ID 100009540 v. BP Exploration & Production, Inc. ( 2017 )

Case: 15-30964 Document: 00513879776 Page: 1 Date Filed: 02/17/2017
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 15-30964 FILED
February 17, 2017
Lyle W. Cayce
CLAIMANT ID 100009540, Clerk
Requesting Party - Appellant Cross-Appellee
v.
BP EXPLORATION & PRODUCTION, INCORPORATED; BP, P.L.C.; BP
AMERICA PRODUCTION COMPANY,
Objecting Parties - Appellees Cross-Appellants
Appeals from the United States District Court
for the Eastern District of Louisiana
USDC No. 2:15-CV-3726
Before ELROD, SOUTHWICK, and GRAVES, Circuit Judges.
PER CURIAM:*
ARTCC Enterprises, LLC appeals the district court’s denial of its request
for discretionary review of a decision of the administrators of the Deepwater
Horizon Economic and Property Damages Settlement (“E&P Settlement”).
Specifically, ARTCC contests the amount of compensation it was awarded on
its claim for economic loss, filed through the settlement program. BP
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
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Exploration & Production, Incorporated, et al. (collectively “BP”) cross appeals
the district court’s order granting ARTCC’s motion for an extension of time in
which to file the present appeal. For the reasons that follow, we AFFIRM.
I. BACKGROUND
ARTCC operated an oyster processing business under the name Bayou
Oyster, located in Houma, Louisiana. On May 27, 2009, ARTCC purchased the
assets of Bayou Oyster from Crab Connection, LLC. The transaction was
structured such that Crab Connection retained and was responsible for Bayou
Oyster’s liabilities. ARTCC, d/b/a Bayou Oyster, commenced operations on or
about June 2009, but was forced to close its doors on May 5, 2010, due to the
cessation of oyster harvesting following the Deepwater Horizon oil spill.
On June 5, 2012, ARTCC filed a “Start-Up Business Economic Loss”
claim for compensation with the Court Supervised Settlement Program
(“CSSP”), which had been created pursuant to the E&P Settlement. For
businesses that shut down due to the oil spill, the E&P Settlement establishes
different compensation formulae for claimants filing as a “Failed Business” and
those filing as a “Failed Start-Up Business.” The difference between the two
is clearly defined in the E&P Settlement: the former is defined as “an entity
that commenced operations prior to November 1, 2008,” while the latter is “an
entity that commenced operations on or after November 1, 2008.” ARTCC
represented that it had commenced business operations on July 1, 2009. While
this claim was pending, ARTCC filed another claim with the CSSP in October
2012, this time using the “Failed Business Economic Loss” form. On this form,
ARTCC stated that it had commenced operations on May 27, 2009. The CSSP
concluded that this second claim was duplicative and sent ARTCC a “Notice of
Duplicate Claim.” ARTCC submitted a third form to the CSSP in February
2013, a “Failed Business Economic Loss Sweat Equity Sworn Written
Statement.” Notably, compensation for “sweat equity” is available only to
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“Failed Start-Up Businesses.” This form listed yet another date for ARTCC’s
commencement of operations: June 20, 2009.
On March 28, 2013, the CSSP Claims Administrator issued an Eligibility
Notice, which determined that ARTCC was entitled to $29,567.81 under the
E&P Settlement, an amount that was substantially offset by the
approximately $375,000 in payments that ARTCC had already received from
BP through loss compensation programs that preceded the establishment of
the CSSP. The award amount was derived using the “Failed Start-Up
Business” compensation framework.
ARTCC requested reconsideration, and, on August 16, 2013, the CSSP
issued a Post-Reconsideration Eligibility Notice, confirming its award. ARTCC
appealed to the CSSP Appeal Panel. The E&P Settlement lays out a specific
appeal procedure, which requires the claimant and BP to exchange and submit
to the Appeal Panel respective initial and final proposals for the compensation
amount the claimant should receive. Although the parties are free to
compromise, without an agreed resolution, the Appeal Panel “must choose to
award the Claimant either the Final Proposal by the Claimant or the Final
Proposal by the BP Parties but no other amount”—the so-called “baseball
process.”
ARTCC filed an initial proposal of $5,000,000. In an attached
memorandum, ARTCC argued that Bayou Oyster was a preexisting company,
not a failed start-up. The memorandum also explained how ARTCC had
calculated its losses to arrive at its proposed award. Significantly, ARTCC’s
methodology diverged in numerous ways from the E&P Settlement, taking into
consideration factors that are not part of either the “Failed Start-Up” or “Failed
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Business” compensation frameworks. 1 BP, by contrast, offered an initial
proposal of $29,567.81, the same amount the Claims Administrator had
determined that ARTCC was eligible to receive. In response, ARTCC made a
final proposal of $3,432,737. As its final proposal, BP again offered $29,567.81.
On October 30, 2014, the CSSP Appeal Panel affirmed the determination of
the Claims Administrator, awarding ARTCC $29,567.81.
In its decision, the Appeal Panel explained that because ARTCC began
its operations in June 2009 and ceased operations in May 2010, the Claims
Administrator properly calculated its losses using the Failed Start-Up
framework to derive the award of compensation to which ARTCC was entitled.
