Insurance company drops suits over Chicago area flooding
(All images, information, and text courtesy of chicagotribune.com. Written by Robert McCoppin, Tribune reporter)
An insurance company has dropped its unprecedented lawsuit that had claimed that nearly 200 Chicago-area communities didn’t do enough to prevent last year’s widespread flooding.
The class-action lawsuits were filed by Farmers Insurance Group in Cook and the collar counties, ostensibly on behalf of more than 600 property owners affected by the flood, and sought to make the local governments reimburse the insurance company for claims it paid out to those property owners. In a move that took the defendants by surprise, it was withdrawn less than two months after it was filed.
Farmers spokesman Trent Frager issued a statement saying company officials had hoped the suit would encourage cities and counties to do more to reduce the risks of future flooding.
“We believe our lawsuit brought important issues to the attention of the respective cities and counties, and that our policyholders' interests will be protected by the local governments going forward,” the statement read. Frager said the company does not intend to refile the suits.
The lawsuits argued that public agencies should have taken more preventive measures to avert the damage caused by record-breaking floods of April 17 and 18, 2013, such as emptying reservoirs before the rains hit and employing more sandbags and inflatable flood barriers.
Margo Ely, executive director of the Intergovernmental Risk Management Agency, which represented 55 suburbs in the suit, said the action was without merit, and noted that some of the defendants hadn’t even be served with the documents yet.
“It’s a good legal decision and a good business decision (to drop the suit),” she said. “Any liability was tenuous at best. The impact would have fallen on their own customers as property taxpayers.”
Regardless of the suit, Glenview Village Manager Todd Hileman said, municipalities are constantly working to improve stormwater control, noting the village board approved a plan last fall to help prevent flooding for 1,500 homes.
“We’ve spent lot of time trying to mitigate flooding and take it quite seriously, so it was rather insulting,” he said.
State law, recent court decisions and the sheer size and complexity of the suit suggested it would have been a difficult to win, legal experts said.
State laws generally protect government agencies from lawsuits under what’s known as tort immunity. In addition, the defendants filed a motion in DuPage County to dismiss the lawsuit based on the public duty doctrine, which holds that governments have duties to the public at large rather than individuals.
Past lawsuits tried to blame Chicago and Elmhurst for previous flooding in those cities, but in both cases courts ruled that the municipalities did not have a duty to prevent flooding. In addition, following Hurricane Katrina in New Orleans in 2005, courts ruled that the city had sovereign immunity from lawsuits.
The Farmers suit also set forth the novel argument that the municipalities should have planned for more severe flooding due to global warming.
The legal action attracted great interest in the environmental law and insurance industries, said Prof. Michael Gerrard, director of the Center for Climate Change Law at Columbia Law School in New York City.
“It was regarded as bold and ambitious,” he said, “and an uphill climb.”
The suit was an extreme example of subrogation, in which an insurance company pays out claims, then goes after a third party seeking reimbursement of those claims. The National Association of Subrogation Professionals has reported it’s the second largest revenue sources for insurance companies, after premiums.
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