Liristis v. American Family Mutual Insurance Company

Carla Liristis and other insureds (plaintiffs) held a homeowner's policy from American Family Mutual (defendant) that excluded mold damage, and after a 1996 house fire caused both fire and water damage, American Family paid their initial claim. The roof kept leaking after every rain following the fire, and once the family moved back in, they developed mold-related allergic reactions and illness; both their own and American Family's environmental experts confirmed dangerous mold-producing bacteria in the home. When the plaintiffs sought coverage for this mold-related environmental damage traced back to the fire's water damage, American Family denied the claim under the policy's mold exclusion, and after the plaintiffs sued for breach of contract, bad faith, and unfair trade practices, the trial court granted American Family summary judgment; the plaintiffs appealed.