Southern Club Enterprises, Inc. et al v. United States of America

Filing 26

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

vs.

PLAINTIFFS

Case No. 6:11-6013

UNITED STATES OF AMERICA

DEFENDANT

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
Springs.
briefs.
Rules

Also before the court are the parties' post-trial
(Docs. 23, 25).

of

Findings

Civil
of

consideration

Procedure,

Fact
of

Pursuant to Rule 52 of the Federal

and
the

the

Court

Conclusions

admissible

enters
of

evidence

the

Law,
and

following

based
the

upon

Court’s

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:
1.

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
Park.
2.
storm

West Mountain is steep and rugged, and has an underground
drain

system

consisting

of

culverts

with

intermittent

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.
3.

One

of

the

culverts,
behind

an

18

and

inch

underground

steeply

is

the

Wax

located

immediately

Museum.

The culvert is designed to send water into Hot Springs

Creek at or near Central Avenue.
four

manholes

or

inverts

which

uphill

tube,

from

This particular culvert has
allow

surface

access

to

the

underground culvert for maintenance.
4.

At some point prior to May 5, 2009, soil and natural debris

accumulated

in

lowest, manhole.

the

underground

culvert

near

the

final,

or

The accumulation fully obstructed the culvert,

completely blocking the exit of water at the termination of the
culvert near Central Avenue.
5.

On May 5 and 6, 2009, the Hot Springs area experienced

rainfall ranging from .07 inches to 3.84 inches during a 24-hour
period.
Page 2 of 35

6.

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
location.

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.
7.

Water ran into the Wax Museum for approximately nine hours,

causing damage to real and personal property.
8.

Upon being advised of the flooding occurring at the Wax

Museum, on the early morning of May 6, 2009, Park employees went
to

the

area

on

West

Mountain

above

the

Wax

Museum.

They

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.
9.

National Park Service personnel called City of Hot Springs

personnel to use their equipment to “flush” the system.

Once

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.
10.

Defendant owned and occupied land immediately adjacent to

Plaintiffs’ land.
Page 3 of 35

11.

Plaintiffs submitted an administrative claim in the amount

of $625,419.84.
Discussion
1.

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
limited

by

the

discretionary

function

exception,

precluding

“[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

test

for

application

of

the

discretionary

function

exception. See Berkovitz v. United States, 486 U.S. 531, 536-37
(1988).
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).
Second,

if

the

court

finds

the

action

to

have

been

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
policy

regarding

Mountain.

maintenance

of

the

culvert

a

System.

part

on

West

At trial, Plaintiffs submitted into evidence four

documents entitled “Job Plan Operation Detail”.
are

system

of
Each

the

Defendant’s

reflects

a

job

Facility
plan

These documents

Management
and

the

Software

frequency,

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
storm
water);
storm
sewer
manholes
(this
includes
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
includes
construction/maintenance
of
headwalls
and

1

The CA (Condition Assessment) is an annual inspection. The job plan also
includes provisions for road inspection and maintenance that are not relevant
here.

Page 5 of 35

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.”
298-299).

(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
event

at

the

Wax

Museum,

no

policy

existed

for

regular

maintenance of the Park’s storm water system, other than as part
of

the

yearly

condition

assessment

of

the

Park.

Since

the

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

Page 6 of 35

Congress intended to shield from tort liability.

However,

Plaintiffs’ lawsuit involves a mundane question of routine ditch
maintenance.
FTCA

The Eighth Circuit has consistently held that the

applies

“operational”

to

decisions

level,

but

by

that

planning” level are exempt.

federal

decisions

agencies
on

the

at

“policy

E. Ritter & Company v.

the
or

Department

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
1208,

1209

(8th

responsibility

of

Cir.

1988)(finding

maintaining

the

that

the

Riverdale

Corps

Outlet

had

Ditch,

a
as

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
court’s

dismissal

for

lack

of

jurisdiction

where

Bureau

of

Indian Affair’s decision to allow an irrigation system to fall
into

disrepair

caused

damage

to

neighboring

landowners).

