Low-cost remedies eyed
With the state’s lawsuit against the lead-paint industry set to go to trial next week, some fear Rhode Island’s property owners and mortgage lenders will be caught in the crosshairs.
In the first phase of State of Rhode Island vs. Lead Industries Association Inc., which begins Sept. 4, the court will rule on one hypothetical question: “Does the mere presence of lead pigment in paint in buildings and properties throughout the state constitute a public nuisance?”
Beyond Cash Donations: How New Forms of Giving Are Transforming Not-for-Profit Accounting
Evolving Funding Landscape for Not-for-Profits Not-for-profit organizations are being asked to do more with less,…
Learn More
If the court’s answer is yes, what does that mean for the thousands of public buildings and roughly 300,000 private homes – or 80 percent of Rhode Island’s housing stock – that are thought to contain at least traces of lead paint?
Rhode Island Realtors and mortgage bankers say they have no idea. And that’s what scares them.
”We’re pretty much in uncharted waters here in terms of what the impact might be on private property,” said Susan Arnold, chief executive officer/general counsel for the Rhode Island Association of Realtors. “I don’t think there has been a declaration of public nuisance on such a broad scale in the history of this country.”
The Realtors association, along with the Rhode Island Bankers Association, say that regardless of what happens in the trial’s later phases – which would determine who is liable for lead paint hazards and then assess damages – labeling as a nuisance any building with traces of lead paint would prove devastating for property owners.
Such a ruling would put homeowners on the hook to pay for lead-abatement work that can run $15,000 to $18,000 per home, the Realtors association estimates.
Lawyers for the two associations on Aug. 7 filed a legal brief with the Rhode Island Superior Court, saying it is taking a flawed approach by deciding the public-nuisance question first and determining liability later. The associations are asking the court to hear both those issues simultaneously.
If the court rules affirmatively on the public-nuisance question without deciding the liability issue, “investments in and sales of such properties would undoubtedly slow to a trickle until the open-ended question of liability was sorted out,” the associations’ legal brief reads.
The fallout could include crashing home values, soaring costs for homeowners’ insurance and widespread foreclosures on mortgages, representatives for the banker and Realtor groups say.
“We’re dealing with a lot of maybes, but if they do happen then there will be consequences,” said William A. Farrell, an attorney at Brown Rudnick Berlack Israels LLP’s Providence office, who filed the legal brief on behalf of the two trade groups.
Farrell used the example of two houses up for sale on the same block: one built just before 1978, the year lead paint was banned nationally, and one built a few years later.
“Why would I want to buy the one that the courts have declared a public nuisance?” Farrell asked.
He added that mortgage bankers are concerned that a public-nuisance declaration on so many properties in Rhode Island could have a chilling effect on the state’s secondary mortgage market, prompting investors to avoid the Rhode Island market altogether.
Sworn depositions from representatives of local governments, hospitals and other owners of large properties in Rhode Island reflect the sense of uncertainty that the banker and Realtor associations say a public-nuisance determination could wreak.
”Well, I think we would … seek professional guidance and take the necessary steps,” said Westerly Public Schools Supt. Scott R. Kizner, when asked what the effect on the district would be if its buildings were declared a health hazard because of lead paint. Kizner’s comments came last spring during questioning by a lawyer for one of the defendants in the case.
James Moretti, manager of maintenance and repair in the facilities-management department at Rhode Island Hospital, had a more-direct answer when the same question was put to him.
”We would close,” he answered in his deposition. “It would put us out of business.”
Those and similar depositions were recorded last spring by lawyers representing the lead-paint manufacturers. The defendants used the testimony to argue their case that the Superior Court should require notices be sent to the 330,000 property owners who could be affected by the court’s public-nuisance ruling – a move that would have delayed the trial.
The U.S. Supreme Court on Aug. 2 denied the defendant’s request, allowing the trial to proceed as scheduled.
The state Superior Court, in a July 3 decision denying the defendants’ same request, said the trial’s first phase is not intended to determine if individual properties constitute a nuisance. Rather, its intent is to determine “whether the cumulative effect of all such properties constitutes a single public nuisance.”
Attorney General Sheldon Whitehouse, who on behalf of the state filed the lawsuit in 1999 against eight former lead-paint manufacturers, could not be reached for comment regarding the concerns of the trade associations.
Previous lawsuits against lead-paint manufacturers by governments seeking compensation for health-care costs associated with lead poisoning have proved unsuccessful. In the Rhode Island case, however, legal experts have said Whitehouse is taking a novel approach by alleging that the lead-paint distributors contributed to a public nuisance.
Property owners also are concerned that a public-nuisance determination effectively would blot out the lead-paint legislation recently passed by the General Assembly.
That law, which won’t take effect until July 2004, allows owners of pre-1978 properties to contain lead-paint hazards through low-cost mitigation – painting over lead-laden windows rather than replacing them, for example. The legislation said that mitigation of lead paint in homes could be done for as little as $1,000.
The trial is expected to begin Sept. 4 in Providence County Superior Court. Jury selection is scheduled for Aug. 28.
