     Case: 18-30268   Document: 00514922301    Page: 1   Date Filed: 04/18/2019




                       REVISED April 18, 2019

        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                                United States Court of Appeals
                                                                         Fifth Circuit

                                                                       FILED
                                No. 18-30268                        April 9, 2019
                                                                  Lyle W. Cayce
                                                                       Clerk
Consolidated with 18-30269, 18-30270, 18-30271, 18-30281

CLAIMANT ID 100081155,

             Requesting Party–Appellant,

v.

BP EXPLORATION & PRODUCTION, INCORPORATED; BP AMERICA
PRODUCTION COMPANY; BP, P.L.C.,

             Objecting Parties–Appellees.



                Appeals from the United States District Court
                    for the Eastern District of Louisiana


Before REAVLEY, ELROD, and WILLETT, Circuit Judges.
JENNIFER WALKER ELROD, Circuit Judge:
      JME Management, Inc. (JME)—a vacation rental business affected by
the 2010 BP oil spill—filed five claims for compensation with the Settlement
Program.    The Settlement Program determined that JME was a “failed
business” under the meaning of the Settlement Agreement and calculated
JME’s compensation according to the Failed Business Economic Loss
framework. The district court granted discretionary review and agreed that
JME was a failed business under the Settlement Agreement. Because the
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                                No. 18-30268
               c/w Nos. 18-30269, 18-30270, 18-30271, 18-30281

district court incorrectly interpreted the Settlement Agreement, we VACATE
and REMAND.
                                      I.
                                      A.
      Following the Deepwater Horizon oil spill in 2010, BP negotiated and
agreed to the Settlement Agreement with a proposed class of individuals and
entities.   The Settlement Agreement created a framework whereby class
members can submit claims to the Claims Administrator and receive payment
for approved claims.     Under the Settlement Agreement, there are two
frameworks for calculating the compensation available to businesses that
suffered economic losses resulting from the oil spill. Class members can submit
claims under the Business Economic Loss (“BEL”) framework or, where
applicable, the Failed Business Economic Loss (“FBEL”) framework.
      Under the BEL framework, claimants are generally compensated for lost
profit and lost profit growth, multiplied by a “Risk Transfer Premium” which
accounts for unknown and future risks and injuries. By contrast, the FBEL
framework uses a business’s past earnings to calculate compensation and does
not offer a Risk Transfer Premium. The FBEL compensation is calculated by
subtracting the “Liquidation Value” from the pre-spill “Total Enterprise
Value.”     A failed business with negative earnings before interest, tax,
depreciation, and amortization (EBITDA) for the twelve-month period prior to
May 1, 2010, is categorically ineligible for compensation. Moreover, because of
the Risk Transfer Premium, businesses that bring claims under the BEL
framework are generally entitled to a greater recovery than they would be
under the FBEL framework.
      The Settlement Agreement defines a failed business as:


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                                 No. 18-30268
                c/w Nos. 18-30269, 18-30270, 18-30271, 18-30281

      [A] business Entity that commenced operations prior to November
      1, 2008 and that, subsequent to May 1, 2010 but prior to December
      31, 2011, either (i) ceased operations and wound down, or (ii)
      entered bankruptcy, or (iii) otherwise initiated or completed a
      liquidation of substantially all of its assets, as more fully described
      in Exhibit 6.

Exhibit 6 explains the additional documentation requirements for an FBEL
claim. A Claims Administrator determines whether a claimant is an ongoing
or failed business and how much compensation is due, and the claimant may
request reconsideration of these decisions. Either BP or the claimant may
appeal a final decision to the Appeal Panel. The district court retains the
discretion to review the Settlement Program’s determinations to ensure that
the Claims Administrator and the Appeal Panel correctly interpreted and
applied the Settlement Agreement.
                                           B.
      JME was in the short-term vacation rental business at the time of the oil
spill in 2010. In June 2011, JME entered into an agreement with Gulf Blue
Vacations Inc. (Gulf Blue), a company founded by JME’s sole owner with the
members of his family, and sold substantially all of its assets to Gulf Blue in
exchange for $800,000.
      Subsequently, in May 2013, JME submitted five claims to the Settlement
Agreement Claims Administrator, calculating the value of its claims using the
BEL framework. 1         However, the Claims Administrator classified and
evaluated all five of JME’s claims under the FBEL framework. Under the
FBEL framework, the Claims Administrator determined that JME was



