Southern Club Enterprises, Inc. et al v. United States of America
MEMORANDUM OPINION AND ORDER. Signed by Honorable Robert T. Dawson on August 21, 2012. (jn)
IN THE UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF ARKANSAS
HOT SPRINGS DIVISION
SOUTHERN CLUB ENTERPRISES,
INC. and 250 CENTRAL AVENUE, LLC
Case No. 6:11-6013
UNITED STATES OF AMERICA
MEMORANDUM OPINION AND ORDER
This matter is before the Court for decision following a
two-day trial to the Court beginning on May 22, 2012, in Hot
Also before the court are the parties' post-trial
(Docs. 23, 25).
Pursuant to Rule 52 of the Federal
assessment of the credibility of the trial witnesses.
Findings of Fact
During the trial, the following facts were established by a
preponderance of the evidence:
Plaintiffs are domestic entities of the state of Arkansas
which own and operate the Josephine Tussaud Wax Museum located
on Central Avenue in Hot Springs, Arkansas.
Page 1 of 35
The Wax Museum is
adjacent to West Mountain, which is in the Hot Springs National
West Mountain is steep and rugged, and has an underground
intakes, which are also known as clean-out boxes or inverts.
Defendant, acting through the United States Department of the
Interior and the National Park Service, owns and maintains the
surface water collection system, which is designed to transport
water down the mountain and into the drainage system of the City
of Hot Springs.
The culvert is designed to send water into Hot Springs
Creek at or near Central Avenue.
This particular culvert has
underground culvert for maintenance.
At some point prior to May 5, 2009, soil and natural debris
The accumulation fully obstructed the culvert,
completely blocking the exit of water at the termination of the
culvert near Central Avenue.
On May 5 and 6, 2009, the Hot Springs area experienced
rainfall ranging from .07 inches to 3.84 inches during a 24-hour
Page 2 of 35
During the May 5-6 rain event, water which entered the
system backed up, lifting the cover off the next uphill manhole.
The water then exited the system, but uphill of the designed
The manhole where the water exited the system was
immediately uphill from the Wax Museum.
All the water that
entered the culvert exited the system through the manhole uphill
from the Wax Museum, instead of the designed exit, and poured
downhill directly into the Wax Museum.
Water ran into the Wax Museum for approximately nine hours,
causing damage to real and personal property.
Upon being advised of the flooding occurring at the Wax
Museum, on the early morning of May 6, 2009, Park employees went
discovered that one of the clean-out boxes in the storm drain
system was clogged due to debris, and water was exiting the
system from the top of the clean-out box.
National Park Service personnel called City of Hot Springs
personnel to use their equipment to “flush” the system.
the system was flushed the clogged material was pushed through
the system, and the water began properly flowing through the
drainage system and no longer exiting out the top of the cleanout box.
Defendant owned and occupied land immediately adjacent to
Page 3 of 35
Plaintiffs submitted an administrative claim in the amount
Federal Tort Claims Act
The United States “can be sued only to the extent that it
has waived its immunity.” United States v. Orleans, 425 U.S.
807, 814 (1976). The Federal Tort Claims Act (“FTCA”) waives the
federal government's immunity from suit for a discrete class of
lawsuits. 28 U.S.C. §§ 2671-80 (2005). This waiver, however, is
“[a]ny claim based upon an act or omission of an employee of the
Government ... based upon ... a discretionary function or duty.”
28 U.S.C. § 2680(a). The Supreme Court has established a twopart
exception. See Berkovitz v. United States, 486 U.S. 531, 536-37
First, courts inquire as to whether the challenged action
was discretionary, as opposed to being governed by mandatory
statute, policy, or regulation. Whisnant v. United States, 400
F.3d 1177, 1180-81 (9th Cir. 2005) (summarizing Berkovitz test).
discretionary, it then determines whether the action involved “a
decision susceptible to social, economic, or political policy
analysis.” Id. at 1181; see also O'Toole v. United States, 295
Page 4 of 35
F.3d 1029, 1033-34 (9th Cir. 2002). If the challenged action was
both discretionary and policy driven, the discretionary function
exception bars FTCA claims.
The parties disagree as to the existence of a mandatory
At trial, Plaintiffs submitted into evidence four
documents entitled “Job Plan Operation Detail”.
description, duration, labor, materials and tools necessary for
that particular job.
Job Plan 42598--Internal Cleaning and Monitoring Culverts
Monthly--clear debris from entrance and exit of culverts;
internal cleaning with flushing machine, if needed; inside
inspection with use of camera, If needed; note damages.
(Plaintiffs’ Ex. 3).
Job Plan 42603--Inspect Road for Debris Weekly--clear
debris (fallen rocks, trees or limbs) from roadway; clear
debris from gutters; visually inspect drop inlets for
debris; note damages. (Plaintiffs’ Ex. 4).
