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   ARTICLE   |   From Scotsman Guide Commercial Edition   |   December 2008

What Clients Should Know About Asbestos

Defense strategies are key as claims against business-owners increase

Litigation related to asbestos use in buildings has been a great economic hardship, with analysts estimating its accumulated cost at $250 billion. Companies from nearly all industries have been sued, with some having to file for bankruptcy protection.

Clients who are seeking financing for or who have purchased a commercial property -- especially a building constructed before the mid-1980s -- should know about asbestos risks. Although your clients can’t always prevent a lawsuit related to asbestos exposure on the property, you can help with advice during the sales process or by encouraging them to work with attorneys and insurance agents.

Ancient Greeks called asbestos a miracle because it withstood heat. For years, the naturally occurring mineral had numerous uses, including its inclusion in fire- and heat-resistant cloth and ceiling tile, in thermal insulation in buildings for burn prevention and soundproofing, and in fireproofing support steel.

Asbestos claims first appeared in the U.S. court system in the late 1960s and early ‘70s. Large asbestos-mining and -manufacturing companies were the main targets for cases related to asbestosis and lung cancer stemming from asbestos exposure.

When these companies’ resources ran out, plaintiffs’ cases were directed at businesses that used asbestos or asbestos-containing parts in their products. When those defendants closed their businesses or went bankrupt, owners of businesses and commercial properties where these businesses were housed became the targets.

Today, litigation involving asbestos-related cancers has become the longest, most expensive mass tort in U.S. history, according to the  Rand Corp.

Attorneys whose practices focus on defending asbestos cases say the number of suits related to premises liability -- i.e., where building-owners are considered liable for asbestos exposure -- began to increase dramatically in 2000. By 2002, the number of cases of this type had reached the number for traditional asbestos defendants.

Premises liability is based on the principle that a business- or building-owner shall provide a safe working environment. Causes of action in these suits include:

  • Strict liability;
  • Ultra-hazardous property condition;
  • Negligence;
  • Conspiracy; and more.

Building-owners whose businesses have had nothing to do with asbestos often are thunderstruck when they are sued. They may find themselves defending a premises-liability suit for exposure that allegedly occurred before they even owned the property. Their potential liability depends on whether their business is “substantially” a continuation of the prior one or if the owner received notice of an asbestos-related claim prior to purchase.

One disturbing aspect of an asbestos-caused health claim is that the time between asbestos exposure and contracting an asbestos-related cancer can be as long as 40 years. This can present a problem for your client if the prior owner closed or is part of another company. Your client also cannot ensure that future asbestos-related claims will not occur.

Defense strategies exist for the prospective buyers of a business or building during the purchase negotiations to protect them from liability that may arise because of asbestos exposure.

To protect from liability for a pre-purchase exposure to asbestos, your client should seek an enforceable indemnification agreement, backed by a bond, from the seller.

Your client also should ensure chronological pre-purchase evaluation of all prior construction and maintenance activities occurs before purchase. If sued, they often must produce paper or electronic documentation from as far back as 70 years ago. This should include acquisition and review of documents such as architectural, engineering, maintenance, health and safety records, in addition to inspection and occupancy permits, past and current insurance policies, and prior asbestos surveys.

An attorney can help determine if a prospective or current owner should seek certain documents from a past owner.


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