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BP Business Economic Loss Claim Appeal 2015-1716: Claimant not excluded as real estate developer, 2010 is relevant year for analysis


The following is an Appeal Panel Decision issued pursuant to Section 6 of the BP Deepwater Horizon Economic & Property Damages Settlement Agreement and the Rules Governing the BP Appeals Process. Links may have been added to assist the reader. The original decision may be found here, as well as a glossary of BP Settlement terms.

BP appeals this award in favor of arguing that claimant should have been excluded as a Real Estate Developer. Appellant points to the claimant’s website which makes numerous references to the company’s development services. Claimant counters that it is a consultant to the real estate industry and mere involvement in real estate activity is not enough to trigger the exclusion. Additionally, Claimant states that “none of the locations referenced on claimant’s website that BP relied on were developed in 2010″.

It is this last point which is most compelling. It is not clear, based on the evidence in the record, whether claimant ever acted as a real estate developer. However, a review of claimant’s financials demonstrates that the company’s revenues in 2010 came from management fees and not from any activity which could have been considered real estate development. This is the key period in the inquiry.

As Policy 468 sets forth, an entity must have sufficiently engaged in real estate development activity during 2010 to be subject to the exclusion. One of the most important indicia of development activity is when there is revenue from real property sales on 2010 tax returns which is classified as ordinary income. This scenario is not present in the immediate case. Accordingly, BP’s appeal is dismissed and the award by the Settlement Program is affirmed.

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