Job Plan 19306--Internal Cleaning and Monitoring Culverts-clear debris from entrance and exit of culverts; internal
cleaning with flushing machine; inside inspection with use
of camera; note damages. (Plaintiffs’ Ex. 5).
Job Plan 1195--CA Roads Inspection1--storm sewer piping
(this includes installation of piping for collection of
construction, maintenance and installation of manholes for
storm water collection systems); culverts (this includes
construction, maintenance and installation of culverts for
storm water systems); headwalls and catch basins (this
The CA (Condition Assessment) is an annual inspection. The job plan also
includes provisions for road inspection and maintenance that are not relevant
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installation/maintenance of catch basins for storm water
systems). (Plaintiffs’ Ex. 6).
The first two Job Plans appear to dictate that the Park
maintenance staff is required to inspect and clear debris on a
monthly basis. Hot Springs National Park Superintendent Mardi
Arce testified that she is responsible for maintaining the day
to day operations of the park and directly supervises the Park’s
five division chiefs.
(Trial Transcript P. 287, Line 10-15).
On May 6, 2009, Ms. Arce was in charge of the Park’s response to
the flooding event at the Wax Museum.
Ms. Arce testified that
she produced the above Job Plans in response to the Plaintiffs’
request for the production of “any and all writings of any kind
which specifically or in any manner set out any maintenance
practice and procedures of the storm drain system and inverts
which are the subject of this litigation.”
(Trial Transcript P.
Ms. Arce testified that these policies were not in
effect on May 6, 2009.
(Trial Transcript P. 301, Line 23).
The evidence reflects that at the time of the flooding
maintenance of the Park’s storm water system, other than as part
Park’s course of conduct is not mandated by statute, regulation
or its own policy, Defendant would have to demonstrate that the
government actions at issue are of the nature and quality that
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Congress intended to shield from tort liability.
Plaintiffs’ lawsuit involves a mundane question of routine ditch
The Eighth Circuit has consistently held that the
planning” level are exempt.
E. Ritter & Company v.
of the Army, Corps of Engineers, 874 F.2d 1236, 1241 (8th Cir.
1989)(citing In re Estate of Gleason v. United States, 857 F.2d
designed and constructed; proper maintenance of the ditch would
have prevented erosion). This is not a decision grounded in
social, economic or political policies, and as such it is not
the sort of public policy issue that the discretionary function
exception is designed to protect. See O’Toole v. United States
of America, 195 F.3d 1029 (9th Cir. 2002)(reversing district
Indian Affair’s decision to allow an irrigation system to fall
Because the Park’s storm water management system maintenance was
discretionary but not policy driven, the discretionary function
exception does not bar Plaintiffs’ FTCA claims.
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government is the same as that for a private person, the prudent
Ritter at 1241.
In Arkansas, the failure to
do what a person of ordinary prudence would do under the same or
similar circumstances constitutes negligence.
Id. at 1242.
The essential elements of a cause of action for negligence
breached, and that the Defendant's negligence was a proximate
cause of the Plaintiffs’ damages. Scott v. Cent. Ark. Nursing
Ctrs., Inc., 101 Ark.App. 424, 434 (2008).
Proximate cause is
generally a question of fact, unless the evidence is such that
reasonable minds cannot differ. Proximate cause is defined, for
negligence purposes, as that which in a natural and continuous
sequence, unbroken by any efficient intervening cause, produces
occurred. Wal–Mart Stores, Inc. v. Kilgore, 85 Ark. App. 231,
Pursuant to Arkansas law, it is the duty of a land owner to
protect another nearby land owner from damages resulting from a
structure or artificial condition maintained on their land if
the land owner knew or should have known of an unreasonable
danger created by that structure and the land owner knew or
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should have known that the danger existed without the consent of
those affected by it and the land owner fails, after having a
§ 366; Dye v. Burdick, 262 Ark. 124 (1977).
The National Park
Service has a duty to operate and maintain the drainage system
into which they intentionally divert storm water and for which
The question of the breach of that duty is the manner in
which the Park maintained its storm water drainage system on
West Mountain, which was the subject of varied testimony at
Beginning with the testimony of National Park Service
Engineering Equipment Operator Walter Abbott, the answers were
difficult to follow, with the matter becoming less clear as the
trial went on.
Mr. Abbott testified that as an employee of the
Roads and Trails department, he was the person responsible for
maintenance of the gutter and culvert system.
P. 234, Lines 9-22).
On direct examination, after explaining how the gutter and
culvert system on West Mountain works, Mr. Abbott was taken
through the Job Plans, identified as Plaintiffs’ Exhibits 3 and
Plaintiffs argue that they are entitled to an inference of negligence by res
ipsa loquitur. The Court does not address that claim here.
Page 9 of 35
Mr. Abbott testified that on a weekly basis, his department
clears debris from the road and gutters, visually inspects drop
inlets for debris and notes any damage to the system.
Transcript P. 240, Lines 8-19).
