The Illinois Supreme Court Opens Door to Claims Against Government Entities for Flood Losses 

Subrogation & Recovery Alert

November 21, 2016

Floods lead to costly claims for insurance companies. Unfortunately, subrogated insurers are frequently precluded from pursuing governmental entities that cause flooding because they enjoy immunity from tort claims. So, for example, if a local water department is responsible for maintaining a municipal water reservoir, and that reservoir floods due to the acts or omissions of the water department, many states provide immunity from tort claims arising from the flood damage.

Illinois has long been considered a jurisdiction that provides for strong statutory protections for governmental agencies. The Illinois Local Governmental and Governmental Employees Tort Immunity Act shields state organizations from negligence claims arising from the execution of public duties. The Tort Immunity Act provides for an abbreviated statute of limitations, limits certain damages, and generally requires a showing that alleged misconduct by state officials or organizations rises to the level of “willful and wanton.”

A recent Supreme Court of Illinois decision creates a potential path to subrogation recoveries on constitutional grounds, as opposed to tort liability, when Illinois governmental entities may be at fault for flooding. In Hampton v Metro Reclamation District, 2016 Il 119861, property owners claimed that the Water Reclamation District of Greater Chicago, a county body tasked with storm water management, caused flooding at the plaintiffs’ properties during heavy rainfall. The plaintiffs argued that the government induced flooding was an unconstitutional “taking” of their property. The claim was based on a provision in the State of Illinois Constitution commonly referred to as the “Takings Clause” that makes it illegal for government entities to take private property without paying a fair price. Such claims are typically referred to as “inverse condemnation” claims because the property owner rather than a governmental entity is the plaintiff. The U.S. Constitution’s Fifth Amendment and all state constitutions, except for Kansas and North Carolina, have similar takings provisions.

Some courts have held that a temporary deprivation of a property owner’s rights can never rise to the level of an unconstitutional taking. Other courts have held the opposite. Most notably, the U.S Supreme Court addressed this issue in Arkansas Game & Fish Commission v United States, 133 S.Ct. 511 (2012), holding that temporary but persistent (emphasis added) flooding can rise to the level of a taking. The Supreme Court conclusively and emphatically rejected a lower court’s finding that temporary flood claims can never qualify as an unconstitutional taking.

In Hampton, the Illinois Supreme Court analyzed and evaluated the contours of the Illinois Takings Clause, and, comparing it to its federal counterpart, held that what constitutes a taking under the U.S. Constitution, and the Illinois Constitution is similar; and, therefore, U.S. Supreme Court jurisprudence is relevant to the determination of whether temporary flooding caused by government actions constitutes a taking in Illinois.

The Hampton Court ultimately concluded that the Illinois Constitution actually provides greater protection for property owners than the U.S. Constitution because it applies explicitly to property that is damaged, not just property that is taken. This distinction does not figure into the Hampton analysis, but is a significant recognition by the court, and may help to pave the way to compensation by government entities responsible for property damage based on the Illinois Takings Clause. The court cited Arkansas Game & Fish to support its holding that, in Illinois, temporary flooding that is induced by the government can form the basis of a takings claim when the flooding directly and immediately interferes with the owner’s use and enjoyment of the land.

Whether based on a state constitution, or the U.S. Constitution, takings claims, in the context of flood losses, should be seriously considered as an alternative to tort-based causes of action against government entities. Hampton is one example of a state court’s approach to constitutional takings litigation. Arkansas Game & Fish indicates how the federal courts might approach the same claims under the Fifth Amendment. Both decisions stand for the proposition that temporary flooding may rise to the level of a taking.


Authors

Peter G. Rossi

Senior Counsel

prossi@cozen.com

(215) 665-2783

Related Practices


For additional information on this developing area of the law, please feel free to contact either of the authors of this Subro Alert, Peter G. Rossi at prossi@cozen.com, or Matthew R. Daniels at mdaniels@cozen.com. Peter Rossi has been practicing law since 1980 with an emphasis on subrogation claims and products liability, he is based in Cozen O’Connor’s Philadelphia Office. Matthew Daniels is a litigator that focuses his practice exclusively on subrogation and recovery efforts, he is based in Cozen O’Connor’s Chicago office.