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BP Business Economic Loss Claim Appeal 2015-2053: Claimant’s Restaurant Not A “Facility” Under the Settlement Agreement

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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.

The Settlement Program denied this Failed BEL claim on the basis that Claimant’s rental property located at Destin, Florida, did not constitute a “Facility” under the Settlement Agreement. Specifically, the Settlement Program determined that Claimant did not own or operate the property at issue, a requirement to satisfy the Facility definition in the Settlement Agreement.
It appears that the Settlement Program determined that the facility belonged to the Claimant’s wife in 2010. Also, Claimant did not list the property on his 2010 tax returns. Claimant’s appeals contending that the documentation shows joint ownership with his wife in 2010. Furthermore, the court-ordered Dissolution of Marriage
Agreement demonstrates that Claimant’s wife transferred all rights to any claim against BP for this incident to Claimant. Thus, Claimant argues that either Claimant owned the facilities in 2010, or, in the alternative his wife did and subsequently transferred rights to all claims to the Claimant. Finally, Claimant asserts that while listing property on one’s tax returns may demonstrate ownership, failure to list them does not prove the opposite.
Because the record did not contain a detailed explanation of the basis for the Settlement Program’s denial, BP suggested that the Panel request a Summary of Review. Claimant wants the denial vacated, but if a Summary of Review was requested, Claimant would like the opportunity to respond to it after it is rendered. That is just what this panelist did – requested a Summary of Review and allowed Claimant and BP to respond after it was rendered.
The Summary of Review states:
“The Settlement Program denied the claims on the basis that the subject rental properties
were not facilities of the claimant because the claimant did not declare any rental income from
the subject rental properties in his 2010 Federal tax return. The Settlement Program typically
considers the compensable claimant to be the person or entity that reports revenues and expenses
from the business on its 2010 Federal tax returns, as this is indicative of actually operating the
business or rental property at issue at the time of the Spill. Here, the claimant did not produce
any 2010 Schedule Es listing the rental properties for which he is claiming lost revenues as
required under Exhibit 4A, presumably because his ex-wife reported them on Schedule Es
attached to her own 2010 Form 1040. Although both the claimant and his wife are listed on the
deeds as owners of the properties, the Settlement Program would typically consider the
individual who reported all of the revenues from the properties on his/her 2010 tax return to be
the compensable claimant.”
“The Appeal Panelist also recites that the claimant’s wife transferred all rights to any claims against BP for this incident to claimant. However, under Section 1.1.2.1 of Exhibit 21 to the Settlement Agreement, the Settlement Program does not recognize purported assignments of claims, except in limited circumstances not applicable here under Policy s356 v. 2.”
The Claimant’s response to the Summary of Review was that the Settlement Program stated the claim was denied because the subject rental properties were not facilities of the claimant because the claimant did not declare any rental income from the subject rental properties in his 2010 federal tax return. In support thereof, it states that the person that reports revenue and expenses is typically the compensable claimant. The operative word, according to Claimant, is “typically.” Clearly, asserts Claimant, in many instances the individual reporting revenue and expenses is the proper claimant. As stated in the Summary, this would be indicative of actually
operating the business or rental property at the time of the spill.
While reporting revenue on a tax return may very well be indicative of operating the rental property, it is only one of many indicators that an individual is operating a rental property. According to Claimant, many of those other indicators have been provided throughout the course of this claim (e.g. deed listing Claimant as owner, the property tax bill, etc.). Finally, contends the Claimant, the fact that the claim was addressed in the dissolution of marriage agreement in 2012 establishes that claimant
had a continuous interest in the property which expended at the time of the court-ordered dissolution of marriage.
BP pointed out that Claimant’s 2010 and 2011 tax documentation does not support Claimant’s ownership or operation of the rental property as required by Exhibit 4A of the Settlement Agreement. Claimant attempts to sidestep this problem by relying on his ex-wife’s purported assignment of this claim to him, but such an assignment runs afoul of the Settlement Agreement. Claimant also contends that it is “unique” and that the Settlement Program should have evaluated this claim differently from the “typical” claim as a result. But Claimant must be evaluated under the same framework as all other claimants, and the Settlement Program properly applied that framework here.
The panelist concurs with the Settlement Program’s and BP’s position on this claim. Accordingly, the Claimant’s appeal is denied.

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