Mr. Abbott earlier testified in
his deposition that he inspected the cleanout boxes annually,
producing pages from his calendar showing he had performed an
inspection on January 7 and 8, 2009.
Lines 12-17; Plaintiffs’ Ex. 13).
(Trial Transcript P. 244,
At trial, Abbot testified
that the January 7 and 8 inspection was in performance of the
annual condition assessment, but that monthly visual inspections
of the cleanout boxes also occur.
(Trial Transcript P. 243,
Calendar pages produced by Mr. Abbott reflect that he had
inspected the boxes only once in 2009 prior to the overflow, but
his testimony in court was that he performed the inspections
assessment, a total of 13 times per year.
Mr. Abbot said the
inspection 13 times per year was the way he currently maintains
On Re-Cross Examination, Mr. Abbott testified that
at the time of the overflow in 2009, it was his department’s
practice to check the cleanout boxes and drop inlets three to
(Trial Transcript P. 274, Lines 5-12).
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that the weekly and monthly inspection plans (Plaintiffs’ Ex. 36) that the Park produced in discovery were not established
until (and in reaction to) the overflow into the Wax Museum in
Regardless of whether in 2009 Mr. Abbott inspected the
system annually, monthly or even daily, it is obvious that he
could not have viewed more than 10% of the culvert at any given
“We open up the cleanout boxes and then take a flashlight
and look up and down each culvert, see if there’s anything and
obstruction inside the culverts.”
(Trial Transcript P. 244,
Mr. Abbott testified that the distance between
the two cleanout boxes at issue on West Mountain was 120 feet,
but that he could only see some 20 feet in either direction with
(Trial Transcript P. 245, Lines 11-14).
culvert system had only been flushed one time, in 1998.
Transcript P. 247, Lines 5-8).
Contrary to reports at the time
of the 2009 overflow, Mr. Abbott testified that the National
Park Service had never used video camera equipment to view and
record the inside of the system.
(Trial Transcript P. 249,
Although there was a plan to video the culverts
equipment, the operator, according to Mr. Abbott, believed that
this particular culvert was too steep to utilize this procedure.
Page 11 of 35
(Trial Transcript P. 257-258).
The National Park Service owned
a flushing machine, but it was stated to be not as powerful as
the one owned by the City of Hot Springs, which was the one used
to flush out the debris that caused the 2009 overflow.
Transcript P.249, Lines 7-8).
Mr. Abbott testified that when
he had been trained to inspect the culverts, he was taught to
keep them cleaned out.
(Trial Transcript P. 259, Lines 21-23).
Mr. Abbott testified that on the morning of May 6, 2009,
when he arrived at the Wax Museum he saw a “small waterfall”
coming down the side of the mountain.
culvert was obstructed.
(Trial Transcript P. 262,
(Trial Transcript P. 250, Lines 20-25).
Although Mr. Abbott’s testimony was at times confusing, it is
clear that the National Park Service did not have in place at
the time of the overflow adequate tools with which to maintain
the storm water system and prevent incidents such as the one
Raphelt, Ph.D in his report and trial testimony3.
had been a hydraulic engineer for 40 years, and his firm, Pyburn
& Odom, Inc., was commissioned to perform an evaluation of the
hydrologic and hydraulic impacts of the May 5-6, 2009, rainfall
Dr. Raphelt was not available at trial, and his testimony was taken in the
form of a videotaped deposition on June 26, 2012, a copy of which was
provided to the Court.
Page 12 of 35
event on the flooding of the Wax Museum.
(Plaintiffs’ Ex. 25).
In his written report he concluded that there was an
extremely intense rainfall event [on May 5-6] that had
a frequency of occurrence of between once in 50 and
100 years, or an extremely rare event.... Most modern
storm drainage systems would not have been capable of
handling such a rare event. Hydraulic and hydrologic
computations of the storm drain system indicated that
the existing storm water drainage system has the
capacity to convey the flows experienced on May 5 and
6 2011 [sic] to City of Hot Springs storm water
(Plaintiffs’ Ex. 25, Pgs 21-22).
Dr. Raphelt testified that the
adequate minimum flow velocities to move water and that it was
Lines 11-13; P. 32, Line 6).
Dr. Raphelt and other members of
survey data of the storm drain system and concluded that the
system was adequately designed to handle all the flows that
would enter into the system back in 2009.
P. 11, Lines 9-22; P. 12, Lines 12-13).
Dr. Raphelt testified
that the way the system was set up on May 5-6 was adequate to
carry the flow that entered in it from Manhole 4.
Deposition P. 43, Lines 15-24).
“The conclusions we drew was
if the system hadn’t stopped up, that it was--the system should
have worked okay.
It was adequately designed, the... plug did
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location of... where some water were discharged.”
Deposition P. 12, Lines 1-6).
handle...this was a rainfall that was about...what you get once
washing.... And it just does not appear that the system could
(Raphelt’s Deposition Pgs. 48-49).
also testified that he had no experience in any sort of culvert
system or municipal surface water draining system.
