Army Corps not liable for Katrina damage: court

Thousands of houses in New Orleans, Louisiana with the downtown skyline in the background remain under water one week after Hurricane Katrina went through Louisiana, Mississippi, and Alabama September 5, 2005.

(Reuters) - A U.S. appeals court has reversed itself and found that the Army Corps of Engineers cannot be held liable in property owners' lawsuits over flood damage during Hurricane Katrina.

More than 400 property owners had filed lawsuits after the August 2005 hurricane, many targeting the Corps of Engineers. The plaintiffs had said the Corps of Engineers had delayed armoring the Mississippi River-Gulf Outlet shipping channel against flood damage due to incorrect scientific decisions rather than public policy considerations.

In an unusual move, a three-judge panel of the 5th U.S. Circuit Court of Appeals in New Orleans on Monday withdrew its earlier ruling in March that had been in the plaintiffs' favor. Monday's ruling came after the federal government sought review of the panel's earlier decision by the full appeals court.

Judge Jerry Smith, writing for the court, said the Corps of Engineers was immune from being held liable for property damage under the "discretionary function exception" to the Federal Tort Claims Act, which governs litigation against the U.S. government.

The exception bars lawsuits against the government for conduct arising from statutes and regulations that do not require an agency's action but involve its discretion.

The 5th Circuit decision reverses a 2009 ruling by U.S. District Judge Stanwood Duval Jr. in New Orleans, who found that the federal government did not have immunity from lawsuits arising out of Katrina's flood damage in 2005.

New Orleans is still struggling to recover completely from the devastation of Katrina, which swept across the city on August 29, 2005, killing more than 1,800 people and causing billions of dollars of damage along the coast.

Joseph Bruno, a lawyer for the plaintiffs, said in an email that his clients were "devastated."

"The fact that the judges reversed themselves deserves an explanation," he said. "The decision is a slap in the face of the people devastated by the Corps' gross negligence and an endorsement to the Corps to continue to put considerations of costs ahead of safety."

Major Jenny Willis, a spokeswoman for the Corps of Engineers, said it was "analyzing the decision in anticipation that litigation will continue."

The case is In re: Katrina Canal Breaches Litigation, 5th U.S. Circuit Court of Appeals, 10-30249

(Reporting by Nate Raymond in New York; Editing by Claudia Parsons and Lisa Von Ahn)