Categories
BP Oil Spill

BP Trying to Save Money Via Federal Appeals Court

Last year, BP filed an appeal over concerns regarding claimants using cash versus accrual accounting.  We blogged about it here.   BP was concerned about scenarios in which a contractor, for example, could buy $100,000 worth of materials in June for a project that was set to begin in November; if the contractor received his first installment payment for the project in September, but then choose June, July and August as his “benchmark period,” as opposed to September, October, November, it would result in the appearance of a loss in June, which would, of course, be artificial.

purple sky with pier in oceanOn October 2, 2013, the Fifth Circuit Court of Appeal instructed the District Court (trial court) to issue a “narrowly tailored” injunction stopping the further payment of any claims that did not properly match revenues with expenses.   Ultimately, the trial court concluded that “revenue must be matched with the variable expenses incurred by a claimant in conducting its business.”  As a result, the trial court recently instructed the Claims Administrator, Patrick A. Juneau, “to adopt and implement an appropriate protocol or policy for handling business economic loss claims in which the claimant’s financial records do not match revenue with corresponding variable expenses.”

Categories
BP Oil Spill

What BP Is Appealing And Why

Introduction

As you likely know, under the terms of the Settlement Agreement, Gulf Coast and Florida Keys businesses may have a compensable BP oil spill claim if they suffered losses during certain periods in 2010 when compared to prior years.

More than one-third of all the claims filed are from Florida, so the settlement could pump hundreds of millions, if not Billions into Florida’s economy.

However, by now Florida business owners have also likely heard that BP has filed an appeal over the Settlement Agreement. There is a lot of misinformation or at least unclear information in the press and on the Internet as to what is being appealed and why. This blog post is designed to provide answers to Florida business owners who have filed a claim.

The Issue at Hand: Cash vs. Accrual Accounting

Under the Claims Administrator’s (the court appointed neutral charged with overseeing the claims/payout process) interpretation of the Settlement Agreement, a claimant’s eligibility and compensation amount, are typically just based on revenues and expenses, as recorded by the business. In other words, the Claims Administrator’s staff is not requiring claimants to re-allocate revenues or expenses to different periods in order to make sure they match or correspond in some manner (such as to a certain job performed by the company) or to smooth revenue and expenses out over the course of a company project.

proud and confident owner of a small pastry store
Small businesses often use cash based accounting.

BP has argued that basic accounting principles require expenses and corresponding revenue to be so matched and, in essence, that they would not have entered into the Settlement Agreement otherwise. In short, BP is arguing that the Settlement Agreement requires accrual accounting instead of cash accounting.

With cash accounting, revenue is not counted until payment is actually received, and expenses are not counted until actually paid. Meanwhile, with accrual accounting, revenues for your business are counted when the order is placed, the item is delivered, or the services are rendered, etc. – regardless of when the corresponding money that is owed, is paid. Expenses in accrual accounting are similarly booked; for example, if you own a construction company, the materials you order for a job are booked as an expense on the day you order them, not the day you pay for them.

Categories
Employment Law

Fighting a Non-Compete Employment Agreement in Florida

Non-Compete Employment AgreementWhat do you do if you signed a non-compete agreement with your employer in Florida and now want to go to work for a competitor of your employer?  Many people believe that if an employer forces an employee to sign a non-compete agreement as a condition of employment, the agreement is unenforceable.  That is not true in Florida because such agreements are presumed by law to be valid.  However, that does not mean you have no ability to defeat the agreement in the event your former employer tries to enforce it.  There are several potential arguments one may be able to make.

Material Breach by Employer

One argument is that the employer somehow materially breached the employment contract.  For example, if the employer did not fulfill its obligations to the employee with regard to such items as compensation, insurance, etc., then the employee could argue that the non-compete provisions should not be enforced.

Categories
Construction

Protecting Lienors and Property Owners During Home Improvement

This is an overview of the actions that construction lienors and property owners should take to protect themselves in the event that lienors are not paid for improvements they made to the owner‘s property.

Lienors Must Serve a “Notice to Owner” to Recover on a Claim of Lien

Kitchen Remodel in Private Home Subcontractors, sub-subcontractors and materialmen who have not contracted directly with the owner to make improvements to the owner’s property must serve a “Notice to Owner” upon the owner and all parties listed in the “Notice of Commencement.”  This notice must be served before commencing work or within 45 days after the labor, materials or services were first provided and before the owner pays the full amount due. The “Notice to Owner” should contain:

  • The lienor’s name and address
  • A description of the owner’s real property
  • A description of the services or materials provided or to be provided

Service of the “Notice to Owner” is a statutory prerequisite to recording a claim of lien. The lienor’s failure to timely serve the notice is a complete defense to enforcement of the claim of lien against the owner’s property.

