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BP Business Economic Loss Claim Appeal 2015-1104: Engaging in excluded business activities, IF not the “Primary Business Activity,” does not exclude entity, revenue


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.

This appeal arises from the denial of Claimant claim for compensation under the BEL Settlement for failure to show causation under the “V-Test” for Zone C BEL Claimants.

Claimant is a pawn shop in Alabama. Claimant asserts the Claims Administrator wrongfully relied on Policy 328 v. 2 to exclude a revenue stream, resulting in the V-Test failure. Claimant argues it derives its regular income from several streams of revenue in its regular course of business, and in Claimant’s evaluation of its potential claim, it used all revenues from regular operations.

BP argues the Settlement Program correctly excluded income from money order sales, as that activity is expressly excluded under the Settlement Agreement. Settlement Agreement, Exhibit 18 at 6. Accordingly, because income from Claimant’s money order sales is excluded, Claimant fails to meet the Exhibit 4B revenue tests, and is not entitled to an award.

The controlling question is whether Claimant is a pawn shop that sells money orders as an incidental part of its eligible pawn shop business, or, alternatively, an ineligible “money order issuance” business. Applying the “totality of the file” or “totality of circumstances” standard, an analysis of the financial records and record as a whole demonstrate that primary business activities are ordinary pawnshop transactions, and Claimant is a pawn shop. An examination of the sources of net income clearly shows that the primary activity permitting to make profits and carry on as a going concern are traditional pawn shop transactions including Sales and Pawn Service Charges, not the sale of money orders. Claimant apparently nets $0.09 per money order; a very minor portion of Claimant’s net revenue.

Policy 373v2 provides, “All recurring revenue streams that are deemed to be within the businesses’ normal course of operations should be included in the analysis. For example, a restaurant that generates income from food service and also generates rental income by renting an apartment attached to the building.”Claimant’s revenue from money order sales are clearly within the businesses’ normal course of operations, and fit the Policy 373 v. 2 definition.

The Claims Administrator’s denial is overturned, and this matter is remanded for reconsideration consistent with the views expressed herein.

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