Class-action suit settled against irrigation district for Fernley flood

Published: Apr. 5, 2016 at 2:04 PM PDT
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A settlement has been reached between the victims of the Fernley flood in 2008 and Truckee Carson Irrigation District, according to a law firm representing the defendants. After eight years of litigation, the courts overseeing the cases have granted final approval to a class-wide settlement for $18.183 million and the settlement money is starting to be disbursed to the victims.

January 5, 2008, a 40-foot-wide section of the Truckee Canal running through a residential section of Fernley collapsed, dumping water into the housing subdivisions below the canal. About 580 homes were impacted by water.

The residents of Fernley whose homes were damaged sued TCID, in both United States District Court for the State of Nevada and Nevada District Court, accusing TCID of negligently maintaining the earthen canal. The lawsuits asserted the irrigation district failed to properly maintain the canal embankment, which resulted in the canal breach. Victims also brought suits against the City of Fernley, Lyon County and developers, alleging they failed to maintain drainage and block drainage ditches.

In 2009, Senior District Judge Miriam Shearing, a former state Supreme Court Justice appointed to hear the suit filed in Lyon County against TCID, certified the case as a class action, finding “no reason why the issue of TCID’s liability” should not be determined in state court in Yerington.

In 2011. the irrigation district tentatively agreed to settle with the victims for $10 million. TCID then backed out of the settlement. The lawyers for the victims asked the U.S. District Court and the Nevada District Court to force the irrigation district to follow through with the settlement. U.S. District Magistrate Robert McQuaid Jr. found that the attorneys for the district who agreed to the $10 million settlement did not have authority to settle and allowed TCID to back out of the settlement.

At the same time, the victims settled with other defendants. The City of Fernley settled for $5 million and Lyon County settled for $1.3 million. The developers also settled their cases.

The flood victims also claimed the TCID board of directors shared responsibility for the flood. The insurance companies for the six individual board of directors agreed to settle. Country Mutual Insurance Company agreed to settle for the $3.8 million on behalf of five the TCID board members and Allstate Insurance paid $50,000 on behalf of another director.

In 2012, the liability phase of the case against TCID went to trial. Plaintiffs presented evidence demonstrating the embankment failure occurred due to numerous rodent burrows in the Truckee Canal embankment. Plaintiffs also presented evidence indicating TCID was repeatedly alerted that significant repairs needed to be done to the canal embankment, including repairing rodent holes, but did not take action.

After a 14-day trial, the jury found TCID failed to properly maintain the Truckee Canal and was liable for damages.

The case then moved into the damages phase. Victims sought compensation for property lost or damaged when the embankment failed. On the eve of the damages trial, which was set to commence February 29, 2016, the parties settled.

TCID agreed to settle for $18.183 million. To fund the settlement, TCID sold the irrigation district’s Donner Lake assets to the Truckee Meadows Water Authority (TMWA) for $17.183 million. In December 2015, both TMWA and TCID boards of directors approved the sale. The sale of the district’s Donner Lake assets then went to a special election of the water users on January 4, 2016. The question was whether TCID, acting through its board of directors, should sell its interest in water storage rights and the dam facilities at Donner Lake (Nevada and Placer counties California). The water users approved the sale. The remainder of the settlement came from insurance.

“The settlement finally brings closure to those who were harmed through no fault of their own,” Patrick Leverty, a lawyer for the victims, said in a statement. “It was a long haul, but I am really proud of the work performed by both firms in getting justice for our clients.”

Attorney Robert Maddox said TCID has paid the $18.183 million, and after deducting attorney fees and the costs of litigation, the money will be distributed to the victims.