USA v. Bd Of Comm Ham Co, et al

Filing 1976

ORDER re - 1863 Sewer Back-up claim filed by Cheryl Isaacs that the Court awards $30,944.78 to the Isaacs for the damages sustained in this case consisting of an award of $20,748.55 for personal property and $10,196.23 for real property damages. Signed by Magistrate Judge Karen L. Litkovitz on 1/21/2022. (art)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
WESTERN DIVISION
UNITED STATES OF AMERICA, et al.,
Plaintiffs,
vs.
BOARD OF HAMILTON COUNTY
COMMISSIONERS, et al.,
Defendants.

Case No. 1:02-cv-107
Barrett, J.
Litkovitz, M.J.
ORDER RE: REQUEST
FOR REVIEW BY
CHERYL AND MICHAEL
ISAACS

This matter is before the Court on the Request for Review of the denial of a Sewer
Backup (“SBU”) claim by Cheryl and Michael Isaacs (Doc. 1863), the response of the
Metropolitan Sewer District of Greater Cincinnati (“MSD”) (Doc. 1875), and MSD’s
supplemental response (Doc. 1899). On June 16, 2021, the Court held a hearing in this matter at
which Cheryl Isaacs, Michael Isaacs, and Jeff Way, a Senior Adjuster with Sedgwick, MSD’s
adjuster in SBU cases, testified.
I. Background
The Isaacs’ request for review is filed under the Sewer Backup 1 program (formerly
known as the Water-in-Basement [WIB] Claims Process Plan) (Doc. 131, Consent Decree,
Exhibit 8). The Plan states in relevant part:
Subject to the requirements of this Plan, occupants who incur damages as a result
of the backup of wastewater into buildings due to inadequate capacity in MSD’s
Sewer System (both the combined and the sanitary portions) can recover those
damages. This plan also provides a means for occupants to recover damages arising
from backups that are the result of MSD’s negligent maintenance, destruction,
operation or upkeep of the Sewer System. The Claims Process is not intended to
address water in buildings caused by overland flooding not emanating from MSD’s
Sewer System or caused by blockages in occupants’ own lateral sewer lines.
The “Water-In-Basement” program has been renamed the “Sewer Backup” program to more accurately
reflect MSD’s responsibility for sewage backups caused by inadequate capacity in MSD’s sewer system. See Doc.
452 at 4; Doc. 454 at 16.
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(Id. at 1). In determining the cause of SBU, MSD must exercise its good faith reasonable
engineering judgment and consider the following non-exclusive factors: amount of precipitation,
property SBU history, condition of the sewer system in the neighborhood, results of a visual
inspection of the neighborhood to look for signs of overland flooding, neighborhood SBU
history, capacity of nearby public sewer lines, and topography. (Doc. 131, Consent Decree, Ex.
8 at 2). Damages arising from basement backups for which MSD is responsible are limited to
documented real and personal property. Id. Homeowners who are dissatisfied with MSD’s
disposition of a claim under the SBU program may request review of the decision by the
Magistrate Judge, whose decision is binding and not subject to any further judicial review.
(Docs. 154, 190).
Cheryl and Michael Isaacs own the property located at 3801 Colerain Avenue,
Cincinnati, Ohio. On February 24, 2018, the Isaacs experienced a sewer backup into their
basement which resulted in damage to their personal and real property. The only issue in this
case is the amount of damages for the Isaacs’ property loss. MSD employed Sedgwick, a
national claims adjuster, to review the Isaacs’ damages claim and documentation provided in
support. Sedgwick employed commercially accepted standards to evaluate the real and personal
property damages and depreciated the value of personal property, based on the age, condition,
and value of each claimed item. Sedgwick prepared a Statement of Loss and Content Analysis
reflecting its analysis of the Isaacs’ claim for damages. (Doc. 1857, Exs. D and F). Based on
this analysis, MSD offered $22,419.51 to the Isaacs as compensation for their claim. The Isaacs
rejected the offer and filed this appeal.

