Hideaway Hills homeowners dealt another blow

Homes in the Hideaway Hills subdivision on East Daisy Drive in southwestern Meade County have been evacuated because sinkholes revealed an abandoned gypsum mine under their homes. Pioneer photo by Deb Holland

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BLACK HAWK — Negligence is mentioned prominently in a lawsuit filed on behalf of more than 140 Hideaway Hills homeowners whose homes were built over an abandon gypsum mine.

Negligence is again being mentioned as the reason the Hideaway Hills homeowners are not eligible for federal money to help them.

In a June 12 letter to Sen. Mike Rounds, R-S.D., by Lee K. dePalo

Regional Administrator, FEMA Region VIII,  it said that Federal Emergency Management Agency Hazard Mitigation Grant Program funds are not available when an applicant, sub-applicant, other project participant, or third party’s negligence or intentional actions contributed to the conditions to be mitigated.

dePalo said FEMA regional staff have taken part in numerous discussions about whether there are any FEMA programs that might be available to the Hideaway Hills homeowners under the circumstances.

“Those discussions, along with additional information, have provided clarity that FEMA, unfortunately, will not be a source of assistance,” dePalo wrote.

John M. Fitzgerald, the Rapid City attorney representing the Hideaway Hills homeowners, suspected that would be the case.

 “A couple of the ineligible activities FEMA says it won’t fund for hazard mitigation assistance are activities required as a result of someone’s intentional or negligent conduct, so of course, building a subdivision on top of a gypsum mine is probably intentional negligent conduct,” Fitzgerald said.

Also ineligible are man-made hazards, he said.

“That’s a second real exclusion as to why FEMA wouldn’t fund the project,” he said.

On April 27, Meade County was notified of a sinkhole on East Daisy Drive in Black Hawk. Black Hawk Volunteer Fire Department, Meade County Sheriff’s Office, and Meade County Emergency Management responded to the scene. Over the next several days, continued investigation of the sinkhole revealed a previous mining operation the size of a football field under the homes.

There were clues Meade County officials knew about the mine. Developers came to the Meade County Planning Commission in June of 2006 seeking approval of the final plat for Phase 2 of the Hideaway Hills subdivision and told commissioners they wanted to close off part of Daisy Drive because it is caving into an old underground mine.

Meade County had taken the lead on applying for FEMA funds on behalf of Hideaway Hills homeowners but halted the federal application process June 9, after receiving a letter from Rounds stating that FEMA was prohibited from considering or awarding federal resources until any lawsuits concerning the homeowners is concluded.  The application for the FEMA grant is July 31.

Fitzgerald said he questioned the sources of the advice Rounds gave the commissioners. He believed that both Rounds office and the state agreed to help with FEMA funds if not for the pending lawsuit.

“We’re trying to guess at the reasons why they would make these statements. They have cited nothing,” Fitzgerald said prior to the June 12 letter.

dePalo did cite specific areas of the Code of Federal Regulations in his letter to Rounds including the section on negligence, pending litigation and duplication of benefits.

So if he didn’t believe that a pending lawsuit would preclude the homeowners from being eligible for federal funds, why did Fitzgerald remove the current Meade County Commissioners and the state of South Dakota from the lawsuit he filed on June 9?

“We wanted to convey that there is no personal conflict for them to help out these people, and if they could show us but for the lawsuit they qualify for FEMA, we would go ahead and dismiss it,” Fitzgerald said. “Also, now is not the time for government to abandon these people when these people are in the position they are in because of government.”

dePalo clarifies in his letter to Rounds that federal funds cannot be used to duplicate benefits from insurance or any other source available for the same purpose.

Hideaway Hills homeowner Lori Erickson said she and other homeowners in the neighborhood have been denied insurance benefits under their homeowner’s insurance because the issue has been deemed “earth movement.”

She said she would have had to purchase additional coverage in order for the sinkhole on her property to be covered by insurance.

The only remaining recourse for the homeowners is the lawsuit which is weaving its way through the Fourth Circuit Court system at this time.

It seeks more than $35 million in compensatory damages, $40 million in exemplary damages, and “such other relief as the court deems equitable.”

And, it specifically asks for a jury trial.

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