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BP Business Economic Loss Claim Appeal 2017-455: Commercial Lessor Fails Decline-Only Test By Failing to Submit Necessary Documentation


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, asserting that it satisfies Exhibit 4B’s decline-only revenue pattern test that the Settlement Program rejected.  The Settlement Program denied this claim due to Claimant’s failure to provide documents sufficient to establish that any lost revenue was a result of the Spill, in
accordance with Exhibit 4B of the Settlement Agreement.
Claimant owns and leases two commercial buildings in Pinellas Park, Florida. Under Exhibit 4B of the Settlement Agreement, Claimant can demonstrate its eligibility under the BEL framework by passing one of the four enumerated tests. Both sides acknowledge Claimant’s financial data satisfy the revenue requirements of only the third test, the decline-only revenue pattern test. In order to satisfy the decline-only revenue pattern test, however, Claimant must, in addition to satisfying the test’s revenue requirements, 1) identify factors outside of its control that prevented the recovery of revenues in 2011, and 2) demonstrate a decline of at least 8.5% in the share of total revenue generated by non-local customers over the three-month period used in the decline-only revenue pattern test. Claimants must provide specific documentation proving each of these requirements.
In its Opening memorandum, Claimant contends that three factors prevented its recovery of revenue in 2011; namely, that a tenant renewed a lease at approximately 30% less than the previous lease “due to market conditions;” that another tenant defaulted on rent payments; and that there was “significant road construction on the main road near Claimant’s facility.”
BP argues that Claimant has not satisfied Ex. 4B’s documentation requirements, in that Claimant has not provided objective third-party documentation of factors outside of its control that prevented its recovery of revenue in 2011. BP maintains Claimant’s submissions do not satisfy the requirements of the Settlement
Agreement or Policy 474, which requires claimants to submit objective third party documentation, and states, “A document prepared by the claimant, the claimant’s accountant or the claimant’s attorney is not sufficient on its own to satisfy this requirement.” Policy 474.
Claimant asserts that it was prevented from recovering revenue because a tenant renewed a lease at approximately 30% less than the previous lease, “due to market conditions.” However, the Appeal Panel has generally rejected claimants’ attempts to rely on general “market conditions” or a macro-economic downturn. A factor must have a specific effect on the Claimant’s business, as opposed to a macro condition that impacts the area in general.
The record does not support Claimant’s allegations with respect to road construction and defaulted rent. Importantly, the construction described in a newspaper clipping commenced in 2009, not 2011, and was located several miles from Claimant’s location. No third-party documentation was submitted in conjunction with the rent default, and Claimant’s financials did not support the timing of the default as described in the Opening Memorandum.
Based upon the foregoing, Claimant’s appeal is denied, and the denial hereby upheld.

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