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BP Business Economic Loss Claim Appeal 2017-551: Residential Builder Not “Real Estate Developer”

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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


BP appeals the BEL award to claimant, a residential builder in Tallahassee, Florida. BP asserts claimant is a real estate developer and thus excluded as an eligible class member by virtue of Section 2.2.4.7 of the Settlement Agreement. BP argues that on Schedule L of its 2010 federal tax return claimant listed “Land Held for Development”. BP also argues that claimant’s ownership interest in three subdivisions’ properties evinces it was directly involved in real estate development activities.
Claimant retorts that BP has presented a distorted view of claimant’s true role and its related activities to these ventures. Claimant contends it is involved only in the after-the-fact acquisition of lots for improvement and sale once a subdivision is developed and placed on the market by an unrelated third-party. Further, claimant contends the entry on its 2010 tax return references a parcel acquired in 2006 for potential development that has yet to move forward and sits as unimproved real estate to the present date.
A review of the record discloses that claimant participated in building activities in three subdivisions identified and cited by BP. Relative to XXX, the record shows it was platted and developed insofar as infrastructure by an unrelated third-party in February 2005, after which claimant purchased lots on which it built and sold homes. Again, relative to claimant’s participation in activities at the XXX, the record reveals claimant purchased lots in April 2005 after the subdivision had been earlier platted and developed by an unrelated third-party. Finally, with regard to YYY and claimant’s involvement, the record shows claimant purchased multiple lots in September 2006 after the subdivision had been earlier developed and placed on the market by an unrelated third-party in June 2006.
These salient facts have not been controverted by BP in any rebuttal responses. This factual pattern persuades the panel that the provisions of policy 468, Section ll.F.2 has application and controls resolution of whether claimant is excluded as a real estate developer. This provision essentially provides that an entity, that engages in building activities and acquires real property sites for speculative purposes of erecting residences and their sale on a dwelling by dwelling basis, will not be considered an excluded real estate developer. Furthermore, the entry contained in Schedule L of claimant’s 2010 federal tax return is not affirmative evidence of overt real estate development activity on part of claimant in the year 2010 as contemplated by policy 468. It shows possession of a passive asset by claimant and nothing more.
In summary, this panel concludes BP has failed to identify activities on part of claimant in 2010 or before which rise to that level to be deemed as those of a real estate developer. Accordingly, the decision of the Claims Administrator is affirmed and the appeal of BP is denied.

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