      1   Although the record does not clearly show the exact amount that JME claimed for
all five locations, it appears that the total amount claimed would have easily exceeded $1
million after accounting for the Risk Transfer Premium.
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                                No. 18-30268
               c/w Nos. 18-30269, 18-30270, 18-30271, 18-30281

entitled to $0 for three locations and denied compensation altogether for two
locations.   JME requested reconsideration by the Claims Administrator,
seeking valuation under the BEL framework.                However, the Claims
Administrator determined that JME’s claims were properly evaluated under
the FBEL framework, and the Appeal Panel affirmed.            The district court
granted discretionary review after consolidating JME’s five claims and
affirmed the Appeal Panel’s decision. JME appealed to this court, arguing that
it was not a failed business under the meaning of the Settlement Agreement.
                                       II.
      JME and BP disagree about the applicable standard of review. In JME’s
view, we should review the district court’s decision de novo as this appeal turns
on the interpretation of the Settlement Agreement.         See In re Deepwater
Horizon, 785 F.3d 1003, 1011 (5th Cir. 2015) (“The interpretation of a
settlement agreement is a question of contract law that this Court reviews de
novo.”). BP, on the other hand, argues that we should review only for an abuse
of discretion because, in its view, the district court did not render an
interpretation but merely applied the Settlement Agreement to JME’s case.
Here, however, JME has raised interpretative issues, which we review de novo.
      Alternatively, citing to an unpublished case, BP argues that this court
has applied the abuse-of-discretion standard when the district court granted
discretionary review but affirmed the denial of claim. See BP Expl. & Prod.,
Inc. v. Claimant ID 100169608, 682 F. App’x 256, 258–59 (5th Cir. 2017). But
this case does not stand for the proposition that BP puts forth. In Claimant
ID 100169608, we observed that “[w]e have not yet directly addressed whether
the abuse of discretion standard of review varies depending on whether the
district court granted or denied a request of review” and declined to resolve the
issue because the parties did not brief the issue and the claimant would have
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                                  No. 18-30268
                 c/w Nos. 18-30269, 18-30270, 18-30271, 18-30281

lost under either standard. Id. at 259 n.3. In any event, we also observed that
“ ‘[t]he standard of review is effectively de novo’ when the district court is
presented with purely legal questions of contract interpretation.’ ” Id. at 259
(quoting Claimant ID 100197593 v. BP Expl. & Prod., Inc., 666 F. App’x 358,
360 (5th Cir. 2016)); see also United States v. Delgado-Nunez, 295, F.3d 494,
496 (5th Cir. 2002) (“[A]buse of discretion review of purely legal questions . . .
is effectively de novo because ‘[a] district court by definition abuses its
discretion when it makes an error of law.’ ” (quoting Koon v. United States, 518
U.S. 81, 100 (1996)). Thus, we will review the interpretative issues de novo.
                                       III.
      We now turn to JME’s argument that the district court misinterpreted
the Settlement Agreement’s definitions of a “failed business.” The Settlement
Agreement defines a failed business in three ways:
      [A] business Entity that commenced operations prior to November
      1, 2008 and that, subsequent to May 1, 2010 but prior to December
      31, 2011, either (i) ceased operations and wound down, or (ii)
      entered bankruptcy, or (iii) otherwise initiated or completed a
      liquidation of substantially all of its assets, as more fully described
      in Exhibit 6.

