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BP Business Economic Loss Claim Appeal 2017-228: Exhibit 4B Classifies “Maintenance” As Fixed and “Contract Labor” As Variable

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 the BEL award ($60,305.56 pre-RTP) to the claimant, a condominium association in Miramar, Florida. BP raises two issues on appeal: (1) the Program misclassified the claimant’s expenses for “Repairs & Maintenance-Building Maint. Contract;” and (2) the Program failed to reconcile discrepancies between Claimant’s financials and its tax returns. The claimant has conceded the second issue and reduced its claim by $3,187 and submitted a final proposal of $57,119. Thus, that issue is moot.
In support of its position, BP claims that the Program’s analyst confused two expense categories and classified them inconsistently. In 2007, the claimant recorded expenses for “Repairs & Maintenance – Building Maint. Contract” which the Program classified as fixed. That category does not appear again in Claimant’s financials
after 2007. From 2008-2010 Claimant had an expense category of “6200- Building Maintenance Salaries & Expense.” The Program considered this to be “Contract Labor” and classified it as a variable expense. In BP’s view these categories are a distinction without a difference and attributes the difference to Claimant’s change in
accounting software in 2008. Unfortunately for BP, there is no evidence in the record that this is the case and it amounts to nothing more than speculation on BP’s part. Equally unfortunate, the claimant sheds no light on this issue in its memorandum.
Exhibit 4B contains a list of fixed and variable expenses that were long ago agreed to by the parties in the Settlement Agreement. In it, “maintenance” is deemed to be a fixed expense while “contract labor” is considered variable. It is equally possible that the 2008-2010 expense relating to salaries and expenses reflects a maintenance contract properly classified as variable while the 2007 expense represents maintenance costs properly categorized as fixed. After a de novo review of the entire record, this panelist does not find BP’s argument on this point persuasive and finds that in this baseball process, the claimant’s final proposal is the correct result.

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