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BP Business Economic Loss Claim Appeal 2017-249:Construction Methodology and NAICS Code Improperly Applied To Real Estate Brokerage and Home Inspection Company


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 denial of its BEL claim. Claimant failed causation. On appeal, Claimant argues that the Settlement Program mistakenly applied the Construction Methodology. Claimant contends that had the AVM Methodology been applied, Claimant would have passed causation.
In spite of its name, and in spite of having listed a construction sector NAICS code on its tax returns, Claimant contends that its primary business activity in the relevant years was not construction. On appeal, Claimant submitted an affidavit swearing that 90% of its work was related to real estate brokerage activities, rental properties, and home inspections. This Panel accepts the affidavit and finds that Claimant should have been assigned a non-construction NAICS code.
In a Summary of Review, the Program stated that, even if Claimant was not a construction company, the Program would still apply the Construction Methodology based on the nature of Claimant’s P&Ls. Claimant responded by arguing that most of its revenues were received within 30 days of invoicing (short earnings cycle) and that Claimant did not utilize the percentage of completion method of accounting to record revenues.
This Panel has reviewed the P&Ls, including the revenue and expense patterns. Additionally, this Panel has reviewed other Appeal Panel Decisions with similar facts wherein those Panels declined to apply the Construction Methodology. As a result of this review, this Panel agrees with Claimant that the Construction Methodology should not have been applied to this Claim.
In light of the above, this matter is remanded with instructions to apply a methodology other than the Construction Methodology.

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