Please remember that when New Orleans was built, it was 80 miles from the coastline and well above sea level. The coastline has eroded where New Orleans is now only 40 miles from the coast and many parts of New Orleans that were above sea level when built have sunk due to subsidence and are now below sea level. Everyone knows the eroding coastline is due to the Federal gov't building the levee system south of New Orleans and channeling the land-building silt from the Mississippi away from Louisiana and out into the deep waters of the gulf.
I have not heard about the mayor's lawsuit, if any, but unfortunately, a billion dollars would not even start to pay for the damages from Katrina. (The area suffered over a billion dollars in losses just from looting. Yes, you're right. It isn't only nice people who live there.)
But remember, flooding doesn't affect just people who live below sea level. It occurs in many mountainous regions also and none of its victims "deserves it"