Holmes Motors, Inc. v. BP Exploration & Production, Inc.
2016 U.S. App. LEXIS 12743
5th Cir.2016Background
- Holmes Motors, a car dealership near Biloxi, filed a claim under the Deepwater Horizon Settlement Program in August 2012, asserting it qualified as a "Start Up Business."
- The Claims Administrator reclassified Holmes as a general business claimant, rejecting its "Start Up" status.
- Holmes exhausted the CSSP internal appeals process and sought discretionary review from the MDL district court; the district court denied review without opinion.
- Holmes appealed the district court’s denial to the Fifth Circuit, arguing (1) the Claims Administrator misinterpreted the Settlement Agreement and (2) the district court abused its supervisory duty by denying review.
- The Fifth Circuit reviewed the denial of discretionary review for abuse of discretion and considered whether the Claims Administrator’s interpretation contradicted or had the clear potential to contradict the Settlement Agreement.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Holmes qualifies as a "Start Up Business" under the Settlement Agreement | Holmes: "a business" means a line of business; Holmes changed its line of business to leasing within 18 months of the spill, so it qualifies | Claims Administrator/BP: "a business" means a business entity; only an entity can be a claimant and Start Up requires <18 months entity operating history | The court held "a business" refers to a business entity; Holmes did not qualify and the reclassification did not misapply the Agreement |
| Whether a shift from selling to leasing cars is a qualifying change in line of business | Holmes: switching from selling to leasing was a new line of business starting within 18 months | BP: Holmes both leased and sold cars before and after; the change was not a fundamental, distinct new line of business | The court held the change was not a drastic, fundamental shift; not enough to qualify as Start Up |
| Whether the district court abused its discretion by denying discretionary review | Holmes: the MDL court must meaningfully supervise and resolve recurring contract-interpretation issues; similar issues have split panels | Holmes: discretionary review is not mandatory; denial does not necessarily abuse discretion absent a clear, recurring split | The court held no abuse of discretion: discretionary review is not mandatory and Holmes did not show a recurring, divided issue requiring intervention |
Key Cases Cited
- In re Deepwater Horizon, 785 F.3d 1003 (5th Cir. 2015) (standard for reviewing district court denial of discretionary review)
- In re Deepwater Horizon, 785 F.3d 986 (5th Cir. 2015) (Settlement Agreement governed by general maritime law)
- Int’l Marine, L.L.C. v. Delta Towing, L.L.C., 704 F.3d 350 (5th Cir. 2013) (federal admiralty law controls interpretation of maritime contracts)
- Breaux v. Halliburton Energy Servs., 562 F.3d 358 (5th Cir. 2009) (contracts should be read as a whole and words given plain meaning absent ambiguity)
- Norfolk S. Ry. Co. v. Kirby, 543 U.S. 14 (2004) (when a contract is maritime and dispute not local, federal law controls interpretation)