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.

Page 7 of 35

2.

Negligence
Under

the

FTCA,

the

standard

of

liability

for

the

government is the same as that for a private person, the prudent
person standard.

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
are

that

the

Plaintiff

demonstrate

a

duty

owed

and

a

duty

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
the

injury,

and

without

which

the

result

would

not

have

occurred. Wal–Mart Stores, Inc. v. Kilgore, 85 Ark. App. 231,
236-237 (2004).
DUTY
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
Page 8 of 35

should have known that the danger existed without the consent of
those affected by it and the land owner fails, after having a
reasonable
protect

opportunity,

against

it2.

to

eliminate

AMI

1110;

the

danger

Restatement

§ 366; Dye v. Burdick, 262 Ark. 124 (1977).

or

Second

otherwise
of

Torts

The National Park

Service has a duty to operate and maintain the drainage system
into which they intentionally divert storm water and for which
it

has

accepted

the

responsibility

for

operation

and

maintenance.
BREACH
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
trial.

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.

(Trial Transcript

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

2

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

4.

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).

(Trial

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,

Lines 16-22).
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
monthly

as

well

as

in

compliance

with

assessment, a total of 13 times per year.

the

required

annual

Mr. Abbot said the

inspection 13 times per year was the way he currently maintains
the system.

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
four

times

necessary.
supervisor,

a

year

and

following

a

rain

(Trial Transcript P. 274, Lines 5-12).
Park

Deputy

Superintendent
Page 10 of 35

large

Mardi

event,

if

Mr. Abbott’s

Arce,

testified

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
2009.
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
time:

“We open up the cleanout boxes and then take a flashlight

and look up and down each culvert, see if there’s anything and
make

sure

there’s

nothing

inside

obstruction inside the culverts.”
Lines 22-25).

the

cleanout

boxes

or

any

(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
his flashlight.

(Trial Transcript P. 245, Lines 11-14).

culvert system had only been flushed one time, in 1998.
Transcript P. 247, Lines 5-8).

The

(Trial

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.
Lines 16-18).
on

West

(Trial Transcript P. 249,

Although there was a plan to video the culverts

Mountain

in

2006,

using

the

City

of

Hot

Springs’

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).

(Trial

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.
Lines

13-14).

Before

culvert was obstructed.

going

up

to

(Trial Transcript P. 262,
inspect

it,

he

knew

the

(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
that

damaged

conclusion

of

the

Wax

the

Museum.

Government’s

This

is

expert

borne
witness,

Raphelt, Ph.D in his report and trial testimony3.

out
Dr.

by

the
Nolan

Dr. Raphelt

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

3

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
drainage system.
(Plaintiffs’ Ex. 25, Pgs 21-22).
drain

system

maintained

by

Dr. Raphelt testified that the

the

National

Park

Service

has

adequate minimum flow velocities to move water and that it was
designed

to

be

self-cleaning.

(Raphelt’s

Deposition

P.

31,

Lines 11-13; P. 32, Line 6).

Dr. Raphelt and other members of

his

data

firm

studied

rain

gauge

from

May

5-6

and

physical

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.

(Raphelt’s Deposition

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).

(Raphelt’s

“The conclusions we drew was

if the system hadn’t stopped up, that it was--the system should
have worked okay.
change

the

It was adequately designed, the... plug did

hydraulics

and

the

flow

Page 13 of 35

characteristics

and

the

location of... where some water were discharged.”

(Raphelt’s

Deposition P. 12, Lines 1-6).
Dr.
rainfall

Raphelt
was

far

later

testified,

greater

than

“The

the

intensity

system

is

of

this

designed

to

handle...this was a rainfall that was about...what you get once
in

every

50

years.

So

it

was

a

high-intensity,

gully

washing.... And it just does not appear that the system could
handle it.”

(Raphelt’s Deposition Pgs. 48-49).

Dr. Raphelt

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).

(Raphelt’s

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
the

amount

of

rainfall

in

the

watershed

Page 14 of 35

that

fed

into

the

culvert, which would have impacted the Wax Museum.

