© Times-Picayune
The clean-up ruling by U.S. District Judge Stanwood Duval Jr., filed Dec. 20,marks the end of an unprecedented series of class-action lawsuits aimed at collecting damages from insurance companies or the federal government that could have totaled billions of dollars.
The final ruling was not unexpected. In earlier decisions Duval found the Army Corps of Engineers was immune from damages caused by failures of levees and floodwalls they designed and built, or from failure to maintain the rapidly eroding Mississippi River-Gulf Outlet, a now-closed shipping channel that helped decimate wetlands east of St. Bernard Parish.
In a ruling in April involving one of those cases, Duval pointed out that he had presided "over this hydra-like 'Katrina Umbrella' litigation for almost eight years. One central theme has been painfully obvious throughout this entire process," he wrote. "Many of the levees protecting New Orleans and the surrounding area were tragically flawed. ...
"However, lamentably, there has been no judicial relief for the hundreds of thousands of people and tens of thousands of businesses impacted," he said. "The Flood Control Act of 1928 as interpreted over the years gives the United States Army Corps of Engineers virtually absolute immunity, no matter how negligent it might have been in designing and overseeing the construction of the levees."
Duval's Dec. 20 ruling includes three pages listing the case numbers of the dismissed suits, and a single sentence finding in favor of the United States in all those cases.
"We believe the Court reached the right decision in these cases," a Justice Department spokesman said in response to a request to comment on the Duval order. The spokesman did not respond to a request for an estimate of how much money the federal government paid to defend against the lawsuits.
New Orleans attorney Joseph Bruno, who helped lead a team of attorneys who oversaw many of the more than 200,000 individual lawsuits bundled into one or more of the cases against the Army Corps of Engineers, said Duval, an appointee of former President Bill Clinton, ended up in charge of the complex litigation in part because many of the other federal judges assigned to the Eastern District of Louisiana had homes flooded during Katrina.
"He's a judge's judge," Bruno said. "He evaluated every single issue to the Nth degree."
The number of plaintiff's involved was unprecedented for this type of claims. By the end of January 2008, the corps had received 489,000 claim forms notifying the agency that an individual or business planned to participate in a damage lawsuit alleging that the agency's poor design and construction of levees and floodwalls resulted in the flooding during and after Katrina and Hurricane Rita, both in 2005.
Some plaintiff's struck a partial victory in 2009, when Duval found the Army Corps of Engineers was liable for billions of dollars in damages in a part of St. Bernard Parish and the Lower 9th Ward because of the corps' operation and maintenance of the Mississippi River-Gulf Outlet, which was built for navigation and not for flood protection. But the U.S. 5th Circuit Court of Appeals reversed that ruling, and the U.S. Supreme Court this past June decided not to review the appeals court's action.
Bruno estimated that plaintiff attorneys racked up about $16 million in expenses to press their lawsuits. They expect to receive about $3.5 million for expenses as part of a $20 million settlement with the Orleans, Lake Borgne Basin and East Jefferson levee districts in one suit that claimed sloppy work by the districts contributed to levee breaches during Katrina and Rita.
The settlement money will come from insurance policies the districts held at the time of the storms. A decision on how the money will be distributed for the benefit of an estimated 500,000 people and businesses who lived in or owned property in east bank communities in Jefferson, Orleans and St. Bernard parishes has still not been made, but the plaintiffs' attorneys will not receive attorney's fees.
In the 8-1/2 years following Katrina and Rita, Duval has issued a a series of decisions concerning key issues raised by those filing suit. Here are some key legal questions, and Duval's rulings for each:
* Should insurance companies be required to pay damages under regular homeowners policies that generally provide coverage for wind damage if there was proof that flood damage was caused by the failure of structures built by the corps and not simply by Katrina's storm surge?
In November 2006, Duval ruled in favor of policyholders, finding that the language excluding water damage in some policies was ambiguous, and that the policies didn't distinguish between floods caused by an act of God, like rainfall, and floods caused by human acts, which would have included levee breaches.
But Duval's decision was overruled in an August 2007 ruling by a three-judge panel of the 5th Circuit, which held that the terms of the policies, and of Louisiana law, excluded coverage for damage caused by flooding from any cause.
The appeals court found that "even if the plaintiffs can prove that the levees were negligently designed, constructed, or maintained and that the breaches were due to this negligence, the flood exclusions in the plaintiffs' policies unambiguously preclude their recovery."
* Should damage in New Orleans, St. Bernard Parish, and a small part of Jefferson Parish caused by the failure of levees or floodwalls designed and built by the corps and its contractors be paid for by the federal government?
In January 2008, Duval said he was reluctantly ruling that a 1928 law governing the construction of levees and other flood control structures by the corps also granted the corps and other federal agencies immunity from damages caused by failures of those structures.
But Duval made no bones about his distaste for having to rule in favor of the corps in the lawsuit, which focused especially on the failure of floodwalls along the 17th Street and other outfall canals in New Orleans.
"Often, when the King can do no wrong, his subjects suffer the consequences. Such is the case here," he said.
"This story -- 50 years in the making -- is heart-wrenching," Duval said in his 46-page ruling. "Millions of dollars were squandered in building a levee system with respect to these outfall canals which was known to be inadequate by the corps' own calculations."
Duval's ruling concerning the corps' immunity for work involving flood protection projects was upheld by the 5th Circuit.
