For the 2010 Deepwater Horizon disaster, penance still isn't cheap: Try $12 million for land not touched by a drop of oil.
That’s what trial lawyers demanded from BP as compensation for a coastal tract that needs no remediation from the oil spill. Still, BP is willing to pay something — just not 762 times the amount it says was agreed to for each such undeveloped property.
Even if the two sides settle for a lesser amount, which may be in the works, the case now in court illustrates high or maximal claims still dogging the British energy giant in seemingly unending litigation six years after its well blowout in the Gulf of Mexico. No one knows how much it may finally cost. BP’s tally is $56 billion and counting.
Experts claim the legal complexity and geographic range of the disaster contribute to the spiraling bill. For example, some 70,000 wetlands and coastal properties subject to settlement have been identified. But in some cases, dubious claims appear to be playing a part. Long Beach is one of them, according to Liskow & Lewis, a white-shoe New Orleans law firm representing BP.
Long Beach sits in Cameron Parish, which is set hard against Texas and the Gulf of Mexico in Louisiana’s southwestern heel, some 300 miles west of the gulf spill site in the Macondo Prospect due south of Mississippi. In 1915, the landowner’s niece fled the 196-acre property after a hurricane left her clinging to a rooftop there for three days, according to a local history. Storms like 2005’s Hurricane Rita still beset Long Beach. But the fact BP oil never reached it offers the company little solace now.
Soon after the disaster, BP agreed to pay $15,750 for every individual coastal parcel like Long Beach unharmed by the spill. It was a gesture meant to show good corporate citizenship as BP moved promptly to put the disaster behind it, according to people familiar with the litigation. The company’s lawyers contend Long Beach was specifically classified as such a property in 2013 negotiations during which the sides pored over coastal maps.
The $12 million demanded by the trial lawyers Mudd & Bruchhaus, representing the family in Texas that owns the land, would be “one of the largest awards ever made under the Settlement Agreement’s Wetlands Framework,” BP’s lawyers say.
On Friday, David Bruchhaus, a partner in the plaintiff firm, said the Long Beach matter has been resolved for an undisclosed sum, although neither BP nor Liskow & Lewis could confirm a deal and the federal court record does not reflect it. Bruchhaus acknowledged the dismissal papers have not been filed.
“They will be soon, though,” he said, while declining to discuss the terms of the settlement.
Mudd & Bruchhaus, Cameron Parish-based until Rita forced them out, came up with the $12-million claim by dividing Long Beach into tiny parcels. The lawyers did so chiefly by superimposing over a Long Beach map a development sketch floated back in 1927. Although a shovel never hit the ground for work, the grid divides Long Beach into 839 separate lots, and Mudd & Bruchhaus wanted cash for every one of them. In most BP litigation thus far, people familiar with it said, trial lawyers have gotten between 25 and 40 percent of settlements.
The claim is a breathtaking overreach, according to BP’s legal team.
“In an attempt to transform a single eligible parcel into 839 eligible parcels, Claimant seeks an award for a property that was not impacted by a single drop of Macondo oil that dwarfs the awards granted for many large, oiled properties,” it argued in federal court papers filed last month.
Mudd & Bruchhaus opposed BP’s appeal motion before U.S. District Judge Carl Barbier, arguing that each of its 839 settlements falls under a $25,000 threshold, beneath which BP had agreed not to appeal. Claims administrator Patrick Juneau signed off on that interpretation, forcing BP to seek Barbier’s help. Juneau did not respond to an email seeking comment.
The price the trial lawyers put on compensation for the land must be a surprise to their Texas client, for it is exponentially higher than it was ever valued.
In 2003, parish records show, Marguerite A. Domatti bought out Eva L. Domatti for family lands, of which Long Beach was one of four tracts. The price for all the land: $125,000, or $175.50 an acre. Under the terms of the claim against BP, the compensation for Long Beach’s 196.06 acres would work out to $61,205 an acre, never mind its underlying value.
That 2003 bill of sale also comes up in the current court maneuvering. BP says both sides agreed that if parish authorities tax a property as one it would be considered one under the settlement, and records support that contention.
Mudd & Brucchaus counter that although Cameron Parish may consider Long Beach a solitary unit for tax purposes, records like the 2003 sale spell out the hundreds of lots that might be developed on the property.
But Long Beach appears unlikely to ever become the envisioned residential subdivision or pricey real estate the trial lawyers depict it as.That’s because the land is flanked by some unwelcome neighbors that have nothing to do with BP or oil from the spill. To its east lie buried natural gas storage tanks, an industrial site with a checkered Louisiana state environmental record, while to the west sits a decrepit Phillips oil well supposedly brimming with toxins.
In April, BP disclosed a second consecutive quarterly loss as spill costs continue to mount. In a teleconference with stock analysts, Chief Financial Officer Brian Gilvary was at a loss to project an end to them. “It’s impossible to come up with a best estimate,” he said.