Ruling for plaintiffs in Calif. lead paint case could hurt state's real estate market

By Jessica M. Karmasek | Jul 17, 2013

SAN JOSE, Calif. (Legal Newsline) -- California's real estate market could take a hit if a state court rules in favor of the plaintiffs in a public nuisance case against former lead pigment and paint manufacturers, the head of a Los Angeles County property rights group says.

"Just as the real estate market is in a recovery mode, these folks are, without even trying, sending it into another tailspin," said Warren Rohn, executive director of the Los Angeles County Board of Realtors.

The plaintiffs in The People of California v. Atlantic Richfield Company et al. -- 10 cities and counties -- are asking the Santa Clara County Superior Court to declare that all lead paint on privately-owned residential buildings within their jurisdictions presents a public nuisance that requires abatement.

The cities and counties have tried, with the help of trial lawyers, to recover costs for medical care, education programs for children, inspections and, most importantly, abatement since 2000.

They allege the manufacturers are responsible for creating or assisting in the creation of the "widespread public nuisance" by concealing the dangers of lead; mounting a campaign against its regulation; and "actively promoting" lead for residential use despite the known harms.

The named defendants, former manufacturers of lead pigments and paints, are: The Sherwin-Williams Company, NL Industries, ConAgra Grocery Products, DuPont and Atlantic Richfield Company.

The cities and counties include: Santa Clara County, San Francisco City, Alameda County, Los Angeles County, Monterey County, Oakland City, San Diego City, San Mateo County, Solano County and Ventura County.

The trial of the 13-year-old case kicked off Monday.

Seven other, similar public nuisance cases have been filed against the former manufacturers -- all of which have either been voluntarily dismissed or rejected.

The California case, filed more than a decade ago, is the last remaining.

"By putting the 'public nuisance' label on all homes built before 1978, they're affecting hundreds of thousands homes in Los Angeles County," Rohn said.

"To satisfy the inspection and abatement processes will cost thousands of dollars. Prospects for these homes will be turned off. Insurance, mortgages and property values will all be affected.

"It'll be a nightmare."

With a reduction in property values, the revenues from property taxes also will drop, Rohn contends.

And -- if the plaintiffs prevail -- it will most likely end up affecting more than just the 10 jurisdictions, he argues.

Antonio Dias, an attorney at Jones Day, who is representing Sherwin-Williams in the lawsuit, agrees.

"Regardless of what happens, every property owner (with lead paint in their home) is now exposed to this issue," he said, adding that a verdict in favor of the cities and counties could be "catastrophic" to the state's real estate market.

Dias pointed to the plaintiffs' attorneys' openings, in which they argued that the presence of lead paint constitutes a public nuisance.

"Suddenly, because of this lawsuit, those homes are considered differently, in terms of value," he said.

"Homeowners would be outraged over this lawsuit if they knew it could be devastating to their homes' value."

Dias, like Rohn, contends a ruling in favor of the plaintiffs -- forced abatement -- could make it difficult to mortgage and sell, much less insure, homes with lead paint.

Brendon DeSimone, a nationally-known real estate expert, said at the least it could hold up escrows and slow down sales.

Currently, the federal government requires and explicitly states that sellers and landlords must disclose any knowledge or risk of lead-based paint in homes built prior to 1978 before a contract with a buyer is signed.

The Consumer Product Safety Commission banned the use of lead in household paints in 1977, but homes built prior to 1978 may still contain lead-based paint.

According to the Centers for Disease Control and Prevention, or CDC, lead poisoning can affect nearly every system in the body.

Because it often occurs with no obvious symptoms, lead poisoning frequently goes unrecognized.

It can cause learning disabilities, behavioral problems, and, at very high levels, seizures, coma and even death, according to the CDC.

From Legal Newsline: Reach Jessica Karmasek by email at jessica@legalnewsline.com.

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