Big Win For Hurricane Harvey Flood Victims
United States Court of Appeals for the Federal Circuit reversed Federal Court of Claims Senior Judge Loren A. Smith’s dismissal of thousands of property owners’ claims against the United States arising out of the Army Corps of Engineers decision to release millions of gallons of water from the Addicks and Barker Reservoirs in the aftermath of Hurricane Harvey. The ruling in favor of approximately 8,000 downstream property owners along with a prior ruling in favor of upstream property owners means that the largest Fifth Amendment takings case in U.S. history can now move forward and could result in the government paying out billions. Estimates of the property owners’ damages range from $6.5 Billion to $13 Billion.
How It All Started
In August 2017, Hurricane Harvey hit Houston and dumped a years-worth of rain on the city in just one week. During the storm, the Addicks and Barker reservoirs’ flood gates were closed, and the reservoirs filled to near capacity flooding upstream homes and businesses as the water migrated off of government owned lands. On August 28, 2017, the Army Corps of Engineers opened the flood gates and released 16,000 cubic feet per second of water into the Buffalo Bayou channel causing the already swollen bayou to overflow its banks and flooding the thousands of downstream properties. Water released from the reservoirs stayed in downstream homes and businesses for two weeks or more.
Upstream property owners flooded by the water captured by the federal reservoirs sued for the invasion of their homes by the impounded water. Downstream property owners whose homes and businesses were inundated by the release of the federal water also sued. The suits were brought against the U.S. Army Corps of Engineers for just compensation under the Fifth Amendment to the United States Constitution. These inverse condemnation cases seek a variety of damages, including property damage to contents and structures, lost property value, displacement costs, and risk of future flooding.
The Initial Dismissal
On November 20, 2017, U.S. Court of Federal Claims Chief Judge Susan Braden consolidated what has since become several thousand lawsuits by property owners and divided the consolidated case into two subcases, one for those who were inundated upstream and one for those who were inundated downstream. Judge Braden appointed Rand Nolen of Fleming, Nolen & Jez, L.L.P. to serve as Co-Lead Counsel for the downstream property owners. During the pendency of the case, Judge Braden retired and after the case was reassigned to Judge Smith, the court considered and granted motions to dismiss filed by the government.
The dismissal came in 2020 after the completion of extensive discovery. Thirteen downstream test properties had been inspected and surveyed. Property owners served 19,000 documents related to the test properties. Government produced more than 250,000 documents. Expert reports were exchanged. Forty-three depositions had been taken. Those who were deposed included both military and non-military personnel with the United States Army Corp of Engineers, a witness from the United States Geological Survey, various witnesses that were City of Houston employees, and Harris County Flood Control District officials.
Getting the Appeal
Despite the property owners’ appellate rights following dismissal, the district court disbanded the leadership structure. However, Jack McGehee, Richard Mithoff, and Rand Nolen continued to prosecute the cases on behalf of most of the property owners and took the lead in appealing Judge Smith’s dismissal of the cases. On June 2, 2022, the Court of Appeals for the Federal Circuit reversed Judge Smith’s opinion dismissing the cases and remanded them for further proceedings in the Court of Federal Claims.
The formerly appointed Downstream Leadership and the lawyers representing the overwhelming majority of the Downstream property owners are very pleased with the court of appeals’ ruling. “There has never been any real question that property owners downstream of the Addicks-Barker reservoirs suffered billions of dollars in damages because the United States Army Corps of Engineers chose to open the reservoir flood gates sending millions of gallons of water down buffalo bayou and right into their living rooms,” said Rand Nolen. “In doing so, the Corps took the water impounded in the reservoirs and moved it right into the homes and businesses downstream.”
Nolen later added that the senior technical leader for the Army Corp of Engineers’ Galveston Division ran that decision up the ladder and obtained buy-in for the decision by the colonel in charge of the Galveston Division, the colonel in charge for the Southwest Division, a host of Corps senior technical civilians, and a pentagon general who is the deputy to a three-star general serving directly below the Secretary of Defense’s chief of staff.
The court of appeals opinion rejected the government’s argument that it is immune from liability in this case. The court held: “The Tucker Act . . . waived sovereign immunity from—’any claim against the United States founded either upon the Constitution, or . . . for liquidated or unliquidated damages in cases not sounding in tort.’ The property owners sued under the Tucker Act to assert their Fifth Amendment rights to just compensation for government’s taking of their private property for public use when government moved the water out of the reservoirs and onto their properties.
Individual Rights vs Governmental Decisions
The appeals court reversed the Court of Claims finding that Texans do not have a recognized property right in a flowage easement. The opinion accurately states the law of Texas: “Texas courts have recognized that property owners have interests in flowage easements under Texas law. . . . And so, under Texas law, a right to grant a flowage easement “is one of the rights in the bundle of sticks of property rights that inheres in a res.” Acceptance, 583 F.3d at 857 (quoting Am. Pelagic Fishing Co., L.P. v. United States, 379 F.3d 1363, 1376 (Fed. Cir. 2004)). The Government argues that several exceptions negate Appellants’ property interests. We disagree. . . . . Similarly, the Government incorrectly asserts that Appellants do not have a cognizable property interest because Hurricane Harvey was an Act of God. . . .Rather, Acts of God relate, if at all, to whether a taking has occurred, not whether a party has a cognizable property interest.”
The appeals court concluded: “In other words, we leave it for the lower court to consider:
- Whether Appellants have shown that a temporary taking occurred under the test applicable to flooding cases, Ark. Game & Fish Comm’n v. United States, 568 U.S. 23, 39 (2012)
- Whether Appellants have established causation when considering “the impact of the entirety of government actions that address the relevant risk,” St. Bernard Par. Gov’t v. United States, 887 F.3d 1354, 1364 (Fed. Cir. 2018), cert. denied 139 S. Ct. 796 (2019)
- Whether the Government can invoke the necessity doctrine as a defense.” Thus, although the appeals courts opinion does not resolve every issue in this litigation, it affords the property owners the opportunity to pursue these cases on their merits.
This is the second significant loss for government. The upstream case was tried for 10 days in the Spring of 2019 before U.S. Court of Federal Claims Judge Charles Lettow. Following post-trial briefing, Judge Lettow issued his opinion in December 2019, ruling in favor of upstream property owners. The damages phase of that case is currently being tried at the federal courthouse in Houston.