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Following the June 2021 hearing on the Isaacs’ appeal, the Isaacs and MSD attempted an
informal resolution of this matter. The Isaacs provided additional information on “used” pricing
information for two items of their personal property: the Neon Art and Jobo Autolab. Sedgwick
accepted the updated prices, and MSD increased the amount of compensation for these items.
Sedgwick determined the depreciated value of the Isaacs’ compensable, personal property
increased from $12,776.05 (Doc. 1875, Exh. D) to $13,248.55 (Doc. 1899, Exh. F). MSD
revised its offer to $22,892.01 (Doc. 1899, Exh. F), which the Isaacs rejected. The Court held
several informal telephone conferences with the parties about items of property which were still
in dispute. The Isaacs provided further information and requested MSD reconsider the following
five personal property line items: Jobo Autolab, refrigerator, Neon Art, table full of photo prints
(“Print Photos”), and “Darkroom/Film and paper from Refrigerator” (“Print Materials”). Based
on this additional information, MSD increased its offer for the professional prints prepared by
Mr. Isaacs, a professional photographer specializing in black-and-white images, but declined to
reconsider the value of the four other items.
II. Resolution of Personal Property Claim
Damages for SBU claims are determined based on the market value of personal property
as of the date of loss (the depreciated value) and not on the original purchase price or cost of
replacement. MSD valuated the Isaacs’ lost items by applying depreciation based on each item’s
age and/or market value. Sedgwick Senior Adjuster Jeff Way testified about the industry
standards and the method of depreciation used in this case. The Court finds the depreciation
methodology used by Sedgwick, as explained by Mr. Way at the hearing, is reasonable and
appropriate.
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MSD’s Content Analysis sets forth an itemized list of the personal property for which the
Isaacs seek damages. (Doc. 1899-1 at PAGEID 45708-45709). With the exception of the five
items listed above, the Isaacs have not presented any evidence to dispute the value assessed by
MSD. The Court finds the value assessed by MSD to be fair and reasonable and awards
$5,813.55 for the items of personal property listed, excluding the Jobo Autolab, refrigerator,
Neon Art, Print Photos, and Print Materials. The Court addresses each of those items in turn.
1. Jobo Autolab 3000 Automated Film Processor
The Isaacs’ Jobo Autolab 3000 model is no longer manufactured. Therefore, the Isaacs
initially submitted information on the purchase price of an ATL 2500 model in the amount of
$6,900.00. According to the manufacturer, the ATL 2500 was the closest replacement unit to the
Jobo Autolab 3000 model. (Doc. 1875-3 at PAGEID 45397). Sedgwick accepted this price and
applied depreciation of 75% based on the age of the Jobo Autolab, resulting in an adjusted value
of $1,725.00. The Isaacs subsequently provided MSD with additional information regarding the
price for a used Jobo Autolab in the amount of $2,000.00. MSD ultimately accepted the used
price amount of $2,000.00 without applying depreciation.
Mrs. Isaacs testified that they could not replace the Jobo Autolab with the $2,000.00
offered by MSD, and they would not purchase a used automated film processor given the
unknown condition of the internal electronics. Under the Consent Decree, however, the Court is
unable to award the replacement value of items lost as a result of a sewer backup. The SBU
program reimburses used personal property loss at the depreciated value or market value rather
than replacement value. Therefore, the Court awards compensation in the amount of $2,000.00
for the used Jobo Autolab.
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2. Refrigerator
The Isaacs provided a price of $600.00 for the refrigerator. (Doc. 1875-3 at PAGEID
45397 and Doc. 1899-1 at PAGEID 45708). As this item was used, and not new, on the date of
loss, Sedgwick applied standard depreciation of 75% based on the age of the refrigerator. This
methodology under the SBU program was proper. Therefore, the Court awards an adjusted value
of $150.00 for the refrigerator.
3. Neon Art
The Isaacs originally provided a price of $350.00 for the Neon Art. (Doc. 1875-3 at
PAGEID 45397). Sedgwick depreciated the Neon Art by 75% to arrive at an adjusted value of
$87.50. The Isaacs subsequently provided MSD with additional information that the used price
for the Neon Art was $285.00. MSD ultimately accepted the used price amount of $285.00
without applying depreciation. Under the Consent Decree, MSD must reimburse personal
property loss at the depreciated value or market value of a used item rather than replacement
value. Therefore, the Court awards compensation in the amount of $285.00 for the Neon Art.
4. Print Photos
The Isaacs originally provided a price of $10,000.00 for the loss of a table full of print
photos Mr. Isaacs produced in his professional work. (Doc. 1875-3 at PAGEID 45397). Based
on additional information the Isaacs recently provided, MSD agreed to increase its original offer
for the Print Photos from $2,500.00 to the Isaacs’ full estimated amount of $10,000.00 (without
depreciation). The Court finds this amount fair and reasonable and awards $10,000.00 for the
Print Photos.

