The Daily Corinthian reports that U.S. District Judge Glen H. Davidson issued the order this week.
FEMA had argued that the Flood Control Act of 1928 exempts the United States from liability for flood damage and that Kmart's claims are barred because they concerned flood mapping, among other things.
As a result of damages incurred in the 2010 flood, the Kmart Corporation sued the city of Corinth; FEMA; The Kroger Co.; E&A Southeast Limited Partnership; Fulton Improvements, LLC; and Kansas City Southern Railway Company.
The suit alleges that Kroger, Kmart's neighbor, sits in a floodway and, on May 2, 2010, altered the flow of water from standing water to a rushing, forceful flow of water at the Kmart store.
Kmart argues that the grocery store should have been leveled but in 2005 was allowed to remain in the floodway after a letter of map revision was issued by FEMA. The suit states the city, Kroger and the landlord at the time, E&A, were involved in securing the revision.
Kmart is seeking compensation related to the flood damage and to the store's closure for 10 months.