Moreover, ARTCC had argued that other components should have been
inserted into the award calculation, but those components are not permitted or
authorized by the E&P Settlement and were correctly excluded.
ARTCC, proceeding without counsel, sought discretionary review from
the district court, which it denied in an order dated August 27, 2015. On
October 26, 2015, an attorney moved to appear as counsel of record for ARTCC
and filed a notice of appeal of the district court’s order. On the same day,
ARTCC moved under Federal Rule of Appellate Procedure 4(a)(5) for an
extension of time to file the appeal on the grounds that, despite concerted
efforts, it had been unable to secure counsel to take an appeal within the 30-
day window permitted under Rule 4. A corporation “cannot appear [in this
court] in proper person as a corporation or through its corporate officer,” but
1 The memorandum, in fact, purported to justify two possible awards, neither of which
were $5,000,000. The first number, $7,846,256, took into consideration the age and years
until retirement of ARTCC’s President, Art Chauvin, factors that have no basis in the E&P
Settlement. The second figure, $3,432,737, claimed to be based on the “settlement accounting
protocol for established businesses,” and multiplied ARTCC’s projected EBITDA (Earnings
Before Interest, Taxes, Depreciation and Amortization) by an industry multiple of “7.” But
that multiple is not found anywhere in the “Failed Business” framework.
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“only through an attorney admitted to practice before this court.” Southwest
Express Co. v. ICC, 670 F.2d 53, 56 (5th Cir. 1982). By order dated November
19, 2015, the district court granted ARTCC’s motion, finding that ARTCC had
shown excusable neglect for failing to timely file and deeming timely ARTCC’s
October 26, 2015 notice of appeal. BP filed a cross-appeal, challenging this
order. The district court consolidated both appeals.
II. APPELLATE JURISDICTION
Because “the taking of an appeal within the prescribed time is
‘mandatory and jurisdictional,’” Bowles v. Russell, 551 U.S. 205, 209 (2007), we
must first resolve whether we have appellate jurisdiction to hear ARTCC’s
appeal. In a civil case involving private parties, a would-be appellant must file
a notice of appeal within 30 days of the entry of judgment or order appealed
from. Fed. R. App. P. 4(a)(1)(A). A district court, however, may, upon motion,
extend the deadline up to an additional 30 days if the movant shows “excusable
neglect or good cause.” Fed. R. App. P. 4(a)(5)(A).
We review a district court’s ruling on a Rule 4(a)(5) motion based on a
determination of excusable neglect for an abuse of discretion. Stotter v. Univ.
of Texas at San Antonio, 508 F.3d 812, 820 (5th Cir. 2007). However, we “give[]
more leeway to a district court’s determination of excusable neglect when the
district court grants the motion for an extension of time.” Id. (citing Midwest
Employers Cas. Co. v. Williams, 161 F.3d 877, 879 (5th Cir. 1998)). “[T]he
determination is at bottom an equitable one, taking account of all relevant
circumstances surrounding the party’s omission,” including “the danger of
prejudice,” “the length of the delay and its potential impact on judicial
proceedings, the reason for the delay, including whether it was within the
reasonable control of the movant, and whether the movant acted in good faith.”
Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P’ship, 507 U.S. 380, 395
(1993).
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Given the leeway granted to district courts under this standard, the
minimal delay and prejudice involved, and the excuse provided by ARTCC, we
conclude that the district court did not abuse its discretion in granting the
motion to extend the time for filing a notice of appeal. See Stotter, 508 F.3d at
820. Accordingly, we have jurisdiction to hear ARTCC’s appeal.
III. STANDARD OF REVIEW
The parties dispute the standard of review applicable to the district
court’s order declining review of the CSSP’s compensation determination. BP
contends that the order is reviewed for abuse of discretion. ARTCC, on the
other hand, argues that the standard of review should be something like the
de novo standard applied to rulings on a motion for summary judgment, relying
on Johnson v. BP Exploration & Prod. (In re Deepwater Horizon), 786 F.3d 344(5th Cir. 2015). Johnson is inapposite. It addressed a situation where a party
challenged not a determination enforcing a settlement agreement, but the
validity of the agreement itself. We stated in Johnson that because “parties
must be allowed an evidentiary hearing on disputed issues of the validity and
scope of the agreement,” a district court may only summarily enforce the
agreement if there are no material facts in dispute and the party seeking to
enforce the agreement is entitled to enforcement as a matter of law. 786 F.3d
at 354. Here, ARTCC does not dispute the validity of the E&P Settlement, only
the CSSP’s compensation determination made pursuant to its terms.
Accordingly, the abuse of discretion standard applies. Steering Comm.
v. BP Exploration & Prod. (In re Deepwater Horizon), 785 F.3d 1003, 1011 (5th
Cir. 2015) (“The Agreement gives the district court discretion to decide whether
it will review an award at all. Thus, the district court’s denials of review are
reviewed for abuse of discretion.”).