Instead, he

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
located
reported

farthest

from

the

substantially

Wax

more

Museum,

rainfall

which,

than

gauges. (Raphelt’s Deposition Pgs 68-69).

any

coincidentally,
of

the

other

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).
rainfall

data

relied

upon,

(Raphelt’s

Regardless of the conflicting

Dr.

Raphelt’s

testimony

did

not

dispute that the cause of the overflow was the clogged culvert.
“Nothing in my study indicated that the clog was there or wasn’t
there.

I

occurred.”

didn’t

have

any

way

of

evaluating

how

the

clog

(Raphelt’s Deposition P. 39, Lines 15-18).

Proximate Cause
Defendant

does

not

deny

that

Plaintiffs’

property

was

damaged as a result of its clogged drainage system.

On Cross-

Examination,

testified

Deputy

Park

Superintendent

Mardi

Arce

that the culvert was clogged:
The Court:

Is there any question in your mind but that the

manhole that we are looking at now was clogged on the date of
the occurrence?

Page 15 of 35

Arce:

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.
The Court:
a

(Trial Transcript P. 311, Lines 8-13).

But did your investigation reveal that there was

substantial

blockage

in

the

culvert

on

the

day

of

the

occurrence?
Arce:

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
museum?
Arce:

Right.

(Trial Transcript P. 313, Lines 8-14).

Conclusions of Law
1.

The Court has jurisdiction pursuant to 28 U.S.C. § 1346(b),

and venue is proper pursuant to 28 U.S.C. § 1402(b).

Plaintiffs

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).
2.

The

law

of

the

state

of

Arkansas

is

applied

to

a

determination of negligence and the amount of damages.
3.

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.
is negligence.

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).
4.

Defendant failed to use ordinary care in the inspection and

maintenance of its underground surface water drainage system.
5.
they

Plaintiffs proved by a preponderance of the evidence that
sustained

damages,

that

Defendant

was

negligent

in

maintaining its underground surface water drainage system, and
that Defendant’s negligence was a proximate cause of Plaintiffs’
damages.
6.

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.
Damages
On the morning of May 6, 2009, in addition to alerting the
National
Plaintiffs

Park

Service

filed

a

that

flood

the

loss

Wax
claim

Museum
with

had

their

flooded,
insurance

company, “National Flood Insurance Program,” serviced locally by
First Arkansas Insurance of Hot Springs Inc.
Page 17 of 35

A representative

visited the site and determined it was “evident the damage was
caused

by

failure

property.”

of

drainage

systems

(Plaintiffs’ Ex. 29, P. 1).

on

the

adjoining

The representative,

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
Flood Policy.

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
assessment4.
and

June

Tim Tieaski, P.E., visited the Wax Museum on May 6,

16,

2009,

and

his

engineering

firm

performed

a

topographic survey to determine how much debris washed down the
embankment into the Wax Museum’s back yard.

(Plaintiffs’ Ex.

27).
Mr.

Jones

personal

property

remediation
proposal).

completed
and

efforts
The

a

presented

(based

total

thorough
a

in

part

actual

cash

review

the

real

and

comprehensive

plan

of

on

B

value

of

&
of

F

Engineering’s
the

loss

was

estimated to be $625,419.845, and this was the amount Plaintiffs
used in making their administrative claim.

4

Mr. Roberts testified that Mr. Jones suggested he engage an engineer.
(Trial Transcript P. 65, Lns 4-6).
5
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
amount claimed.
Defendant proffers that at least $440,850.53 should be
deducted from Plaintiffs claim, for a maximum award of $184,569.31.
(Doc.
25).

Page 18 of 35

Remediation
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’
Ex.

27,

sloughed

P.

3).

off,

Mr.

washing

limbs down the hill.
In

addition,

the

Tieaskie
soil,

testified

small

that

rocks,

the

gravel,

slope

had

leaves

and

(Trial Transcript P. 111, Lines 12-16).

water

that

flowed

down

the

embankment

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).