Deposition P. 38, Lines 1-4).
Dr. Raphelt was asked to read
from page 6 of his report, in which he stated:
The total rainfall of the May 5-6 2009 storm in Hot
Springs would not be considered a major event using
Technical Paper 40, Rainfall Frequency Atlas of the
United States for Durations from 30 Minutes to 24
Hours and Return Periods from 1 to 100 Years (1961).
The total event would be considered a 2 year frequency
12 hour Rainfall event.
The total precipitation for
this event is often experienced in the Hot Springs
area, however this event did have the potential to
cause flooding because of the very intense 5 and 15
minutes rainfall events that occurred between 12:30
a.m. and 1:00 a.m. on the morning of May 6, 2009.
(Plaintiffs’ Ex. 25, P. 6).
The amount of rain that fell that morning continues to be
the subject of debate.
While Dr. Raphelt examined data from
seven rain gauges, he admitted that none of the gauges showed
Page 14 of 35
culvert, which would have impacted the Wax Museum.
relied on five of the seven gauges to determine the intensity of
the rainfall; specifically, he did not consider the two gauges
closest to the Wax Museum and based his conclusion on the gauge
gauges. (Raphelt’s Deposition Pgs 68-69).
Dr. Raphelt admitted
that even with a reduced amount of rainfall, the flow entering
would have been more than the culvert could handle.”
Deposition P. 73, Lines 5-9).
Regardless of the conflicting
dispute that the cause of the overflow was the clogged culvert.
“Nothing in my study indicated that the clog was there or wasn’t
(Raphelt’s Deposition P. 39, Lines 15-18).
damaged as a result of its clogged drainage system.
that the culvert was clogged:
Is there any question in your mind but that the
manhole that we are looking at now was clogged on the date of
Page 15 of 35
Well, the---I have no doubt in my mind that the
culvert that runs in between this manhole and the next manhole
was clogged somewhere.
(Trial Transcript P. 311, Lines 8-13).
But did your investigation reveal that there was
Yes....Yes, I -- there was water that was created
from that backing up.”
(Trial Transcript P. 312, Lines 1-10).
U.S. Attorney: But it was obvious to you, Ms. Arce...that the
water had flowed out of this and down the hill...over to the wax
(Trial Transcript P. 313, Lines 8-14).
Conclusions of Law
The Court has jurisdiction pursuant to 28 U.S.C. § 1346(b),
and venue is proper pursuant to 28 U.S.C. § 1402(b).
commenced this action within the time and in the manner set
forth under the terms of the Federal Tort Claims Act, 28 U.S.C.
§§ 1346(b), 1402(b), 2401(b) and 28 C.F.R. 14.9(a).
determination of negligence and the amount of damages.
Pursuant to Arkansas law, it is the duty of a land owner to
protect an adjoining land owner from damages resulting from a
structure or artificial condition maintained on their land if
Page 16 of 35
the land owner knew or should have known that the danger existed
without the consent of those affected by it and the land owner
fails, after having a reasonable opportunity, to eliminate the
danger or otherwise protect against it.
A violation of the duty
AMI 1110; Restatement Second of Torts § 366;
Aluminum Company of America v. Guthrie, 296 Ark. 269 (1988); Try
B Advertising v. Thomas, 278 Ark. 58 (1982); Dye v. Burdick, 262
Ark. 124 (1977).
Defendant failed to use ordinary care in the inspection and
maintenance of its underground surface water drainage system.
Plaintiffs proved by a preponderance of the evidence that
maintaining its underground surface water drainage system, and
that Defendant’s negligence was a proximate cause of Plaintiffs’
Plaintiffs’ damages are limited by the damages proven in
connection with their administrative claim.
For the reasons set
out below, Plaintiffs are entitled to recover $145,472.60.
On the morning of May 6, 2009, in addition to alerting the
company, “National Flood Insurance Program,” serviced locally by
First Arkansas Insurance of Hot Springs Inc.
Page 17 of 35
visited the site and determined it was “evident the damage was
(Plaintiffs’ Ex. 29, P. 1).
Adam Jones, informed Plaintiffs that because the flooding was
limited to their property it was not the result of a “General
Condition of Flooding,” and was not covered by the National
Upon learning this, Plaintiffs hired Mr. Jones to
consult as a private adjuster.
In addition, Plaintiffs engaged
B&F Engineering, Inc. to perform a storm water runoff damage
Tim Tieaski, P.E., visited the Wax Museum on May 6,
topographic survey to determine how much debris washed down the
embankment into the Wax Museum’s back yard.
estimated to be $625,419.845, and this was the amount Plaintiffs
used in making their administrative claim.
Mr. Roberts testified that Mr. Jones suggested he engage an engineer.
(Trial Transcript P. 65, Lns 4-6).