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IV. ANALYSIS
Factors we consider in deciding whether the district court abused its
discretion include whether the CSSP’s claim determination clearly
contradicted or misapplied the settlement agreement, In re Deepwater Horizon,
641 F. App’x 405, 409 (5th Cir. 2016), or whether the claim determination
involved an issue of interpretation of the settlement agreement that is
frequently recurring and has divided the appellate panels of the CSSP, In re
Deepwater Horizon, 632 F. App’x 199, 203–04 (5th Cir. 2015).
We discern no error in the CSSP’s interpretation or application of the
E&P Settlement. ARTCC argues that the CSSP should have classified it as a
continuing business and applied the compensation framework for a “Failed
Business,” rather than a “Failed Start-Up Business.” This argument fails for
several reasons.
First, although the actual date of ARTCC’s commencement of operations
appears to be a moving target, all of the various dates listed by ARTCC in its
submissions to the CSSP occur after November 1, 2008. ARTCC avers that the
E&P Settlement “lacks precision as to how to determine a claimant’s category,”
but it could not be more exact on this point. A “Failed Business” is an entity
that commenced operations before November 1, 2008, whereas a “Failed Start-
Up Business” is an entity that commenced operations after November 1, 2008.
Second, as the Appeal Panel decision points out, ARTCC’s multi-million
dollar compensation request was not based on criteria permitted or authorized
by the E&P Settlement. In the “baseball process” utilized in CSSP
administrative appeals, the Appeal Panel must select either the claimant’s or
BP’s final proposal, but no other. BP’s proposal was the only one tethered to
criteria in the E&P Settlement. Consequently, the Appeal Panel could not
have sided with ARTCC without itself violating the E&P Settlement.
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Finally, the E&P Settlement makes clear that the proper claimant is the
“entity” asserting a business economic damages claim, and not, as ARTCC
contends, the business (here, Bayou Oyster) that is operated by that entity.
There is no dispute that ARTCC purchased only the assets of Bayou Oyster,
while liabilities remained with its predecessor-in-interest, Crab Connection. It
is well-established that the life of an entity continues in a stock sale, whereas
assets are transferred to a different entity in an asset sale. See, e.g., Diebold
Found., Inc. v. Commissioner of Internal Revenue, 736 F.3d 172, 175 (2d Cir.
2013) (distinguishing between “asset” and “stock” sales); BASIC LEGAL
TRANSACTIONS § 28:7 (2011) (explaining that “[i]n an assets sale, the seller
is the corporate entity,” whereas “in a sale-of-stock transaction, all assets
owned by the corporation automatically become the purchaser’s assets, since
they are held in the corporate entity’s name”).
ARTCC attempts to circumvent this principle by relying on the successor
liability doctrine recognized in Louisiana, which under certain circumstances
treats an asset purchaser as a “mere continuation” of the seller corporation
such that the purchaser-successor should be held liable for its predecessor’s
liabilities. But the purpose of the “‘mere continuation’ exception to the rule of
non-liability is to prevent two corporations from merging in effect while
limiting the liability of the surviving corporation by structuring the transaction
as a sale of assets.” Bank of Am., N.A. v. Garden Dist. Pet Hosp., Inc., No. CV
15-1386, 2016 WL 952250, at *7 (E.D. La. Mar. 14, 2016) (internal quotations,
alteration, and citation omitted). The doctrine has no relevance here where
ARTCC is seeking solely to step into the shoes of Crab Connection in order to
claim a benefit to which it would otherwise not be entitled. In any event, the
E&P Settlement is governed by general maritime law, not Louisiana law, and
ARTCC has not shown that maritime law recognizes such a doctrine, let alone
applies it in the novel way ARTCC urges here.
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ARTCC does not otherwise contend that the compensation award
calculated under the “Start-Up Business” compensation framework is
erroneous. Therefore, under this prong of our analysis, the district court did
not abuse its discretion in declining to review the CSSP decision.
As for the second prong, ARTCC has adduced no evidence that its
individual compensation determination involves an issue of the settlement
agreement’s interpretation that is frequently recurring and has split internal
appeal panels within the CSSP. The rhetorical questions raised in ARTCC’s
brief regarding the manner in which the E&P Settlement evaluates claims by
successor-in-interest entities do not stand in for competent proof. In In re
Deepwater Horizon, 632 F. App’x at 203–04, claimants developed a record
demonstrating that the issue in the case had repeatedly arisen in claims
litigation and that there were conflicting appeal panel decisions generated by
the issue. ARTCC has offered no such evidence.
Ultimately, ARTCC’s appeal illustrates this Court’s previous
observation that:
If the discretionary nature of the district court’s review is to have
any meaning, the court must be able to avoid appeals like this one
which involve no pressing question of how the Settlement
Agreement should be interpreted or implemented, but simply raise
the correctness of a discretionary administrative decision in the
facts of a single claimant’s case. See In re Deepwater Horizon, 785
F.3d 986, 999 (5th Cir. 2015) (“We do not intend any part of this
opinion to turn the district court’s discretionary review into a
mandatory review. To do so would frustrate the clear purpose of
the Settlement Agreement to curtail litigation.”).
In re Deepwater Horizon, 641 F. App’x at 410.
AFFIRMED.
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