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BP Business Economic Loss Claim Appeal 2017-790: Pre-Spill Operations Not Sufficient for “Start-Up” Vacation Property Lessor


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, a lessor of vacation rental property, has asserted various Start-up BEL claims for its rental units located at Islamorada, Florida. The present appeal involves a unit located at XXXX.  The Program has denied a claim for this unit on three occasions, finding that it did not establish a sufficient pre-Spill operating history as construed by Policy 362v2. In support, Claimant points to a recent Discretionary Review decision by the District Court involving Claimant’s located at the same premises. Therein, on a finding that Claimant had expended some $12,582.00 in repair, maintenance, utilities and management fee costs prior to the Spill, the Court affirmed a panelist’s reversal of the Program’s denial of an award, finding that there was a sufficient operating history established pre-Spill.
Claimant argues that pre-Spill expenses, amounting to almost $10,000.00, are comparable to, and merit the same finding. Claimant also asserts that as of the time of the Spill, this unit was rental ready, and that it was advertised for rent. It further points to other panel decisions holding that actual pre-Spill rental revenue need not be established to show a sufficient operating history.
In response, BP contrasts the financials and operating history of others from those of the subject unit. As to the former, Claimant had spent over $26,000.00 in  pre-Spill costs, including over 85% of its maintenance and repairs before the Spill. That unit’s rental commenced in May of 2010, about a month after the Spill. In contrast, repair expenses post-Spill amounted to almost $40,000.00, the vast majority of its total 2010 repairs, indicating that it was hardly rental ready by the time of the Spill. Additionally, its rental revenue did not commence until January, 2011, some 8 months after the Spill.
After de novo review of this case, this panelist agrees with BP. Even as to the District Court noted that its affirmance of that panel was “a close call.” The aforementioned financials and rental history as to in the opinion of this panelist, applying “a totality of circumstances” standard required by Policy 362v2, do not ascend to a sufficient operating history before the Spill as to show “actual start-up business operations”  prior to April 20, 2010. As such, the decision of the Program was appropriate on the facts of this case, and its denial of this claim was properly denied.

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