Although Defendant contends that it was not negligent in its maintenance of
the storm water system and is not liable for any damages to Plaintiffs,
Defendant also argues that Plaintiffs have failed to prove damages in the
Defendant proffers that at least $440,850.53 should be
deducted from Plaintiffs claim, for a maximum award of $184,569.31.
Page 18 of 35
Mr. Tieaskie’s report indicates that when the embankment
behind and above the Wax Museum collapsed due to the drainage
system overflow, the swiftly-moving water carried and eventually
deposited approximately 114 cubic yards6 of loose soil material,
shale and organics at the back of the Wax Museum. (Plaintiffs’
limbs down the hill.
(Trial Transcript P. 111, Lines 12-16).
undermined the structural integrity of the concrete slab at the
top of the embankment at the point of the overflow.
Transcript P. 111, Lines 16-20).
In Mr. Tieaskie’s opinion, the
accumulated debris must be removed and the embankment, including
the concrete slab, stabilized in order to prevent additional
future damage to the Wax Museum building and property.
Transcript P. 118, Lines 3-25).
To determine the costs of such remediation, three engineers
Mr. Tieaskie testified that the survey crew performed “shoot shots” from the
rooftop of a building adjacent to the Wax Museum. “We have an instrument man
that takes a rod with a prism on it that indicates a location and height and
it gets shot into an instrument. That data is duplicated throughout the area
of the debris from the base up to the top.
And then it is compiled in a
At that time we used a program called Eagle Point which compiles
those points and generates contours which each contour is--everybody is
probably familiar with but represents a foot in height change of elevation.
So through that data then we were able to generate the approximate location
of the base of the mountain before the debris and generate some cross
sections and do a volume calculation.” (Trial Transcript P. 116, Lns 5-19).
Page 19 of 35
together to develop an estimate.
(Trial Transcript P. 119,
Costs factored into B&F’s report included those
Transcript P. 120, Lines 6-11).
The first estimate was based on
constructing a temporary gravel road on National Park Service
land and accessing the material from above utilizing a crane
with a bucket.
The second option was to remove an existing
excavate the debris by hand, bringing the material through the
building to Central Avenue using wheelbarrows.
27, P. 4).
The estimated construction cost of excavation from
the upper side of West Mountain was $202,381.43 and the estimate
of excavation from Central Avenue was $200,419.537.
Ex. 27, P. 18).
included in his report were necessary and reasonable as of 2009,
but that the costs would have risen since that time.
Transcript P. 122, Lines 16-18).
Despite the thoroughness of B&F’s calculations and report,
debris was deposited in the back of the Wax Museum as a result
Mr. Tieaski testified that the lower estimate for excavating from Central
Avenue was used in Mr. Jones’ adjustment, but according to his report, Mr.
Jones used the higher of the two estimates. (Trial Transcript P. 122, Lns 177; but see Plaintiffs’ Ex. 29, P. 36). Mr. Jones also based his commission
on the higher of the two estimates, see infra.
Page 20 of 35
of the over-flowing drainage pipe.
No evidence was produced
showing the condition of the property before May 6, 2009.
Abbott testified that the vegetation he witnessed behind the
building was growing in the ground, not lying on the ground as
if it had come to rest there recently.
268, Lines 4-8).
(Trial Transcript P.
The Wax Museum had flooded at least once
before, in 1990, when the area received 13.25 inches of rain in
less than 24 hours, causing floodwaters 2 to 4 feet to flow
through the historic downtown area of Hot Springs8.
In 1986, the
Wax Museum’s then-owner Al Green told the Governor’s Commission
suffered damage when heavy rains fell on the city9.
Without any evidence that all the debris behind the
overflow, or that the event caused all of the cliff erosion, it
would be inappropriate to award Plaintiffs the full measure of
Due to the history of the area, it is
contained debris from past flooding.
Defendant argues that the
USGS, “ Hydrologic Monitoring for the City of Hot Springs Early Flood
Warning Information System”,
http://ar.water.usgs.gov/PROJECTS/HotSpringsFlood.html, site visited July 25,
Roger Hedges, The Sentinel-Record, Hot Springs, Arkansas, “Panel Tries To
Turn Tide Against Downtown Flooding,” June 13, 1986.
Page 21 of 35
total amount claimed for soil remediation and engineer fees in
the amount of $218,571.94, should be deducted from any award of
(Doc. 25, P. 11).
Under Arkansas law, the measure of damages is the cost of
restoring property to its former condition.
238 Ark. 484 (1964).
Barnes v. Young,
The Court finds the total estimated cost
of remediation to be supported by the evidence, but that it
should be reduced by 50% to account only for damages that were
proximately caused by any negligence of Defendant, as opposed to
damage attributable to erosion over time or other conditions
such as historical flooding or cutting back of the mountain by
current or past property owners.
The Court awards Plaintiffs
$101,190.72 for remediation and believes this to be fair and
equitable under the circumstances.
