugms/dl over the next two years despite chelation therapy. Plaintiff argued the child was hyperactive and produced the child's fifth grade teacher who testified the child was academically 2 years behind. The child was never left back, however, and was never evaluated for special education. Moreover, post-chelation treatment was minimal and there was no record of any hyperactivity complaints by plaintiff. Dr. Leon Charash and Dr. Nancy Fleisher testified for plaintiff. Plaintiff was granted a missing witness charge because defendant did not call one of its experts.

Leonard v. City of New York, No. 112339/93 (Sup. Ct., N.Y. C'nty, Mar. 20, 1996). The jury returned a $250,000 verdict for future pain and suffering for the younger child and a defense verdict for the older child. The City was the landlord by virtue of a tax foreclosure. The younger child was found with a lead level of 29 ugms/dl at age 1 and was hospitalized twice. The child's level dropped permanently below 10 ugms/dl within seven months after initial diagnosis. The older child's lead level never rose above 8 ugms/dl. The defendant presented evidence that plaintiffs were squatters in one of two apartments at issue, and that plaintiffs did not allow defendant to abate the lead problem in a timely fashion. Defendant further argued that low maternal IQ and socio-economic factors could have caused the alleged problems. Plaintiffs' demand was $650,000 and defendant's offer was $29,000.

Coverage Developments

Consistent with its pro-liability precedent setting rulings, the First Department set new precedent in finding coverage in Public Serv. Mut. Ins. Co. v. Hollander, No. 57471 (1st Dep't, June 18, 1996) (WL 332411). The insurer disclaimed four months after receiving notice from a landlord of a lead paint claim, based on the fact that the landlord never previously advised the insurer that lead paint violations were found eight years before. The court affirmed a lower court ruling that even assuming the landlord received notice of the violations (which the landlord denied), whether the insured reasonably believed that a claim was not going to be made against him as a result of the violations is a question of fact for the jury to determine.

Indemnity & Restitution

The First Department issued another precedent setting decision spreading liability in the long awaited decision in a lawsuit by New York City against lead paint manufacturers, City of New York v. Lead Indus. Ass'n, N.Y.L.J. (7/1/96) at 25, col. 3 (1st Dep't, June 27, 1996). The court reversed the lower court, holding that claims for restitution and indemnity against the manufacturers for lead paint abatement expenses were not time barred, nor dependent on the viability of underlying claims for negligence and product liability (which were time barred) and fraud (which possessed doubtful merit). The court explained that these causes of action were intended for precisely the type of claim at issue. Moreover, in dictum, the court stated that "there is no question that direct payments by [the City] to [tenants] would provide the final predicate necessary for a traditional indemnity claim". Id. at 28, col. 5. Thus, the court clearly approves landlord indemnity suits against the manufacturers subsequent to settlement or trial of the underlying lead paint cases, or possibly bringing in the manufacturers as third-party defendants.

Miscellaneous Developments

In Correas v. S.J. Marsh Equities, Inc., 95 Civ. 10565 (RWS) (S.D.N.Y., Jan. 29, 1996) (WL 32320), the court denied a preliminary injunction to compel New York City to inspect plaintiffs' apartment for lead and remove all lead paint hazards and dismissed the action on the basis of federal abstention in favor of state court jurisdiction. The court explained that plaintiffs were essentially challenging the City's lead paint remedial program and that the very same issues were already pending before the New York State Supreme Court in another action. Thus, the court decided to defer to the state court.

The EPA settled an action against it to compel the EPA to issue regulations pursuant to the federal Toxic Substances Control Act, 15 USC § 2683, identifying lead paint hazards in or near residential dwellings. In Atlantic States Legal Foundation, Inc. v. Browner, 95-CV-1788FJSDNH (N.D.N.Y., Jan. 3, 1996), the EPA agreed to issue a notice of proposed regulations by November 30, 1996 and promulgate the final regulations by September 30, 1997. One practical effect of the regulations will be to provide lead paint plaintiffs with a federal statutory basis to file suits in federal courts.

The United States Consumer Product Safety Commission reported that imported vinyl miniblinds pose a lead poisoning risk. Wall St. J., 6/26/96 at B2, col. 6. The blinds are made with lead to maintain their color, but deteriorate to dust as a result of prolonged exposure to sunlight. Most of the major manufacturers of such blinds voluntarily agreed to stop manufacturing them by July 1, 1996, but many will remain in retailer's inventories and installed in homes.

A recent medical study claims to document a link between delinquent behavior in children and lead poisoning. Needleman et al., Bone Lead Levels and Delinquent Behavior, 275 J. Amer. Med. Ass'n 363 (Feb. 7, 1996). However, a respected occupational health firm, Sandler Occupational Medicine Associates, Inc., Melville, N.Y., criticizes the study as misleading and the findings as questionable.


The average settlement and verdict remains in the $150,000 to $500,000 range, primarily restricted by average policy limits rather than favorable verdicts. The landlord does not have any obligation to inspect a multiple dwelling for the presence of children, but if he has actual or constructive notice of children, then an affirmative duty to inspect a multiple dwelling unit for lead paint and remediate any hazards is triggered. Failure to remediate is only evidence of negligence and not negligence per se. Evidence that the landlord acted reasonably to prevent a lead paint hazard may be presented as well as lack of causation, but the causation defense will in many cases not withstand a summary judgment motion. Prior to the Court of Appeals decision reversing it, the First Department continued to be active, broadening its Wavecrest decision to eliminate many affirmative defenses by landlords and clearly signaling to trial courts that it views the cases against landlords to be one of strict liability if lead paint is found in a multiple dwelling in New York City. Consistent with its deep pocket rulings on liability, the First Department continues to issue decisions on coverage and indemnity that spread the risk.

We hope you find this update useful and informative. We would be happy to discuss any of the lead cases and issues with you in more detail at your request and provide earlier newsletters. Please feel free to contact Rich Fogel or Les Bennett at (516) 694-8000. Please note that this newsletter is not intended to provide legal advice for any particular matter.

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