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5. Print Materials
The Isaacs estimated the value of the “Darkroom/Film and paper from Refrigerator” at
$10,000.00. (Doc. 1875-3 at PAGEID 45398 and Doc. 1899-1 at PAGEID 45709). MSD
accepted the Isaacs’ estimated values and applied 75% depreciation to arrive at a $2,500.00
adjusted value for the Print Materials.
Mrs. Isaacs testified that the photographic materials lost were “irreplaceable.” She
testified that her husband has worked for over 50 years as an artist and photographer and has
accumulated a “lifetime” of rare silver paper and film that no longer exist. These materials were
stored in a temperature controlled refrigerator for special projects.
Mr. Isaacs testified that these materials included silver paper and film that is no longer
manufactured and the only way to replace them would be to make them himself. He testified
that these special materials are required to make high quality black and white images and
archival photography, similar to those created by the artist Ansel Adams, with whom he studied.
In response to the Court’s questions, Mr. Way testified that the insurance industry relies
on claimant information to evaluate items no longer made or sold like the darkroom film and
paper. He testified that it is standard to apply depreciation unless the item is considered an
antique, which the industry defines as over 100 years old, or claimants provide information to
show the item is a “collectible.” According to Mr. Way, Sedgwick accepted the $10,000.00
value the Isaacs placed on the Print Materials given their rarity and applied 75% depreciation per
industry standards.
The Isaacs have made several attempts to obtain additional information on this issue. At
the last status conference, they reported to the Court that they were ultimately unsuccessful. The
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Court has reviewed the website information the Isaacs previously provided but was unable to
glean any information on the specific issue of whether these items should be depreciated. As the
undersigned explained at the hearing, the Court must rely on information from a source with
knowledge (other than the claimants) in determining the fair compensation to award in an SBU
case. MSD accepted the value attributable to the Print Materials by the Isaacs. Sedgwick
applied depreciation per industry standards. In the absence of any other information to
substantiate a departure, the Court is constrained to award the depreciated value of $2,500.00 for
these items.
6. Lost income and real property
The Isaacs also request reimbursement of lost income from 1989 through 2018. This
request is denied as the Consent Decree covers damage to real or personal property only, and not
lost income. See Exhibit 8 to the Consent Decree (Doc. 101-9 at PAGEID 473) (“Damages will
be paid for losses to real and personal property that can be documented.”).
The Isaacs request reimbursement of mechanical items and services: (1) $4,325.00 for
water heater services by Zins Plumbing; (2) $95.23 for a Sears service call; and (3) $5,776.00 for
a furnace replacement. MSD accepted the invoices for $95.23 for the Sears service call and
$5,776.00 for a comparable furnace replacement. However, MSD did not allow the claim for
Zins Plumbing services because the Isaacs’ estimate included an upgrade to a tankless system.
MSD adjusted the water heater estimate to $3,772.23, an amount compensating for the
replacement of the two 75-gallon water heaters previously located at the property.
Mrs. Isaacs testified that this was not their first sewer backup, but it was the largest.
Therefore, they chose a “tankless” water heater system because Zins Plumbing could move the
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water heater to the first floor to avoid a future loss from any subsequent sewer backup. The Zins
Plumbing invoice confirms that two 75-gallon water heaters were replaced by a tankless water
heater system “to keep from flooding if water comes in again.” (Doc. 1875, Exh. B). Given the
history of sewer backups at the property, the decision to move the water heater system from the
basement to the first floor was reasonable, and the Court awards the Isaacs $4,325.00 in
compensation for this item.
7. Summary of award
Jobo Autolab: $2,000.00
Refrigerator: $150.00
Neon Art: $285.00
Print Photos: $10,000.00
Print Materials: $2,500.00
Remaining items of personal property: $5,813.55
Total personal property: $20,748.55
Sears service call: $95.23
Furnace: $5,776.00
Water heater replacement: $4,325.00
Total real property: $10,196.23
IV. Conclusion
In conclusion, the Court awards $30,944.78 to the Isaacs for the damages sustained in
this case consisting of an award of $20,748.55 for personal property and $10,196.23 for real

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property damages.
IT IS SO ORDERED.
Karen L. Litkovitz, Magistrate Judge
United States District Court

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