The court's decision was not based on their failure to predict the earthquake, but on their making a public statement that it wouldn't happen, as far as I know. They got sucked into a political situation, and rather than staying out of it, they came out on one side - the side of the mayor and council at that time, reassuring people that they didn't need to worry, it was all okay. Basically, they let themselves be used for political purposes, and when the earthquake happened they were in deep doodoo.
But the things the court did to *come* to that verdict are screwy, to me. Quake victims' families testifying, for example. Whether the court knows it or not, it's setting a precedent with its decision, not for what it is, but for what people *think* it is.