Because JME has never entered bankruptcy, it would qualify as a failed
business only if it either “ceased operations and wound down” or “otherwise
initiated a liquidation of substantially all of its assets, as more fully described
in Exhibit 6.”     The district court concluded that the Settlement Program
correctly classified JME as a failed business because JME “ceased operations
after it sold its assets to another entity.” JME challenges, and BP defends, the
district court’s conclusion under both definitions. We hold that the district
court’s conclusion was erroneous under both the first and third definitions.



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                               No. 18-30268
              c/w Nos. 18-30269, 18-30270, 18-30271, 18-30281

                                       A.
      The district court’s interpretation of the first definition of a failed
business was erroneous.
      Under the first definition in the Settlement Agreement, an entity is a
failed business if it “ceased operations and wound down.” The conjunction
“and” that separates the phrases “ceased operations” and “wound down” is
crucial to interpreting the first definition. “[I]f there are two elements in the
construction,” then the conjunction “and” generally “entails an express or
implied both before the first element.” Antonin Scalia & Bryan A. Garner,
Reading Law: The Interpretation of Legal Texts, 117 (2012). For example,
under “the well-known constitutional phrase cruel and unusual punishments,
the and signals that cruelty or unusualness alone does not run afoul of the
clause:   The punishment must meet both standards to fall within the
constitutional prohibition.” Id. at 116; see also Musacchio v. United States, 136
S. Ct. 709, 714 (2016) (“The parties agree that [the district court’s jury
instruction] was erroneous: By using the conjunction ‘and’ . . . the instruction
required the Government to prove an additional element.” (emphasis added));
Matador Petroleum Corp. v. St. Paul Surplus Lines Ins. Co., 174 F.3d 653, 657
(5th Cir. 1999) (“The endorsement’s use of the conjunction ‘and’ indicates that,
to obtain coverage, the insured must satisfy the requirements of both the
seven-day notice provision and the thirty-day reporting provision.” (emphasis
added)). Likewise, under the Settlement Agreement, having ceased operations
or having wound down alone does not render an entity a failed business. It
must have both ceased operations and wound down to be a failed business.
      Winding down is commonly defined as a process through which a
corporation “collect[s] [its] assets, dispose[s] of any assets that will not be
distributed in kind to shareholders, discharge[s] or make[s] provision to
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                               No. 18-30268
              c/w Nos. 18-30269, 18-30270, 18-30271, 18-30281

discharge its liabilities, . . . and settle[s] the business and its affairs.” 30
Fletcher, Corporations § 137:1 (5th ed. 2016). It is an act of “draw[ing] or
bring[ing]” a corporate existence “to a close.” Wind, New Oxford American
Dictionary (3d ed. 2010). “For convenience in winding [down], the corporate
existence is usually continued either indefinitely or for some period limited by
law in order to dispose of the corporation’s assets and pay creditors.” Cox &
Hazen, 4 Treatise on the Law of Corporations § 26:1 (3d ed. 2010) (emphasis
added).
      In interpreting the phrase “wound down,” JME argues that the
Settlement Agreement requires an entity to have completed winding down by
December 31, 2011 to satisfy the “wound down” element. We disagree. As BP
notes, the Settlement Agreement does not require that a business “completely”
or “fully” have wound down. Moreover, JME’s interpretation of “wound down”
would require an entity to complete winding down within less than a two-year
period. Because winding down is typically a process that could take place over
a substantial—or perhaps indefinite—period of time as the business brings its
existence to a gradual close, JME’s interpretation would thus render the first
definition a narrow eye of a needle that only few entities can pass through.
The better reading of the first definition of a failed business is to see, first,
whether the business ceased operations, and, second, whether it set into
motion a process to bring its corporate existence to a close by collecting its
assets, disposing of its assets, discharging its liabilities, and taking other
actions necessary to conclude the business. See Fletcher, Corporations § 137:1.
      Although the district court correctly concluded that JME “ceased
operations” by transferring almost all of its assets to another corporate entity,
see Claimant ID 100262194 v. BP Expl. & Prod., Inc., 745 F. App’x 539, 540
(5th Cir. 2018) (observing that a business ceased operations when it merged
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                                  No. 18-30268
                 c/w Nos. 18-30269, 18-30270, 18-30271, 18-30281