Mr. Jones testified he used Simsol software, one of two
programs approved by the National Flood Insurance Program and
Transcript P. 183, Lines 16-18; P. 185, Lines 10-16).
determined there had in fact been flood damage, he entered the
program, which assigned value based on the Craftsman Publishing
claim data for any type of property loss based upon construction
Page 22 of 35
prices for a specific trade--according to zip code.
Transcript P. 183, Lines 6-11; P. 184, Lines 1-2).
the Simsol program, heavy flood loss clean-up was valued at $.98
Mildewcite floor treatment was valued at $.23 per square foot;
pressure blasting concrete floor was valued at $2.12 per square
(Plaintiff’s Ex. 29, P. 10).
While this method of
itemizing claims may be useful in the insurance world for its
uniformity and predictability, it bears little resemblance to
Further, it is the finder of fact’s obligation to assess damages
by fixing the amount of money which will reasonably and fairly
compensate Plaintiffs for the damages they sustained.
Measure of Damages--General Instruction).
replacement value of the building itself to be $1,146,376.00, or
$93.05 per square foot.
After applying 37% depreciation, the
actual cash value of the building is $722,216.88, or $58.62 per
square foot, according to Mr. Jones.
(Plaintiffs’ Ex. 29, P.
Page 23 of 35
replacing custom cabinetry, electrical outlets and the heating
and air conditioning system, all of which were alleged to have
been damaged by the flood.
Mr. Jones estimated the cost to
restore the building to pre-flood condition and remediate the
area behind the building and the cliff face to be $407,426.17.
He then added ten percent adjustment for contractor overhead and
ten percent for contractor profit, totaling $81,485.24. Next, he
added the cost of debris removal and haul-off to be $16,297.05,
depreciation10 of $26,222.94, resulting in actual cash value of
figure represents “heavy flood loss clean-up”, Mildewcide floor
treatment, air movers and dehydrators, pressure blasting floors,
wall plaster, painting walls, removing and replacing shelving,
doors, hardware for each room and flushing and sanitizing the
Mr. Jones testified that he applied an “educated estimate” to depreciate
the cost of restoring the building and its contents.
He did not apply any
depreciation to personal property which had not been used at the time of the
overflow (display and sale items in the gift shop).
(Trial Transcript P.
203, Lns 2-13).
Mr. Jones included an 8% commission for himself based on the gross loss,
which is the cost of repair before depreciation.
The National Flood
Insurance Program limits adjustors to the higher of 2.1% or $5,750 for claims
above $250,000.01 with dates of loss on or after September 1, 2008.
NFIP Adjuster Fee Schedule-2008 Revision,
http://www.fema.gov/library/viewRecord.do?id=3895, site visited August 7,
Page 24 of 35
replacement needed for each individual-purpose room12.
destruction of the unit.
The Wax Museum was closed for three to
(Trial Transcript P. 67, Lines 12-19).
The floors were damaged
and, although Mr. Roberts testified he had patched places over
time, they still need to be replaced.
(Trial Transcript P. 68,
The damaged walls were power washed and treated
(Trial Transcript P. 69, Lines 3-16).
The electricity had to be
rewired in many places due to water damage.
P. 70, Lines 12-17).
Mud had to be scooped from the basement
and there was up to 16 inches of water in much of the building.
(Trial Transcript P. 70, Lines 1-5). Mr. Roberts testified that
while he, his family and his employees performed some clean up
and restoration work themselves, nothing has been hired out to
professionals because the Wax Museum does not have enough money
to have all the necessary work done.
While he testified as to
what he made per hour as a pharmacist, he did not provide any
Mr. Jones provided separate estimates for: Back Storage/Staging area, Back
Hall, Obama Exhibit, Main Attraction 1st Floor, West Hall, Pirate Display,
Female Restroom, Male Restroom, Display Exit, Basement, Gift Shop, Office,
Break Room, Electrical/Air Closet, Ticket Office, Gift Storage, Front Shirt
Storage Room, Rear Shirt Storage Room and Exterior.
Page 25 of 35
evidence of how much time or money he spent making necessary
repairs or how much, if any, future repairs he intends to make.
The Wax Museum continues operating as a tourist attraction, and
Plaintiffs have not made a claim for loss of profits due to the
While Mr. Jones estimated the loss to the
building to be $188,854.23
(including $23,270.00 to repair an
escalator that allegedly worked before the flooding), the only
evidence produced as to the proximate value of the building and
materials prior to the overflow was provided by Mr. Jones13.
Jones estimated the actual cash value of the repairs to the
Under Arkansas law, the applicable measure of damages was the
reasonable expense of necessary repairs to the property. See AMI
3d 2213; Morton v. Park View Apartments, 315 Ark. 400 (1993).
The Court finds that many of Plaintiffs’ claims for compensatory
damages are unsupported by the evidence and should be reduced by
The Court finds that a reasonable value for damages
caused to the building is $20,340.27.
