IN THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

No. 18-30268

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 

United States Court of Appeals

Fifth Circuit

FILED

April 9, 2019

Lyle W. Cayce

Clerk

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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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[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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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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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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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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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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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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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-Wester’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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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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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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