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BP Business Economic Loss Claim Appeal 2016-1878: Auto Dealership’s Operating History Began Before April 20, 2010 Based on “Totality Of Circumstances”

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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.

Claimant is an automobile dealership whose Start-Up Business Economic Loss claim was denied. The Settlement Program found that Claimant “submitted documents indicating that [its] operating history commenced on or after April 20, 2010.
The Settlement Agreement and Claims Administrator Policy 362 require that [the] business’ operating history commence before April 20, 2010 to be eligible to receive compensation under the Start-Up Business Economic Loss or Failed Start-Up Business Economic Loss frameworks.”
BP contends that Claimant has neither demonstrated that its operations began prior to the Spill nor has it demonstrated that it incurred expenses indicative of the actual start-up of operations prior to the Spill. Claimant began recording legal, tax, and “outside services” expenses in March 2010, but these are not the kinds of expenses (like salary and inventory, for example) that indicate that Claimant had actually started operating, according to BP. Claimant did not take possession of its dealership premises until May 1 and did not possess the necessary equipment to operate the dealership until, at least, May 5, Claimant was not operating at the time of
the Spill and is ineligible to recover under the Settlement Agreement.
Claimant counters that its operating history commenced and substantial expenses were incurred before April 20, 2010. Claimant points out that voluminous records evidencing substantial efforts, expenses and operations have been submitted, clearly demonstrating a pre-Spill start date. Under Policy 362 v.2, in determining whether a business had begun doing business pre-April 20, 2010, the Settlement Program is to consider the “totality of the circumstances,” including whether a claimant began to incur substantial costs or expenses of a nature indicative of the actual start-up of business operations.
BP incorrectly states Claimant’s burden by requiring the business to be “fully operational”, with salaries, auto sales and the like prior to April 20, 2010. This is not the correct standard that governs this Settlement Agreement. Claimant notes a number of Appeal Panel decisions that speak directly to pre-spill activity and undertakings deciding that those claims should not have been denied based on a “totality of the circumstances test,” noting expenses incurred indicative of a nature to the actual
start up of the business prior to April 20, 2010.
Claimant asserts that it is in a similar position. Claimant, now the largest auto dealer in the United States, began operations like most typical auto industry-related businesses. The level of complexity and preparation that is necessary to create and operate a business of this scale is extraordinary and must be taken into consideration when considering the “totality of circumstances.”
This panelist finds that based on the evidence presented and numerous supporting Appellate Panel decisions this claim should not have been denied, and is remanded to the Claims Administrator for review as a Start-Up BEL.

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  1. Lawrence Scott says:
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    I have a client that has had their appeal denied on several occasions and is interested in filing suit in an effort to pursue the same. Please contact me if your firm handles these types of claims or refer me to someone that does.

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