Judge approves Fernley flood deal

RENO - The city of Fernley will pay half of a $10 million settlement to about 600 victims of a flood caused by the failure of a century-old irrigation canal in 2008 under a deal a U.S. judge approved on Friday.

However, lawyers for the flood victims say the U.S. government and local irrigation district still are on the hook for as much as $150 million in damages.

Fernley will pay $5 million, Lyon County $1.3 million and an insurance company $3.8 million on behalf of the individual members of the board of directors of the Truckee Carson Irrigation District who were named as defendants in the class-action lawsuit filed more than three years ago.

Lawyers for the plaintiffs wanted U.S. District Magistrate Robert McQuaid Jr. to force the irrigation district itself to follow through on an earlier tentative agreement to pay an additional $10 million in damages but the judge said the attorneys for the district who agreed to that arrangement didn't have the authority to do so.

The agreement reached Friday settles only a fraction of the losses homeowners claim in a series of lawsuits that chiefly blame the Interior Department's Bureau of Reclamation and the Truckee Carson Irrigation District for failing to properly maintain the earthen canal, which burst and sent a wall of water into a Fernley neighborhood in January 2008.

The local governments shared responsibility because they knew or should have known the canal was in disrepair based on previous studies and warnings from the bureau, the lawsuit claims.

"Overall this is good because finally we are getting some money to the flood victims. There are people who are really hurting," attorney Robert Maddox told The Associated Press after the settlement was announced. "But we are far from done."

Justice Department lawyers said they have no interest in negotiating a settlement because they believe whatever liability might exist is the responsibility of the district in its capacity as the contractual operator of the irrigation system that brings water from the Truckee River to more than 2,500 ranchers and farmers in northern Nevada east of Reno.

Maddox said that means the suit will continue against the federal government and TCID because the homeowners refuse to continue mediation with TCID after the district backed out of the earlier agreement.

"I don't think we could ever trust any deal that could be made with TCID," he told the judge during the 90-minute hearing. He told AP later the case against TCID would continue in state court in Yerington on Feb. 29.

"We have to go to trial. We have to get a judgment," he said. "It's been 3 1/2 years since the flood. They toyed with us and said they would settle because they didn't want to face trial and then when we backed off, they wouldn't settle."

Greg Addington, assistant U.S. attorney for Nevada representing the Bureau of Reclamation, was one of at least 30 lawyers who attended the hearing. He said he could not comment on the case.

McQuaid initially cast doubt on the claims the liability remaining on the part of TCID and the Bureau of Reclamation could reach $150 million.

"Every plaintiff says their case is worth the moon," he said.

But at the close of the hearing he acknowledged the deal had settled only a portion of the case.

Robert Hager, another lawyer for the flood victims, said the bulk of the damages they hope to recover remain outstanding because the federal government is most to blame for what happened.

"They are ultimately responsible for the safe operation of the canal in an urban area. They were aware of the fact the canal was originally constructed based on standards 100 years ago that are not acceptable at this time." Hager said.

The settlement states that the city, the county and insurance companies agreeing to pay the damages "have denied any wrongdoing, but have agreed to the proposed settlement in order to avoid further litigation."

Country Mutual Insurance Co. will pay the $3.8 million on behalf of the TCID board of director members at the time - Ernest Schank, Richard Harriman, Raymond Peterson, Lester Debraga, Larry Miller and Don Travis.

Allstate Insurance Co. also is paying $50,000 on behalf of an additional director, David Stix Jr.

Roger Strassberg, a lawyer for TCID, said he didn't believe the individual members should be faulted for anything that occurred. He said they played no role in actually setting the water flows.

"All the board members did was attend board meetings, approve budgets and review reports," he said.