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BP Business Economic Loss Claim Appeal 2015-1563: AVM properly applied to construction claim


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 has appealed a BEL award of $100,036.02 (pre-RTP) to a Winnfield, La. directional boring company on the single basis that the Program accountants used the wrong Policy 495 methodology in analyzing the financials. BP points out that Claimant’s assigned NAICS code (237110) was included in the Policy 495 listing of codes appropriate for use of the Construction methodology, and that the accountants were required to use that methodology absent factors that justified a different methodology. Herein, the AVM methodology was used. BP seeks a remand to justify non-use of the Construction methodology, or alternatively proposes $0.

Claimant, pro se, responds cogently that Policy 495 grants the Program accountants leeway in their selection of the appropriate methodology, and that in this case, their choice of AVM was correct based upon the factors unique to its business. Specifically, Claimant points to the fact that in contrast to typical companies in construction, Claimant’s job cycle is usually less than a week, and its revenues and expenses for most jobs are included in the financials in the same month. The only reason even AVM was required for sufficient matching was because of certain fluctuations in Claimant’s variable margin, as explained to Program accountants. A de novo review of this record shows extensive communications between Claimant and Program accountants whereby the latter were able to dig deep to understand the true nature of Claimant’s business operation. The vendors were more than justified in their use of AVM under the particulars of this case. Thus, Claimant’s final proposal, seeking full affirmation of the award, must be chosen in this baseball arbitration process.

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