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BP Business Economic Loss Claim Appeal 2015-1805: Totality of circumstances suggest start up

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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, a RV dealer in DeFuniak Springs, Florida, appeals the denial of its Start-UP BEL claim on the basis claimant was not in operation before April 20,2010. Claimant asserts that if the totality of the circumstances provisions of policy 362 are correctly applied the claim should not have been denied.

BP in a half-hearted response points to two factors that favor denial of the claim: the BEL claim form of claimant which declares that claimant commenced operations on May 1,2010; and financial documents that show revenues from sales were not recorded until June 2010. A review of the record discloses that while the above factors are true and correct, other factors exist that support claimant’s contentions.

Claimant is a RV dealership that requires a large physical footprint in the form of a building/display lot and a sizeable inventory for display to the public, all of which necessitates long-term planning and preparation. Claimant’s date of incorporation with the State of Florida was March 8,2010. On its 2010 federal tax return, claimant stated it started its business operations on March 8,2010, and reported revenues of over $5 million for a portion of that year. On April 5, 2010, claimant obtained its sales tax license and resale certificate from the State of Florida. Thereafter, on April 12, 2010, claimant received its surety bond as a RV dealer to comply with Florida law. Before April 20, 2010, and commensurate with the start of its operations, claimant expended over $100,000 for rental of its premises, legal services, signage and building materials. Lastly, and most importantly, before April 20, 2010, claimant spent over $3 million to acquire and transport inventory to its location to have ready for sale once it began its operations in May 2010 and as evidenced by sales recorded for June 2010.

Logic and common sense dictate a finding these events could not have occurred overnight or subsequent to April 20, 2010. Indeed, there is record support that claimant incurred substantial costs and expenses of a nature indicative of the actual start-up of business operations before April 20, 2010. Based on these foregoing reasons the decision of the Claims Administrator is vacated and set aside and remanded for further processing and evaluation under the Start-Up BEL framework.

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