Categories
Construction

Preventing Commercial Landlord Liability for Tenant Improvements

Many commercial landlords face a common but preventable problem: construction lien liability for tenant improvements. This issue comes up when the tenant voluntarily hires contractors to make improvements to the landlord’s property but fails to pay them in full. To recover the monies owed to them, the contractors file construction liens against the landlord’s property and sue the landlord to foreclose on the liens.

Construction PlansConstruction liens cloud the landlord’s title to the real property and can prevent its sale or refinancing. Additionally, landlords can be held liable to construction lienors, such as general contractors, subcontractors and materialmen, for improvements they made for the tenant. Consequently, landlords must take certain actions to shield themselves from liability against tenant improvement construction liens.

Review the Lease Agreement

The lease agreement should not contain express or implied language that requires the tenant to do anything to improve the property. If the lease agreement obligates the tenant to make improvements, any liens arising from those improvements can attach to the landlord’s real property interest.

Categories
BP Oil Spill

BP Oil Spill Frequently Asked Questions From Clients

What is the Deepwater Horizon BP Oil Spill Settlement?

A settlement program set up to compensate businesses and individuals for economic losses caused by the April 20, 2010, explosion on the Deepwater Horizon oil rig and the resulting oil spill in the Gulf of Mexico. BP has agreed to pay all claims no matter the dollar amount. Although each claim will differ in value, the average economic loss is approximately $200,000. As of January 22, 2013, 106,103 claims have been filed and approximately $1.3 billion has been paid. Approximately $400 million of unfiled claims remains to be paid.  Find more basics about  BP oil spill claims.

Categories
BP Oil Spill

BP Oil Spill Claims Available to a Wide Range of Businesses

INTRODUCTION

The Deepwater Horizon oil rig explosion in the Gulf of Mexico on April 20, 2010, caused the largest offshore oil spill in U.S. history. The spill damaged marine and wildlife habitats and the Gulf’s seafood and tourism industries. As a result, British Petroleum (BP) set aside $20 billion dollars in an escrow fund to compensate affected businesses and individuals. Unfortunately, the claims process, which was administered by  the “Gulf Coast Claims Facility” was difficult, time-consuming and in many cases unfair.

bp-oil-spill

CLASS ACTION LAWSUIT

Therefore, what followed was a federal class action lawsuit in the United States District Court for the Eastern District of Louisiana. Judge Carl J. Barbier oversees this case, which is known as In re: Oil Spill by the Oil Rig “Deepwater Horizon”in the Gulf of Mexico on April 20, 2010, MDL No. 2179.

Categories
Corrosive Drywall

Domestic Drywall Problems Resemble Chinese Drywall

There is a lot of evidence that Chinese drywall can cause serious environmental and health problems. Recent reports suggest that some American-made or domestic drywall also poses the same risks. However, unlike with Chinese drywall, scientists are still trying to determine whether domestic drywall has deleterious effects on health and property.

What are the purported problems with domestic drywall?

There are reports out of the southeastern states that indicate a potentially growing problem with domestic drywall. There are many Florida homes built between 2005 and 2008 that contain potentially corrosive domestic drywall. It seems to corrode plumbing fixtures, copper wiring, appliances and air condition units. Some homeowners have reported smoke alarm malfunction, tarnishing of silverware and pitted metal surfaces.

Moreover, exposure to domestic drywall may cause health problems for homeowners. Such problems include:

  • Labored breathing
  • Nose bleeds
  • Liver and kidney disease
  • Seizure
  • Stoke
  • Delirium
  • Light headedness
  • Headaches
  • Tumors and cysts

What might be causing domestic drywall to be a risk to property and health?

Some independent laboratory reports suggest that high levels of sulfide gas are coming out of the domestic drywall in homes. This “off-gassing” phenomenon may be connected to the presence of synthetic gypsum. This is a byproduct of the scrubbing process that removes sulfur dioxide from the emissions of coal-fired plants. Off-gassing of sulfide gas is more prevalent in homes built in the southeast possibly because of the high humidity there.