Texas Court of Appeals Victory: LLF Verdict Against Tenaris Upheld in Rare Consolidated Flood Damage Case Involving Over 30 Homes
A few weeks ago, the Houston Court of Appeals affirmed a jury’s verdict from August 2021 in a two-phase trial against defendant Tenaris before the Honorable Donna Roth, where the trial stopped after a verdict on Phase 1 after the parties reached an agreement on $2.8 million as damages in a rare mediation presided over by another sitting state court judge. This was a very unique case that involved a consolidated trial of 30 property owners in one lawsuit. Full opinion here: Tenaris Bay City Inc. v. Ricky Ellisor et al, Cause No. 14-22-00013-CV
The key issue in dispute was whether Tenaris, the owner and operator of a 1.2 million square foot seamless-pipe manufacturing plant (the size of downtown Houston), negligently caused the neighboring owners’ homes in Van Vleck, Texas to flood for the first time during Harvey. Specifically, the jury determined that the water-drainage system constructed by Tenaris failed to meet the specifications in their retained engineer’s design plans. We elected to present each plaintiff’s damages akin to a water damage claim made through a private insurance policy, where our experts opined that the IICRC S500 standards required a much larger scope of repairs to provide complete indemnification given the homes’ exposure to Category 3 water.
The crux of Tenaris’ argument on appeal was that the homeowners’ lead engineering expert was required to link the drainage system as the primary cause of damage to each of the 30 homes, which the engineer conceded he had not done due to the degree of difficulty. In its supplemental briefing before the Court of Appeals, “Tenaris argues that this was a case that required expert testimony on causation because it involved complex issues beyond the jurors’ common understanding. Thus, Tenaris asserts the evidence is legally insufficient because appellees’ expert did not specifically testify regarding substantial causation.”
This gave the court of appeals an opportunity to weigh in on whether experts are required to demonstrate specific causation in cases stemming from flooding caused by another property owner:
“In analyzing this argument, we find it helpful to imagine cases involving experts on a spectrum. On one end of the spectrum are cases in which an expert is always required. See, e.g., Tex. Civ. Prac. & Rem. Code Ann. § 74.351 (requiring expert report in health-care-liability claims). On the other end of the spectrum would be cases in which experts are almost never required; for example, a party would not need an expert to testify regarding causation in a simple slip-and-fall tort case. In the middle of the spectrum, are cases that might or might not require an expert, depending on the complexity of the case. Although not binding, we note that our sister court has concluded that flooding causation tends to fall in the middle of the spectrum: ‘Regardless of whether an expert is required to testify specifically about the natural flow of surface water based on measurements of elevation, it is not always necessary to have expert testimony to establish flooding and its causes.’”
Ultimately, the appellate court found that “Just because expert testimony might be helpful or available does not mean that it is necessary. While it might be beyond the common understanding of jurors to comprehend the natural flow of water or the engineering behind the storm-drainage system, it is within their understanding to reason that if Tenaris’s facility overflowed, it would cause flooding on nearby properties. Stated differently, the combined lay testimony and evidence in this case was sufficient to establish a sequence of events which provides a strong, logically traceable connection between Tenaris’s negligence and the flooding of appellees’ properties.”
Jurors heard evidence that, prior to the construction of the Tenaris facility, our clients’ homes never flooded during the course of more than 100 tropical storms and hurricanes that passed through the region in the last century. Tenaris contended that Hurricane Harvey amounted to an “act of God,” such that the flooding was unforeseeable—despite the fact that the Tenaris facility did not flood during the storm. This argument, too, was squarely rejected by the Court of Appeals:
“Regarding foreseeability, Tenaris argues that Hurricane Harvey was an act of God, and thus, inherently unforeseeable. However, even though Hurricane Harvey itself was not foreseeable, it is perfectly foreseeable that a negligently built storm-drainage system will cause flooding issues in nearby properties. This is especially true when flooding was a known issue in the area of the Tenaris facility, even before the facility was constructed. Thus, we conclude there was legally-sufficient evidence of foreseeability.”
As an aside, this was also an infrequent instance of any Texas court substantively addressing our clients’ separate cause of action under the Texas Water Code, where the jury additionally found Tenaris had diverted the natural flow of surface waters into our clients’ homes. The opinion clarified what type of surface water can be categorized as floodwater, such that it constitutes an actionable statutory violation:
“While there was some evidence presented at trial that the water that flooded appellees’ properties may have been at least partially categorized as floodwater by passing through a channel after being diverted by Tenaris but before flooding their properties, there was no evidence showing that the water was anything but surface water at the time Tenaris diverted it.”
Tenaris will seek to overturn this result at the Texas Supreme Court over the next 12-16 months. However, the appellate decision was well-reasoned and relied on decades-old precedent from a variety of other Texas appellate courts. Hopefully, Tenaris’ Petition for Review will be rejected and the Judgment will be left intact for the benefit of Texas homeowners and businesses down the road.
Because our firm focuses exclusively on property disputes with insurance carriers, a special thanks to the rest of the trial team which included Nelson Heggen (who asked me to get involved back in 2018 when we only had 4 families with a concerning story involving Tenaris), Derek Potts, Ryan Fowler and Michael Bins. I went up against Nelson as an insurance defense lawyer at Bracewell roughly 18 years ago, and we have stayed in touch ever since. Nelson’s oral argument on appeal was immensely helpful to clarify some of the issues before our panel. Without their collective efforts, this significant win for property owners in Texas would not have been possible.