With respect to the contents of the Wax Museum, Mr. Jones
inventory, damaged attractions and business operation furniture
Mr. Jones testified that his commission is calculated based on his estimate
of what he determines the total damage claim to be.
(Trial Transcript P.
217, Lines 3-6).
Page 26 of 35
offsite during clean-up.
Mr. Jones estimated the replacement
cost of the contents to be $140,953.87. After adding his eight
percent commission ($11,276.31) and then applying depreciation
of $5,795.86, the actual cash value of the loss, including Mr.
Jones’ fee, was calculated to be $146,434.32.
constitutes 30 pages of his report, with an additional 23 pages
(Plaintiffs’ Ex. 29, Pgs 24-54, 90-113).
Jones testified that he spent three to four days inventorying
Plaintiffs’ personal property.
(Trial Transcript P. 195, Ex. 3-
4). He hand-counted every souvenir in the gift shop and storage
area, leaving out any item that did not appear to be affected by
(Trial Transcript P. 195, Lines 17-25).
as glassware and t-shirts, which could arguably be cleaned, were
understanding from Mr. Roberts that he did not intend to retain
these items for resale.
P. 219, Lines 1-14).
(Trial Transcript P. 218, Lines 23-25;
Mr. Jones testified, however, that because
Mr. Roberts did not request a salvage audit, he does not know
whether or how many of the items were disposed of.
Transcript P. 219, Lines 17-24).
Mr. Roberts testified that
many items counted by Mr. Jones sat in the Wax Museum for about
“Most of the stuff, the t-shirts, you know, we used
Page 27 of 35
them at the Duck Shop14 to mop up grease.”
340, Lines 3-6).
“The glassware was hauled to the dumpster at
All Seasons Lodge.
(Trial Transcript P.
Some of my employees I’m sure took some of
(Trial Transcript P. 340, Lines 10-12).
Mr. Roberts advised his
(Trial Transcript P. 340, Lines 14-21).
The employees carried
merchandise to two different dumpsters.
Mr. Roberts told them
to “just get rid of it,” but he “can’t say that they didn’t take
(Trial Transcript P. 341, Lines 11-16).
Mr. Roberts continued to testify to Mr. Jones’ breakdown of
equipment and inventory, noting that most of the damaged office
Much of the equipment is still in use, some of which
has been repaired15.
It was not replaced because Plaintiffs did
Plaintiffs rented two local hotel rooms for one month to store
property during the clean-up period, at a cost of $1016.00.
(Plaintiffs’ Ex. P. 25).
In the gift shop, Plaintiffs cleaned
the candle displays, which are currently in use.
Plaintiffs also own National Park Duck Tours, located at 418 Central Avenue
in Hot Springs, Arkansas.
currently in use; printer:
replaced with cheaper model;
desk: “not sure”; legal chair: on site; wooden chair: “not sure”; vertical
on site; drink cooler:
repaired and in use.
Page 28 of 35
jewelry displays from the Duck Shop to replace the water-damaged
ones at the Wax Museum.
The commercial ice cream freezer was
replaced, but the damaged one remained in storage.
cooler was repaired, as was the classic penny press machine.
Plaintiffs refurbished the love tester machine, and bought a new
Children’s Ride ($4874) was scrapped, and the 10-foot lighted
Christmas tree kept in storage was replaced, while the original
one remains onsite.
The commercial freezer remains in the back
of the Wax Museum; Mr. Roberts does not know if it still works
or not as he has not tried to sell ice cream from it.
vac cleaners were destroyed, but Mr. Roberts did not indicate
Mouse16 was soaked with mud and water.
Mr. Roberts testified he
had intended to use it in a future Disney exhibit.
you could clean it....I’m not sure where it’s at, though.
Transcript P. 353, Lines 18-20).
The focus of a Wax Museum is, of course, the wax figurines
(made partially of wax) that had been stored in the back of the
Wax Museum was found after the overflow to have fallen out of a
The Mickey Mouse figurine is one of two made for the opening of Disney
World, according to Mr. Robert’s wife’s aunt, who donated it to the Wax
Museum. (Trial Transcript P. 353, Lines 4-14).
Page 29 of 35
chair and broken its neck.
(Trial Transcript P. 343, Lines 5-
Mr. Roberts testified that he was sure Pinocchio had not
been broken prior to being washed over.
364, Lines 12-19).
(Trial Transcript P.
Because Plaintiffs owned a second Pinocchio,
they did not replace the damaged one at an estimated cost of
Two wax figurines inherited from the previous owner
had resided in a coffin-shaped crate since at least 2002, having
replacement cost to be $40,750 apiece.
(Plaintiffs’ Ex. 29, P.
The crate was not opened until several weeks after the
(Trial Transcript P. 361, Lines 8-10).
