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BP Business Economic Loss Claim Appeal 2016-605: Claimant’s “operation” of location qualifies as a “Facility”


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 appeals the decision of the Settlement Program which denied this claim on the basis it was submitted for a component of the business that is not a Facility as defined under the Settlement Agreement. Before getting into the substance, this Panelist wishes to comment on claimant counsel’s derogatory comments regarding the impartiality of the Settlement Program. Surely, no large-scale adjudicatory program can be flawless. However, leveling such broad brush criticisms of the Program is inexcusable and offensive. If an advocate wishes to be viewed with distaste by a decision maker, claimant’s counsel, who is otherwise able, has accomplished this.

In this case, Claimant is a real estate agency with its principal office in Sarasota, Florida which is outside the claim zone. Nevertheless, claimant contends it leases space at [XXXXX] which is within the claim zone and where the company allegedly operates its business. The Settlement Agreement defines a Facility as (1) a separate and distinct physical structure, such as a building or other premises; (2) owned, leased or operated by the Business Entity; (3) at which the Business Entity performs or manages its operations.

The first debate involves the issue of whether the company leased the [XXXXX] location which was actually a Townhouse. Claimant did not own this property but argues it did lease the premises. In an usual twist, Claimant was not the lessee but did pay rent for the townhouse. This raises an interesting question. If an entity is not a party to the lease contract but pays money for the use of the space, has the entity leased the property. The Cambridge Dictionary defines lease as follows: “to use or allow someone else to use land, property, etc for an agreed upon period of time in exchange for money”. This definition arguably suggests that claimant leased the property. Moreover, even if there is some lingering question as to whether the premises were leased by [XXXXX], Claimant arguably operated the premises in question. Claimant alleged all of its revenues and expenses were generated out of the address and, therefore, suggests it operated out of this location.

This is important, because, in order to satisfy all the necessary elements, Claimant is required to show that it leased or operated the premises to satisfy subpart (2) and must show that (3) it managed or performed its operations at the relevant location. In its original filings, Claimant only made conclusory statements to establish it operated at the address and performed and/or managed its operations there. As a result, this Panelist requested documentary proof on these elements. In response, claimant submitted the following:

1) Affidavit from [XXXXX], the principal owner of Claimant that attests to the following:

a) Claimant has its sales office, conducts its real estate brokerage services and performs all its real estate brokerage business at the location.

b) Claimant employed four full-time sales agents who were physically located full time at the address.

c) One of the sales agents is responsible for the management, supervision and direction of the day-to-day operations of the Claimant and its other sales agents.

d) All revenues of Claimant are generated by the marketing and sale of real property through the actions of the sales agents working at the property.

2) A document from the State Of Florida Department of Business and Professional Regulation which states the address has been registered as a branch office for [XXXXX] Properties.

Claimant also submitted blank Listing Agreements on behalf of [XXXXX] which show its address on [XXXXX]. However, these documents are unexecuted and blank with no date so they have little probative value.

However, the affidavit and the Certificate from the state of Florida are enough to establish that Claimant operated out of the address and performed and/or managed its operations from this location. Also, as mentioned above, Claimant arguably qualified as a lessee of the subject facility. Accordingly, there is a finding herein that Claimant had a facility within the claim zone as that term is defined under the Settlement Agreement. The denial is overturned and this claim is returned to the Settlement Program for further processing.

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