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BP Business Economic Loss Claim Appeal 2014-450: Primary business activity is excluded real estate development


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.

Claimant appeals the denial of his individual economic loss claim. Although this case is an extremely close call, the decisions of the Claims Administrator repeatedly denying this claim are upheld.

The denial of this claim was based on his employer qualifying as an excluded real estate developer. Claimant, in a strident opposition, argues that the employer fits the description of a hotel because it is in the business of providing short term lodging. Additionally, Claimant contends a similarly situated employee with the same employer received an award and BP did not raise the exclusion argument in that case.

However, as all parties agree, the appropriate NAICS code shall be based on the entity’s primary business activities and this determination is dictated by the entity’s 2010 tax return, 2010 business permits and other evidence of the business activity of the owner. In this case, the employer identified its business activity as Real Estate Development on its 2010 return. It also had 2010 business permits and licenses indicative of Real Estate Development.

Nevertheless, claimant could have overcome these hurdles by demonstrating that Real Estate Development was not the primary activity of the employer. Claimant did demonstrate that the employer is involved in the business of short term rentals and did also show that a separate unit of his employer’s parent company purchased a vacation rental company. Without more specifics and details, this information is simply not sufficient to prove the primary business of the employer is other than is shown on the 2010 return.

If this decision is inconsistent with the result in a similarly situated case, that is unfortunate. However, the outcome in that case, assuming the facts are similar, does not dictate the result in this case.

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