into a new LLC), 2 the district court’s order reveals that the district court did
not see “wound down” as an additional element under the first definition of a
failed business as it failed to analyze whether JME also wound down.
Accordingly, the district court’s interpretation of the first definition was
erroneous.
                                               B.
       Next, the district court also misinterpreted the third definition of a failed
business. Under the third definition, an entity is considered a failed business
if it “otherwise initiated or completed a liquidation of substantially all of its
assets, as more fully described in Exhibit 6.” Here, JME and BP mainly
disagree about the meaning of the word “liquidation.”                     JME argues that
“liquidation” as used in the Settlement Agreement means the sale of assets for
the purpose of paying off debts and liabilities. Because it has not sold its assets
to pay off its debt, JME contends that it did not “initiate[] or complete[] a
liquidation of substantially all of its assets.” On the other hand, BP interprets
“liquidation” to mean simply disposing of assets. Under BP’s interpretation,
because JME disposed of its assets by selling them to Gulf Blue, it liquidated
substantially all of its assets, thus qualifying as a failed business.



       2 BP argues that Claimant ID 100262194 v. BP Expl. & Prod., Inc., 745 F. App’x 539,
540 (5th Cir. 2018), warrants a summary affirmance because the facts are similar and yet we
upheld the conclusion that the business that ceased operations was a failed business without
inquiring whether it also wound down. One crucial difference that BP forgets is that
Claimant ID 100262194 came to this court after the district court denied discretionary
review, thus triggering the abuse-of-discretion standard. See Claimant ID 100212278 v. BP
Expl. & Prod., Inc., 848 F.3d 407, 410 (5th Cir. 2017) (“It is not an abuse of discretion to deny
a request to review that . . . simply raise[s] the correctness of a discretionary administrative
decision in the facts of a single claimant’s case.” (alteration in original) (quoting In re
Deepwater Horizon, 641 F. App’x 405, 410 (5th Cir. 2016)). Here, the district court granted
discretionary review, and we are reviewing the district court’s interpretation of the
Settlement Agreement de novo. Thus, Claimant ID 100262194, 745 F. App’x at 540, is not
dispositive.
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                                No. 18-30268
               c/w Nos. 18-30269, 18-30270, 18-30271, 18-30281

      JME’s interpretation is more persuasive given, and more consistent
with, the word’s common usage and place in the Settlement Agreement.
“Under admiralty law, a contract ‘should be read as a whole and its words given
their plain meaning unless the provision is ambiguous.’ ” Holmes Motors, Inc.
v. BP Expl. & Prod. Inc., 829 F.3d 313, 315 (5th Cir. 2016) (quoting Breaux v.
Halliburton Energy Servs., 562 F.3d 358, 364 (5th Cir. 2009)).
      As a threshold matter, dictionaries heavily favor JME’s interpretation.
“Dictionaries . . . are helpful resources in ascertaining a term’s generally
prevailing meaning.” In re Katrina Canal Breaches Litig., 495 F.3d 191, 210
(5th Cir. 2007). Black’s Law Dictionary defines “liquidation” as “[t]he act or
process of converting assets into cash, esp. to settle debts,” which is consistent
with JME’s interpretation. Liquidation, Black’s Law Dictionary (10th ed.
2010) (emphasis added). The sense divider “esp.” (for especially) “denot[es] the
most common usage [and] suggests that other usages, although acceptable,
might not be common or ordinary.” Taniguchi v. Kan. Pac. Saipan, Ltd., 566
U.S. 560, 568 (2012) (holding that the ordinary meaning of “interpreter” is one
who orally translates, not one who translates writing).             Many other
dictionaries also favor JME as they list JME’s definition as the primary
definition and BP’s as the tertiary or quaternary definition. See Blue Br. at 28
(cataloguing dictionaries); see also Liquidation, Merriam-Webster’s Collegiate
Dictionary (Deluxe ed. 1998) (“1a. (1) to determine by agreement or by
litigation the precise amount of (indebtedness, damages, or account) . . . ; 4. to
convert (assets) into cash”). These dictionaries, therefore, suggest that the
prevailing meaning of “liquidation” is sale of assets to pay off debts.
      Contextual clues also support JME’s interpretation in two ways. Cf.
Scalia & Garner, Reading Law at 69 (“Words are to be understood in their
ordinary, everyday meanings—unless the context indicates that they bear a
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                                No. 18-30268
               c/w Nos. 18-30269, 18-30270, 18-30271, 18-30281

