The city of Thunder Bay says insurance adjusters have advised 1900 property owners that the city is not liable for losses caused by the rainstorm in May 2012.
Letters have been mailed out this week to residents who filed claims.
The city said in a news release Thursday that the letters constitute its response to the claims.
According to city manager Tim Commisso, the city "acted appropriately" before, during and after the May 28 rainstorm.
In a statement, Commisso said even though the water pollution control plant on Atlantic Avenue has a capacity for 10 times normal water flows, the volume was too much for the system to handle.
"The unprecedented rain storm was the cause of the unfortunate losses that affected property owners including the city," he said.
The letter sent to property owners says they may be eligible to participate in the class-action lawsuit that arose out of the rain event.