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BP Business Economic Loss Claim Appeal 2015-1333: Lease commenced May 1, 2010, start up claim properly denied


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 filed this Failed Start-up Business Economic Loss claim under the Settlement Agreement. The Settlement Program denied the claim based upon Policy 362. appeals. The issue on appeal is whether claimant’s operating history began before April 20, 2010.

In reaching this determination, the totality of the circumstances must be considered. In this case, no one argues that Claimant sold products or performed full time services before April 20, 2010. The inquiry does not end there, however. Claimant could still qualify if it sustained substantial costs or expenses before the Spill that are indicative of the actual start-up of business operations. Claimant argues that it started incurring substantial costs in January, 2010. The record does reflect that from August 2009 until March 2010, Claimant searched for a restaurant location. This culminated with an offer to rent (with an option to buy) made on March 25, 2010. That offer was accepted on March 27, conditioned on prepayment of six month’s rent, taxes, and insurance. Claimant contends it signed the lease on April 15, 2010, paying $35,000 for rent, $20,000 for taxes, $7,552 for insurance, and $2,450 for sales tax. Claimant took possession on May 1.

BP counters that the checks Claimant contends were written on April 15, before the Spill, were actually written April 30, 2010. The documents support BP. When the Settlement Program inquired about this discrepancy, Claimant responded:

“here are the copies of the checks I wrote to [XXXXX] from my personal account. Unfortunately, I postdated them for April 30th but they were delivered to my attorney… on April 15th when we signed the lease agreement.”

It is a fair interpretation to say Claimant planned to move in and commence operations on May 1, 2010 – too late to qualify for programmatic relief in this process. While did begin some business activity before the Spill, based upon a totality of the circumstances, it is not enough. The clear intent was to commence operations after the Spill. Claimant also observes that some of its employees successfully filed claims. This is irrelevant.

The Settlement Program’s denial of the claim is upheld.

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