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United States v. Board of Hamilton County Commissioners

United States District Court, S.D. Ohio, Western Division

May 12, 2017

UNITED STATES OF AMERICA, et al., Plaintiffs,

          Barrett, J.



         This matter is before the Court on the Request for Review of the denial of a Sewer Backup ("SBU") claim by Herbie and Angela Schell (Doc. 850) and the response of the Metropolitan Sewer District of Greater Cincinnati ("MSD") (Doc. 892). On May 9, 2017, the Court held a hearing on Mr. and Mrs. Schell's request for review of the denial of their SBU claim.

         Mr. and Mrs. Schell's request for review is filed under the Sewer Backup[1] program (formerly known as the Water-in-Basement [WIB] Claims Process Plan) (Doc. 131, Consent Decree, Exhibit 8). The Plan states in relevant part:

Subject to the requirements of this Plan, occupants who incur damages as a result of the backup of wastewater into buildings due to inadequate capacity in MSD's Sewer System (both the combined and the sanitary portions) can recover those damages. This plan also provides a means for occupants to recover damages arising from backups that are the result of MSD's negligent maintenance, destruction, operation or upkeep of the Sewer System. The Claims Process is not intended to address water in buildings caused by overland flooding not emanating from MSD's Sewer Systems or caused by blockages in occupants' own lateral sewer lines.

(Id. at 1). In determining the cause of SBU, MSD must exercise its good faith reasonable engineering judgment and consider the following non-exclusive factors: amount of precipitation, property SBU history, condition of the sewer system in the neighborhood, results of a visual inspection of the neighborhood to look for signs of overland flooding, neighborhood SBU history, capacity of nearby public sewer lines, and topography. (Doc. 131, Consent Decree, Ex. 8 at 2). Damages arising from basement backups for which MSD is responsible are limited to documented real and personal property. Id., Homeowners who are dissatisfied with MSD's disposition of a claim under the SBU program may request review of the decision by the Magistrate Judge, whose decision is binding and not subject to any further judicial review. (Docs. 154, 190).

         I. Background

         Mr. and Mrs. Schell occupy the building located at 515 Delmar Avenue, Cincinnati, Ohio, which is owned by Mr. Schell's company, DGS Development Ltd., and used by the Schells as their residence. On August 28, 2016, a "100-year" rain event caused extensive overland flooding and backup to MSD's sewer system. The Schells sustained damage to their personal and real property, both inside and outside their dwelling. Mr. Schell also lost vacation time to address the cleanup of the property. The Schells made a claim to MSD for the damages they sustained as a result of the August 2016 rain event. MSD's adjuster evaluated the Schells' claim submittal and, in compliance with Ohio Rev. Code § 2744.05(B)(1), deducted the $10, 000.00 they received from their insurance carrier from the calculated total damages. MSD's adjuster valuated the real and personal property loss of the building and its contents at $24, 894.97. (Doc. 892-3 at 5-6). MSD offered the Schells this amount in settlement of their claim; however, MSD disallowed any compensation for damage to items outside of the residence, including landscaping, yard fencing, a driveway retaining wall, and other personal items, as well as the Schells' claim for lost vacation time and associated expenses. On January 19, 2017, Mrs. Schell gave MSD a signed agreement releasing the City of Cincinnati and the Hamilton County Board of County Commissioners from "any and all claims, demands, actions, and causes of action whatsoever or in any manner arising from a 'Sewer Backup' incident on or about August 28, 2016 at 515 Delmar Avenue, Cincinnati, OH 45217." (Doc. 892-4 at 4). The settlement check for $24, 894.97 was cashed by the Schells on January 20, 2017. (Id. at 7). On March 6, 2017, Mr. and Mrs. Schell filed a request for review in this Court of the denial of their claim relating to their outside property and non-property expenses. (Doc. 850).

         At the hearing, Mr. and Mrs. Schell stated that the damage to their yard and basement property was caused by an MSD sewer collapse in the parking lot of a local high school, which resulted in the backup of water on a neighboring street and flooding of their subdivision. Mr. and Mrs. Schell stated they were told by MSD representatives that they would be "fully reimbursed" for their loss, only to find out later that much of their property was valued at 50% of its worth. Mr. and Mrs. Schell further alleged they were told by MSD representatives that they should file an appeal of their claim for outside property after the claim associated with the basement and its contents was resolved.

         II. Resolution

         There is no dispute that one of the causes of damage to the Schells' property was an MSD sewer backup. MSD appropriately reimbursed the Schells for the depreciated value of their personal belongings and not their replacement value or original cost. The Court notes that under the Consent Decree that governs the Court's review of SBU appeals, damages for SBU claims are determined based on the market value of personal property as of the date of loss (the depreciated value) and not on the original purchase price or cost of replacement. Therefore, MSD's valuation of personal property (e.g., furniture, appliances, clothing, etc.) based on the depreciated value was correct. Additionally, damages through the claims process under the Consent Decree are limited to real and personal property loss and cannot be paid for other intangibles such as forfeited vacation time or expenses. (Doc. 131, Consent Decree, Exhibit 8 at 2). Thus, the only issue in this appeal is MSD's denial of the Schells' claim for outside property damage.

         Whether the Schells may be compensated for property loss outside of their dwelling is governed by the Consent Decree. "A consent decree is essentially a settlement agreement subject to continued judicial policing, " the terms of which a court is obligated to enforce as circumstances dictate. Shy v. Navistar Intern. Corp., 701 F.3d 523, 532 (6th Cir. 2012) (quoting Williams v. Vukovich, 720 F.2d 909, 920 (6th Cir. 1983)). In interpreting the terms of a consent decree, the Sixth Circuit has clarified:

"[C]onsent decrees bear some of the earmarks of judgments entered after litigation" and . . . "[a]t the same time, because their terms are arrived at through mutual agreement of the parties, consent decrees also closely resemble contracts." Local No. 93, Int'l Ass'n of Firefighters v. City of Cleveland, 478 U.S. 501, 519 (1986). It is this resemblance to contracts that requires that the scope of a consent decree "be discerned within its four corners, and not by reference to what might satisfy the purposes of one ...

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