(Trial

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.

(Trial

Transcript P. 118, Lines 3-25).
To determine the costs of such remediation, three engineers
from

B&F

Engineering,

Inc.

and

two

local

contractors

worked

6

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
program.
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.
Lines 22-25).
for

(Trial Transcript P. 119,

Costs factored into B&F’s report included those

excavating

material

and

reinforcing

Transcript P. 120, Lines 6-11).

the

slope.

(Trial

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.
masonry

wall

The second option was to remove an existing

from

behind

the

building

to

create

a

path

and

excavate the debris by hand, bringing the material through the
building to Central Avenue using wheelbarrows.
27, P. 4).

(Plaintiffs’ Ex.

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.

(Plaintiffs’

Ex. 27, P. 18).
Mr.

Tieaski

testified

that

the

costs

of

remediation

included in his report were necessary and reasonable as of 2009,
but that the costs would have risen since that time.

(Trial

Transcript P. 122, Lines 16-18).
Despite the thoroughness of B&F’s calculations and report,
there

is

no

way

of

determining

with

any

certainty

how

much

debris was deposited in the back of the Wax Museum as a result

7

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.

Mr.

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
on

Hot

Springs

National

Park

that

his

business

suffered damage when heavy rains fell on the city9.
Ex. 29).
Wax

frequently
(Defendant’s

Without any evidence that all the debris behind the

Museum

was

deposited

as

a

result

of

the

May

6,

2009,

overflow, or that the event caused all of the cliff erosion, it
would be inappropriate to award Plaintiffs the full measure of
remediation expenses.
more

likely

period

of

Service’s

than

time

not

due

control

Due to the history of the area, it is
that
to

and

the

embankment

conditions
that

the

outside

area

contained debris from past flooding.

had

eroded

the

behind

over

National

the

Wax

a

Park

Museum

Defendant argues that the

8

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,
2012.
9
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
damages.

(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.
Building
Mr. Jones testified he used Simsol software, one of two
programs approved by the National Flood Insurance Program and
widely

used

by

adjustors

to

estimate

flood

loss.

(Trial

Transcript P. 183, Lines 16-18; P. 185, Lines 10-16).

After he

determined there had in fact been flood damage, he entered the
building’s

measurements

and

construction

material

into

the

program, which assigned value based on the Craftsman Publishing
database.

That

database

is

updated

quarterly

and

generates

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).

(Trial

According to

the Simsol program, heavy flood loss clean-up was valued at $.98
per

square

foot

in

Hot

Springs,

Arkansas

in

May

of

2009.

Mildewcite floor treatment was valued at $.23 per square foot;
pressure blasting concrete floor was valued at $2.12 per square
foot, etc.

(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
the

damages

actually

sustained

by

Plaintiffs

in

this

case.

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.

(AMI 2201

Measure of Damages--General Instruction).
Using

the

Simsol

software,

Mr.

Jones

estimated

the

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.

9).
Mr.
removing
floor

Jones’
mud

and

coverings,

treatment

of

plan

provided

water

from

trim

and

surfaces,

for
the

the

building,

framing,

repairing

water

Page 23 of 35

room-by-room

costs

replacing

drywall,
heater

paint,
and

of

damaged
mold-

escalator,

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,
for

a

total

of

$505,208.46.

Mr.

Jones

accounted

for

depreciation10 of $26,222.94, resulting in actual cash value of
$478,985.52,

including

his

commission11

of

$36,769.17.

This

figure represents “heavy flood loss clean-up”, Mildewcide floor
treatment, air movers and dehydrators, pressure blasting floors,
cleaning,

treating

and

sealing

walls,

removing

and

replacing

wall plaster, painting walls, removing and replacing shelving,
doors, hardware for each room and flushing and sanitizing the

10

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).
11
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,
2012.

Page 24 of 35

H.V.A.C.,

in

addition

to

specific

repairs,

cleaning

and

replacement needed for each individual-purpose room12.
Owner
damaged

Stacy

by

Roberts

floodwater,

testified

catching

that

fire

the

and

HVAC

resulting

unit
in

was

total

destruction of the unit.

