updated 3/20/2009 8:25:52 PM ET 2009-03-21T00:25:52

A lawsuit blaming the Army Corps of Engineers for flooding from Hurricane Katrina can proceed to trial, a judge ruled Friday in a case seen as a likely last recourse for storm victims seeking compensation from the federal government for alleged negligence by the agency.

U.S. District Judge Stanwood Duval dismissed the corps' argument that it cannot be sued for widespread flooding that devastated much of New Orleans during Katrina's storm surge in 2005. The corps argues federal law gives it immunity from lawsuits and that it properly maintained a waterway at the center of the dispute.

The lawsuit argues that the Army Corps failed to properly maintain a navigation channel called the Mississippi River-Gulf Outlet, allowing Katrina's surge to swamp eastern New Orleans and St. Bernard Parish through that waterway.

Lawyers for six flood victims who filed the lawsuit said they did not expect any further hurdles as the decision clears the way for a trial scheduled to start April 20.

The case is being watched by tens of thousands of others with pending damage claims, including storm victims and businesses. Other attempts to obtain compensation from the corps have faltered.

In January 2008, Duval dismissed a class-action lawsuit against the Army Corps over the breaching of New Orleans' 17th Street Canal during Katrina. The judge ruled that the corps was immune in that case under the Flood Control Act of 1928, which grants immunity to the federal government when flood control projects — including floodwalls — break.

The case before Duval centers on a 76-mile shipping channel that was dug into the swamps southeast of New Orleans in the 1960s as a shortcut between New Orleans and the Gulf of Mexico.

The Mississippi River-Gulf Outlet, known locally as the "Mister Go," became an engineering fiasco in the words of environmentalists who claimed it spurred the loss of wetlands, marsh and swamp forests. At the same time, the channel never drew the volume of shippers developers had hoped to attract.

The corps has repeatedly tried to get the case thrown out. In its latest defense, the corps argued that it had not been mandated to build storm surge barriers and stabilize the channel's shorelines, as the plaintiffs contend.

Duval said in Friday's decision that a trial is required on the issue of whether the corps failed to take the risk of flooding from the outlet seriously after it dug the channel.

"Plaintiffs have created substantial questions of fact as to whether due care was exercised, Duval said.

The corps argued that it "relied on studies that the widening of the channel and loss of wetlands would not have an effect on the people and property in the area," Duval said. "The question is whether the reliance on these studies was negligent or not."

Jonathan Andry, a lawyer for the plaintiffs, said the corps never apologized after homes, businesses and whole neighborhoods of eastern New Orleans and nearby St. Bernard parish were swamped by floodwaters surging up the channel.

"When the Mister Go caused the flooding, the corps didn't even come out and say to the people ... 'we're sorry,'" Andry said. "Not only that, they came into court and they say, 'it's just a terrible thing that happened to you, but we're immune. And oh, by the way, go enjoy your destroyed life.'"

Joe Bruno, another plaintiffs lawyer, said they were merely seeking compensation for their property damage.

Charles Miller, a spokesman for the Department of Justice, said the government's lawyers were reviewing the decision. He declined further comment.

Since the 2005 hurricane, the federal government has set aside more than $126 billion for rebuilding and recovery. Out of that came more than $7.8 billion in grants to help more than 122,000 homeowners.

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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