* Should damage in a portion of St. Bernard Parish and the Lower 9th Ward of New Orleans be paid for by the federal government because the corps' improper construction and maintenance of the MR-GO shortcut from the Gulf of Mexico to the Industrial Canal caused a share of the flooding?
The lead plaintiffs in this lawsuit were WDSU-TV anchor Norman Robinson and his wife, who owned a home in eastern New Orleans. The suit aimed at getting around the corps' immunity for actions involving flood control structures, by targeting the corps' decision to build the navigation channel. The MR-GO caused rapid erosion of wetlands protecting the St. Bernard levees, which prosecution experts said was actually causing those levees to sink.
In February 2007, Duval ruled that the Robinsons and other eastern New Orleans property owners were not damaged by flooding caused by the MR-GO.
But his ruling found that the corps' mismanagement of maintenance along the navigation channel was directly responsible for flood damage in St. Bernard and the Lower 9th Ward. He compared the corps' actions to those of a Navy captain who fails to maintain a ship that crashes through a levee.
"The failure of the corps to recognize the destruction that the MR-GO had caused and the potential hazard that it created is clearly negligent on the part of the corps," Duval said in his ruling. "Furthermore, the corps not only knew, but admitted by 1988, that the MR-GO threatened human life ... and yet it did not act in time to prevent the catastrophic disaster that ensued with the onslaught of Hurricane Katrina."
"The Corps' lassitude and failure to fulfill its duties resulted in a catastrophic loss of human life and property in unprecedented proportions," Duval wrote. "The Corps' negligence resulted in the wasting of millions of dollars in flood protection measures and billions of dollars in Congressional outlays to help this region recover from such a catastrophe. Certainly, Congress would never have meant to protect this kind of nonfeasance on the part of the very agency that is tasked with the protection of life and property."
In March 2012, a three-judge panel of the 5th Circuit upheld Duval's ruling, confirming his logic in both finding that the corps' poor maintenance was not protected by the Flood Control Act's immunity and that eastern New Orleans residents were not covered by the decision because their flooding didn't result from the MR-GO.
That ruling was written by Judge Jerry Smith of Houston, appointed by Ronald Reagan, and agreed to by Judge Edward Prado of San Antonio and Jennifer Elrod of Houston, both appointed by George W. Bush.
But in September 2012, the same three judges reversed their ruling and found that the corps was immune from damages because of a provision in a law governing suits against the federal government that protects an agency when it makes a discretionary decision.
The panel now found that the corps may have abused its discretion or simply made errors in inadequately studying the effects of the shipping channel during environmental studies, in deciding against extra protection along the failed segment of St. Bernard levees, and in delaying a decision to armor segments of the levee and shoreline with grasses or other materials. But each of those decisions were immune from lawsuit under the federal law, they ruled.
The new ruling found that the "Discretionary-Function Exception" under the Federal Tort Claims Act bars lawsuits on claims that the law says are "based upon the exercise or performance or the failure to exercise or perform a discretionary function or duty on the part of a federal agency or an employee of the Government, whether or not the discretion involved be abused."
Duval had found that the corps violated the National Environmental Policy Act in three ways: the original 1976 environmental impact study of the channel's effects was flawed; the corps never filed a supplemental environmental study, despite a dramatic expansion in the channel's size caused by the corps' inadequate operation and maintenance procedures; and it kept the public uninformed of the channel's effects.
But in each case, the 5th Circuit found the corps acted within its discretion.
"At most, the corps has abused its discretion -- an abuse explicitly immunized" by the tort law provision, the appeals' court ruling said.
* Should damage in much of St. Bernard and the Lower 9th be paid for by the federal government because the corps' activities in advance of the construction of a new lock on the Industrial Canal helped cause the failure of the floodwalls along the Lower 9th Ward?
Plaintiff attorneys again attempted to skirt the corps' immunity for actions involving flood control structures by focusing on allegations that the removal of structures within the Industrial Canal in advance of construction of an expansion of the new lock helped weaken large segments of the floodwall, leading to their failure early on August 29, 2005.
But Duval deemed as unconvincing the testimony by University of California at Berkeley civil engineering professor Rober Bea that work in the canal caused the wall segments to fail.
Duval cited a federal government witness who said the problems Bea described would only occur if the holes left from removing pilings within the canal were within 25 yards of the wall, which was not the case.
But as with his earlier rulings, Duval was critical of the corps and of the federal laws granting it immunity.
"I feel obligated to note that the bureaucratic behemoth that is the Army Corps of Engineers is virtually unaccountable to the citizens it protects despite the Federal Tort Claims Act," Duval wrote. "The public will very possibly be more jeopardized by a lack of accountability than a rare judgment granting relief. The untold billions of dollars of damage incurred by the greater New Orleans area as a result of the levee failures during Katrina speak eloquently to that point."
Only one major lawsuit remains active in federal court that might result in payments to a large number of Katrina flood victims. In that case, which is being heard by the U.S. Court of Federal Claims in Washington, D.C., St. Bernard Parish government and several private claimants in the parish and in the Lower 9th Ward argue that the corps, in building and then failing to maintain the MR-GO, took a portion of the value of their property.
In November, Federal Claims Judge Susan Braden heard testimony on how much of the loss of value of a sample of the properties owned by the plaintiffs was caused by the MR-GO and the loss of wetlands prompted by the channel's construction.
Earlier in the year, the judge heard testimony over whether the MR-GO actually reduced the value of their property. She has not yet issued rulings in either part of the case.
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