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BP Business Economic Loss Claim Appeal 2015-1851: Construction trailer not “facility” (decision overruled)


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 appeals this pre-RTP award of $1,285,833.73 to alleging 2 points of error and presenting a final proposal of 0. The primary argument is that the calculations in this matter included revenue from out of zone facilities which should have been excluded. Additionally, appellant suggests the Settlement Program did not properly consider certain expenses which were embedded in an entry for insurance in the financials.

Claimant is a commercial general contractor based in Plant City, Florida. BP contends that claimant had “facilities” at construction projects outside the compensation zone and, therefore, the revenues from these facilities should have been excluded from the calculations. However, as pointed out, these locations are simply on-site trailers for project supervision, field engineering and site overview. This description does not match with the term “facility” as contemplated by the Settlement Agreement since they are not where the entity manages its operations in a broad sense. Although there may be some supervision of the local operations performed at these far flung locations, they do not constitute facilities which is defined in the Settlement Agreement as “a separate and distinct physical location of a multi facility Business at which it performs or manages its operations”. See Exhibit 5 at p.2. Partly due to the transitory nature of construction trailers, it is held herein that on site supervision of local construction projects at temporary sites does not constitute a “facility” as that term is understood in the Settlement Agreement. As a result, there was no need to exclude revenue attributable to any of the out of area locations in this case.

BP also suggested the claimant’s P and Ls failed to segregate worker’s compensation, employee health insurance and payroll taxes. Appellant argued these expenses were characterized improperly which inflated award by $137,236 pre-RTP. Claimant, appearing pro se, only made a cursory response on this issue. Nevertheless, this debate is not material in a baseball appeal where claimant’s final proposal is well over a million and BP presents a final number of 0.

Accordingly, BP’s appeal is dismissed and the award in accord with the claimant’s final proposal is affirmed.

[Editor’s Note: This appeal panel decision was reversed by Judge Barbier under Discretionary Review.]

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