The Wax Museum was closed for three to

four

and

days

for

cleaning

other

flood-related

(Trial Transcript P. 67, Lines 12-19).

maintenance.

The floors were damaged

and, although Mr. Roberts testified he had patched places over
time, they still need to be replaced.
Lines 4-18).
for

fungus,

(Trial Transcript P. 68,

The damaged walls were power washed and treated
but

some

of

them

had

to

(Trial Transcript P. 69, Lines 3-16).

be

altogether.

The electricity had to be

rewired in many places due to water damage.
P. 70, Lines 12-17).

removed

(Trial Transcript

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

12

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
flooding damage.

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.

Mr.

Jones estimated the actual cash value of the repairs to the
building,

not

including

his

commission,

to

be

$162,722.18.

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
87.5%.

The Court finds that a reasonable value for damages

caused to the building is $20,340.27.
Contents
With respect to the contents of the Wax Museum, Mr. Jones
catalogued

all

of

Plaintiffs’

retail

inventory,

t-shirt

inventory, damaged attractions and business operation furniture

13

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

and

equipment.

Inventory

offsite during clean-up.

that

was

not

damaged

was

stored

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.
Mr.

Jones’

analysis

of

the

contents

of

the

Wax

Museum

constitutes 30 pages of his report, with an additional 23 pages
of photographs.

(Plaintiffs’ Ex. 29, Pgs 24-54, 90-113).

Mr.

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
the water.

(Trial Transcript P. 195, Lines 17-25).

Items such

as glassware and t-shirts, which could arguably be cleaned, were
not

assigned

salvage

value,

because

it

was

Mr.

Jones’

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).

(Trial

Mr. Roberts testified that

many items counted by Mr. Jones sat in the Wax Museum for about
two months.

“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.
it

in

their

(Trial Transcript P.

Some of my employees I’m sure took some of

vehicles

throughout

the

period

it

sat

there.”

(Trial Transcript P. 340, Lines 10-12).

Mr. Roberts advised his

employees

took,

receive

not

any

to

sell

payment

the

from

items
his

they

employees

for

but

he

what

did

they

not

took.

(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
it home.”

(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
furniture

remained

in

overflow.

Much of the equipment is still in use, some of which

has been repaired15.
not

have

the

the

Wax

Museum

three

years

after

the

It was not replaced because Plaintiffs did

money.

(Trial

Transcript

P.

347,

Line

20).

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.

They brought

14

Plaintiffs also own National Park Duck Tours, located at 418 Central Avenue
in Hot Springs, Arkansas.
15
Office desk:
currently in use; printer:
replaced with cheaper model;
desk: “not sure”; legal chair: on site; wooden chair: “not sure”; vertical
cabinets:
on site; drink cooler:
repaired and in use.
(Trial Transcript
Pgs 345-347).

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.

A drink

cooler was repaired, as was the classic penny press machine.
Plaintiffs refurbished the love tester machine, and bought a new
one

as

well

($1852.50).

The

coin

operated

Indy

Car

Style

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.

Two wet

vac cleaners were destroyed, but Mr. Roberts did not indicate
whether

they

were

replaced.

A

custom-made

Mouse16 was soaked with mud and water.

oversized

Mickey

Mr. Roberts testified he

had intended to use it in a future Disney exhibit.

“I’m sure

you could clean it....I’m not sure where it’s at, though.
just

don’t

know

if

they

threw

it

away

or

not.”

I

(Trial

Transcript P. 353, Lines 18-20).
The focus of a Wax Museum is, of course, the wax figurines
themselves.

According

to

Mr.

Roberts,

a

Pinocchio

figurine

(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

16

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.
11).

(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
$11,500.00.

Two wax figurines inherited from the previous owner

had resided in a coffin-shaped crate since at least 2002, having
never

been

opened.

Mr.