While the calculations of all damages in this matter have
Plaintiffs’ personal property that causes the most concern.
is not necessarily the complexity of these calculations which
makes the ultimate question of damages suffered by Plaintiffs
virtually impossible to determine, but the manner in which they
were assessed by Mr. Jones.
According to both Mr. Roberts and
Mr. Jones, a great number of items from the retail store were
hauled away, but there is no evidence that the property was
destroyed or disposed of rather than retained by Plaintiffs’
Some of the damaged office furniture remains in use
at the Wax Museum, but Mr. Roberts does not know what became of
Page 30 of 35
some of the furniture. Similarly, Mr. Roberts does not know
whether the ice cream freezer works, because he has not tried to
use it since the overflow.
Probably the most speculative of
damage estimates is that for replacement of the wax figurines
that were damaged by mold.
Mr. Roberts testified he had never
opened the storage crate when he bought the Wax Museum from the
prior owners in 2002.
There is no evidence as to what condition
the figures were in at the time of the sale or immediately prior
to any water damage in 2009.
As stated above, Plaintiffs did
waiting several weeks to assess the damage.
the cost of the Pinocchio figure ($10,120.00), office furniture
($3,883,35), jewelry display ($874.25), Mickey Mouse ($740.77)
and wax figurines ($81,500) should be deducted from any award.
(Doc. 25, P. 12).
When there has been a total loss of property such that
there is no salvage value or no possibility of repair, the owner
is entitled to recover the fair market value of the property
immediately before the loss occurred.
Kanis v. Rogers, 119 Ark.
120 (1915). However, when the property is not a total loss but
is only damaged, the owner is entitled to recover the difference
in the fair market value of the property immediately before and
immediately after the damage occurred. Daughhetee v. Shipley,
282 Ark. 596 (1984).
In both situations, the fair market value
Page 31 of 35
willing seller and a willing buyer in the open market after
Southern Bus Co. v. Simpson, 214 Ark. 323 (1948).
appliances, or other personal items, the measure of damages is
not the fair market value but simply the fair value. Howard's
Headley, 237 Ark. 400 (1963). Fair value is determined not by
considering the reasonable value to the owner for his own use,
cost, and the owner's past and future use of the items. Howard's
308 Ark. 291 (1992).
The Court finds many of Plaintiffs’ claims for compensatory
damages are unsupported by the evidence and should be reduced by
The Court finds a reasonable value for the replacement
cost of damaged contents is $16,894.75.
Mr. Jones’ Adjustor Fee
Assuming an eight percent commission is reasonable for a
private adjustor, the Court finds it is unreasonable for Mr.
Jones to add $16,190.51 to the total damage assessment.
$202,381.43 to remediate the property behind the Wax Museum.
Page 32 of 35
then added his eight percent commission to that estimate by
transferring B&F’s line items to his adjustment and calling it
an “Engineer Estimate Adjuster Fee.”
The description of the
Consultations and all other applicable burdens.”
Ex. 29, P. 26).
In the absence of evidence that any of these
fees and burdens actually existed, the Court finds that the
Mr. Jones’ commission on the building repair estimate (not
including B&F’s remediation efforts) is reduced to $1,627.22,
proportional to the costs for repair allowed by the Court.
With respect to Mr. Jones’ commission on the value of the
contents of the Wax Museum, $11,276.31, for the reasons stated
above, the Court finds that commission to be based on inflated
valuation and speculative damages.
Defendant argues it should
not be liable for any of the costs of this “expert”, as the FTCA
only provides for the recovery of compensatory damages.
contents and his degree of expertise in the industry, the Court
finds the United States is liable for $1,351.58, which is 8% of
the allowable award of $16,894.75.
Page 33 of 35
Overhead and Profit
When Mr. Jones calculated the loss and cost of repair to
overhead and profit for the contractors.
Mr. Jones calculated
the twenty percent based on the total “repair item totals”,
which included his eight percent commission.
Defendant is not
The estimate that B&F Engineers provided to Plaintiffs was
to remediate the collapsed soil material directly behind the Wax
Museum as well as to stabilize the slope of the embankment and
the concrete slab at the top of the embankment.
fees, labor costs, insurance and bonding, gravel surface work,
control, stabilization of upper concrete slab, retaining wall
and labor, mobilization, traffic control, cleanup, testing and
Mr. Jones based his commission on the higher
they accounted for overhead and profit on their own work.
was unreasonable, then, for Mr. Jones to add another twenty
Page 34 of 35
Defendant is not liable for the cost attributable to overhead
and profit allowances on the B&F estimate ($40,476.29).
Court awards $4068.05.
Based upon the foregoing, the Court concludes Plaintiffs
Accordingly, judgment is for Plaintiffs and Defendant is liable
in the amount of $145,472.60, plus post-judgment interest at the
rate of .19%.
Each party is to bear its own costs and fees.
IT IS SO ORDERED this 21st day of August, 2012.
/s/ Robert T. Dawson
Honorable Robert T. Dawson
United States District Judge
Page 35 of 35
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