NEW ORLEANS – April 20, 2009 - (AP) – Lucille Franz lost her home and her sister in the flooding that followed Hurricane Katrina. She blames the Army Corps of Engineers.

Arguments are set to begin Monday in a lawsuit she filed along with four other residents and a business. They claim the corps owes them damages because of the massive flooding after Katrina that stirred up the waters and washed out levees along a 75-mile, man-made shipping channel dubbed "hurricane highway."

Much is at stake in the trial, which will be heard and decided by a judge, not a jury: If the plaintiffs are victorious, more than 120,000 other individuals, businesses and government entities could have a better shot at claiming billions of dollars in damages.

The residents argue the corps' poor maintenance of the Mississippi River-Gulf Outlet, a shipping channel dug in the 1960s as a short-cut between the Gulf of Mexico and New Orleans, led to the wipeout of St. Bernard Parish and the city's Lower Ninth Ward when Katrina struck in August 2005. They are asking for damages between $300,000 and $400,000 for each individual.

Franz, 75, lost her home in the Lower 9th Ward, and her sister drowned at St. Rita's nursing home in St. Bernard near the MRGO, also know as "Mister Go."

"They are responsible," she said of the corps. "We wouldn't have had that kind of water if it hadn't been for the MRGO."

The corps has argued that it is immune from liability because the channel is part of New Orleans' flood control system, but the judge has allowed the case to move forward because residents claim the shipping channel was a navigation project.

The four-week trial will explore in detail the natural history, engineering and politics of the Mississippi River-Gulf Outlet.

The outlet was authorized in 1958 by Congress. The route went through largely pristine wilderness of marsh and swamp forest southeast of New Orleans.

Scientists say its construction destroyed about 18,000 acres of marsh and 1,500 acres of cypress swamps. The economic benefits never paid off, and few ships used it before Katrina. After the channel was built, larger vessels continued to use the Mississippi River because a bigger lock to the MRGO was never built.

The corps has acknowledged the area's flood risk, and is in the process of closing the MRGO with rocks. The corps is also building a $1.3 billion floodgate.

"It's really something the people of St. Bernard and the Lower 9th Ward, and New Orleans East, everybody in that area, have needed for a long time. What happened there should not happen in the United States of America," said plaintiffs' attorney John Andry. "It's the largest preventable catastrophe in American history."

The Department of Justice is defending the corps, but lawyers declined to comment. In court documents, the government has argued that Katrina's massive storm surge, not the MRGO, caused the catastrophic flood.

"The only way in which the catastrophic flooding of the Lower Ninth Ward, St. Bernard, and New Orleans East could have been avoided would have been through the construction of a better hurricane protection system," the government argues.

For decades, the corps has invoked immunity from lawsuits over flooding - granted by the Flood Control Act of 1928 - and maintained it has a good track record of carrying out Congressional mandates.

In this case, the plaintiffs have a glimmer of hope because U.S. District Judge Stanwood Duval has ruled the corps can be held liable for flooding caused by the MRGO. By contrast, Duval threw out a similar suit in January 2008 over flooding caused by broken floodwalls closer to the city park and downtown New Orleans, ruling the corps was immune.

"The claims are not new, nor is the defense new, but their application is novel in two ways: One, the size of the stakes and, two, the amount of the alleged negligence and malfeasance," said Oliver Houck, environmental law professor at Tulane University.

The outcome of the trial may pivot on technical arguments.

The plaintiffs say the MRGO - and all the erosion it caused - allowed Katrina's waves to destroy the levees and floodwalls.

"It was nothing but a city killer," said G. Paul Kemp, a coastal scientist with the National Audubon Society who is expected to testify on behalf of the plaintiffs.

The corps disputes that analysis, saying it took concerns about the risk of flooding seriously, but after studying its effect determined the MRGO would not contribute to severe storm surge.