NEW ORLEANS — The U.S. Court of Appeals for the 5th Circuit has upheld a lower court ruling regarding the impact financial reforms under the Dodd-Frank Act had on the real estate appraisal industry.
Circuit Judges Tomas M. Reavley, Leslie H. Southwick and Catharina Haynes heard the case.
The appeal was filed by Hammond, Louisiana-based Bickford Appraisal Group as part of its claim under the Deepwater Horizon Economic and Property Damages Settlement agreement, which resolves certain economic loss and property damage claims related to the 2010 Deepwater Horizon oil spill.
According to court documents, as part of the terms of the settlement, Bickford had to show causation to be able to recoup losses.
The appraisal company wanted to establish causation by using the “Decline Only” test, which looks at a decline in revenue percentage over three consecutive months in 2010 in the wake of the spill compared to the same months in a benchmark period, according to court documents.
The company also had to document key factors out of its control that allegedly made it impossible to recover revenues in the year following the spill, and there had to be an examination of three consecutive months after the spill cited previously compared to the same three-month period in 2009.
A claims administrator rejected Bickford’s claim, maintaining the company didn’t provide enough documentation to prove it lost revenue as a result of the spill.
An appeal panel upheld the rejection of the claim, and the company then took its case to the 5th Circuit.
Bickford had contended that the district court abused its discretion by leaving in place a split with an appeals panel that did not correct what it said was a legally incorrect definition of what it means for documentation to be “objective,” court records state.
"We need not consider whether the appeal panel applied a legally incorrect definition of ‘objective’ when dismissing the documentation because Bickford’s Dodd-Frank articles do not address any of the factors required by Section III.C.,” the 5th Circuit wrote in its opinion.
According to the court, the appraisal company did not satisfy Section III.C because it failed to provide specific documentation addressing one of the “enumerated factors.”
“The district court did not abuse its discretion in denying Bickford’s petition for discretionary review,” the 5th Circuit concluded in affirming the lower court’s ruling.