Jones’

report

replacement cost to be $40,750 apiece.
34).

estimated

their

(Plaintiffs’ Ex. 29, P.

The crate was not opened until several weeks after the

overflow,

and

no

attempt

was

made

to

clean

or

repair

them.

(Trial Transcript P. 361, Lines 8-10).
While the calculations of all damages in this matter have
concerned

the

Court,

it

is

the

valuation

of

damages

to

Plaintiffs’ personal property that causes the most concern.

It

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’
employees.

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.
not

open

the

crates

As stated above, Plaintiffs did

immediately

after

the

waiting several weeks to assess the damage.

overflow,

instead

Defendant argues

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

is

defined

as

the

price

the

property

would

bring

between

a

willing seller and a willing buyer in the open market after
negotiations.
When

the

Southern Bus Co. v. Simpson, 214 Ark. 323 (1948).

property

that

has

been

damaged

is

clothing,

home

appliances, or other personal items, the measure of damages is
not the fair market value but simply the fair value. Howard's
Laundry

&

Cleaners

v.

Brown,

266

Ark.

460

(1979);

Cecil

v.

Headley, 237 Ark. 400 (1963). Fair value is determined not by
considering

the

saleable

or

second-hand

value,

but

by

considering the reasonable value to the owner for his own use,
which

includes

considerations

of

original

cost,

replacement

cost, and the owner's past and future use of the items. Howard's
Laundry,

supra;

Minerva

Enterprises

Inc.

v.

Howlett

308 Ark. 291 (1992).
The Court finds many of Plaintiffs’ claims for compensatory
damages are unsupported by the evidence and should be reduced by
87.5%.

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.

Mr.

Jones

for

took

an

existing

estimate

from

B&F

Engineers

$202,381.43 to remediate the property behind the Wax Museum.
Page 32 of 35

He

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.”
fee

states

that

Outsourcing

it

The description of the

includes
incurred

Expenses

“Commission%,
from

Retainage%,

B&F

Engineering,

Consultations and all other applicable burdens.”

(Plaintiffs’.

Ex. 29, P. 26).

In the absence of evidence that any of these

fees and burdens actually existed, the Court finds that the
United

States

is

not

liable

for

any

commission

on

B&F’s

estimate.
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.

(Doc.

25,

Jones

P.

expended

11).
in

Given
assessing

the

amount

the

damage

of

time

and

work

the

Wax

Museum

to

Mr.

and

its

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
the

building

and

property,

he

allowed

for

overhead and profit for the contractors.

twenty

percent

Mr. Jones calculated

the twenty percent based on the total “repair item totals”,
which included his eight percent commission.
liable

for

any

overhead

or

profit

Defendant is not

added

to

Mr.

Jones’

commission.
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.
provided

for

material

excavation,

engineering

The estimate
and

surveying

fees, labor costs, insurance and bonding, gravel surface work,
seeding,

mulching,

fertilizing

and

watering,

safety

systems,

control, stabilization of upper concrete slab, retaining wall
and labor, mobilization, traffic control, cleanup, testing and
“miscellaneous.”
of

the

two

presented

B&F

its

Mr. Jones based his commission on the higher
bids,

report

$202,381.43.

to

Plaintiffs,

Presumably,
including

this

when

B&F

estimate,

they accounted for overhead and profit on their own work.

It

was unreasonable, then, for Mr. Jones to add another twenty
percent
overhead

to
and

the

estimate.

profit

Defendant

estimate

($77,114.74)

Page 34 of 35

argues

that
should

all
be

of

the

deducted

from

any

Plaintiffs

award
did

of
not

damages
expend

because

this

Mr.

amount.

Roberts
(Doc.

testified

25,

P.

12).

Defendant is not liable for the cost attributable to overhead
and profit allowances on the B&F estimate ($40,476.29).

The

Court awards $4068.05.
Conclusion
Based upon the foregoing, the Court concludes Plaintiffs
have

proven

storm

drain

Defendant
system,

negligently

causing

maintained

damage

to

its

underground

Plaintiffs’

property.

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

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