technical sense.”). First, the two preceding definitions of a failed business
provide a hint about how to construe the third definition. See In re Deepwater
Horizon, 745 F.3d 157, 172 (5th Cir. 2014) (applying noscitur a sociis—“words
grouped in a list should be given related meaning”). The first two definitions
define a failed business as one that either ceased operations and wound up or
entered bankruptcy. BP’s interpretation that a failed business includes any
entity that has sold substantially all of its assets for any reason, even if the
entity was simply seeking to reinvest its assets elsewhere, does not fit this list
neatly. JME’s interpretation of “liquidation” fits the two preceding definitions
better as it naturally points to an entity that has found it necessary to sell
substantially all of its assets to settle its debts although it may not have left
the market or entered bankruptcy.
      Second, Exhibit 6 shows that the Settlement Agreement generally
contemplates “liquidation” in connection with debt. See Envtl. Def. v. Duke
Energy Corp., 549 U.S. 561, 574 (2007) (discussing the “natural presumption
that identical words used in different parts of the same act are intended to
have the same meaning” although context may ultimately dictate when the
meanings diverge (quoting Atl. Cleaners & Dryers, Inc. v. United States, 286
U.S. 427, 433 (1932))). The third definition defines a failed business as one
that “otherwise initiated or completed a liquidation of substantially all of its
assets, as more fully described in Exhibit 6.” Exhibit 6 requires a claimant to
provide an affidavit certifying that “[n]o bankruptcy filing, asset liquidation,
or debt restructuring had been initiated” and thus employs the word
“liquidation” in connection with debt.      If the claimant has not filed for
bankruptcy, Exhibit 6 further requires the claimant to provide “documentation
reflecting the company’s entry into the liquidation process.” The claimant
must also provide “[e]vidence of any asset sales, . . . and evidence of any
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                                No. 18-30268
               c/w Nos. 18-30269, 18-30270, 18-30271, 18-30281

payments of liquidation proceeds in satisfaction of debt and/or other creditor
obligations.” Exhibit 6 employs the word “liquidation” in connection with debt,
and it should be interpreted consistently throughout the Settlement
Agreement. In sum, given the word’s generally prevailing meaning, its place
in the Settlement Agreement, and its usage throughout Exhibit 6, we hold that
an entity must have “initiated or completed a liquidation of substantially all of
its assets” to settle its debts to be a failed business under the third definition.
      BP argues that this court has already interpreted the word “liquidation”
as simply disposing of assets in In re Deepwater Horizon, 857 F.3d 247, 250
(5th Cir. 2017) (Crystal Seafood). This is not an accurate description of our
holding in that case which only opined on fact issues. See id. Crystal Seafood
involved BP’s motion for claw-back after a claimant had been awarded
compensation based on the claimant’s misrepresentation that it did not
liquidate substantially all of its assets. Id. at 249. It appears that neither BP
nor the claimant raised an argument before this court about how the word
“liquidation” should be interpreted; instead, the appeal turned on whether the
claimant had raised a genuine issue of fact sufficient to survive summary
judgment by contradicting its own previous sworn statement. Id. at 250. We
held that this was insufficient. Id. Thus, we reject BP’s mischaracterization
of our holding in Crystal Seafood.
                                        IV.
      Because the district court analyzed JME’s claims under an erroneous
interpretation of the first and third definitions of a failed business, we
VACATE and REMAND.




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