Litigation opportunists swarm BP and courts over oil spill

The litigation is spreading faster than the slick,” said Houston-based plaintiffs’ attorney Tommy Fibich in an interview. “BP may be as endangered as the brown pelican. This litigation will dwarf other corporate catastrophes.”

From Bloomberg’s BusinessWeek, 7-8-10

Without a doubt, there are those who have genuinely suffered loss from the Deepwater Horizon oil spill and deserve compensation. Also doubtless, litigation happy opportunists rise to the surface faster than the oil spill gushing from the wellhead itself. This is a class action trial lawyer’s dream… pick just about any category, do the legwork collecting signatures, and file the brief against the Great Oil Satan, BP.

According to the BusinessWeek article, BP and Transocean already face at least 36 lawsuits. But lurking like an oil plume in the depths are the class action suits.

At least 31 proposed class-action suits have been filed in courthouses from Texas to Florida. Commercial fishermen, shrimpers, charter-boat operators and beachfront-property owners asked to represent anyone whose livelihood depends on coastal waters imperiled by the drifting oil. At least 24 cases were filed yesterday.

Topping the meter of opportunism chutzpah may be North Naples Realtor®, Cynthia Joannou, who took it upon herself to file a class-action federal lawsuit, asking for at least $5 million from BP and others to reimburse south Florida homeowners affected by the oil spill.

Only one problem… there is no Deepwater Horizon spill damage in the Naples area.

Below… the 7-8-10 NOAA trajectory for oil… please take careful note of the color coding for the oil density.

For those of you unfamiliar with Naples locale in the peninsula state, here’s a map… and please take note the size of the Gulf – the 9th largest body of water on Earth – and just what of that area is affected by heavy or medium oil.

But wait, Mata, you say… what about that Loop Current? Well, might be valid, had it happened. However, as NOAA’s July 7th trajectory data states, it’s not only not hit the Loop Current, but the spill possible entry into the current has been “pinched off”.

OR&R’s modeling team continues to generate daily trajectories for the nearshore surface oil. The offshore trajectory maps (previously displayed on this page, showing oil interacting with the Loop Current) have been temporarily suspended because the northern end of the Loop Current has been pinched off into a large eddy (Eddy Franklin) so there is no clear path for oil to enter the Loop Current from the source. Also, there have been no reports of recoverable oil in the Loop Current or Eddy Franklin and the oil has moved to the North and away from the Eddy Franklin. We will continue to monitor the area with overflights, vessel observations, and satellite analysis. When the threat of shoreline impacts to the Florida Keys increases, we will resume producing the offshore trajectory maps.

But wait again, Mata, you say? Just what kind of oil damage could this ambitious Realtor® expect in her neck of the woods? NOAA has a response for that as well… Because any oil arriving would have had at least a couple of weeks of weathering in the Gulf, what South Florida would see is entirely different than what is happening in the LA marshlands.

If the oil reaches South Florida, responders in South Florida may see a mixture of forms of oil, however, they are most likely to see tar balls. The oceanographic processes that would transport oil also would broadly distribute it at sea, so it is not possible to predict just where the oil could go or when it could arrive. Depending on the age, these tar balls may be soft and gooey, denser and tar-like, or, if the oil has mixed with sand, easily crumbled.

OMG… push the panic button, Nellie… we’re all gonna die!

So what’s Ms. Joannou’s actual beef? Property values…

Joannou, a Gulf of Mexico beachfront property homeowner, has a home on Lely Barefoot Beach in North Naples. Records show she purchased the Jumento Cay Lane house, off Bonita Beach Road, for $372,500 in 1997. Real estate ads show Jumenta Cay Lane condos are listing for $3.4 million. Property records show the most recent sales were $4.3 million in December and $3.4 million in April 2007. Joannou’s home was last listed for sale in 2003 and the listing was extended several times before it expired in July 2006.

The lawsuit alleges Joannou and others have been subjected to a substantial and unreasonable invasion of the use and enjoyment of their homes due to the fumes from the oil spill and “chemical stew” and Joannou has experienced a “repugnant and unbearable odor and fumes … like heated oil coming off the water.”

No oil or tar balls have washed ashore on Naples beaches and there are no reports of wildlife being affected in Southwest Florida, although some property owners did complain of a smell when the rig was burning.

“Falling real-estate values are one consequence of the worst environmental disaster in U.S. history as oil continues to gush from the BP Macondo well,” the lawsuit says, noting that appraisers gave Gov. Charlie Crist a letter saying property owners will suffer decreased values and urging a property tax adjustment.

Anyone notice that Ms. Joannou is a Realtor® that’s behind the real estate times? So she makes an unsuccessful attempt to cash out in the real estate boom era. Although I have to wonder about any Realtor’s® ability to do effective comparable market analyses when her own condo is on the market for three years without a successful transaction. There’s a perfect example of incorrect pricing. Of course, what is not disclosed is if Ms. Joannou was one of those who took advantage of the unnatural prices skyrocketing, refi’ed and spent the cash elsewhere.

In other words, is Ms. Joannou now one of those in a toxic asset/upside down mortgage? And is this motivating her pre’emptive class action lawsuit? Worthy of pondering, her motivation, don’t you think?

But Ms. Joannou has company with those attempting to make BP pay for declining property values. There are at least eight lawsuits from Alabama and Florida beach front property owners who are suing because of claims the oil spill will affect their rental values.

If we want to play the property value game, why isn’t there a plethora of lawsuits against Fannie/Freddie, Barney Frank, and the banking industry for the housing bubble’s rise and fall? This stuff is simply absurd. And when there is virtually little oil present in these communities, one could more effectively argue that these owners should be suing the media for the catastrophic hype they use to increase their ratings. For those driving away any tourism is the MSM. But are any of the above named in lawsuits? But no…. because the idiocy of the suit itself is abundantly clear when you use banks and the media as defendants, but easy to sell when you’re using big bad oil companies… even when the spill isn’t notably affecting their shores.

It becomes even more absurd when you examine another class action lawsuit by Robert Rinke and his Pensacola lawfirm. Rinke and his attorneys are asking for triple actual damages, plus attorney fees, punitive damages, etal on behalf of himself and “all others similarily situated”. Rinke’s actual condominium is a 30 unit complex. But his attorney’s are especially creative, using Florida’s RICO act, citing criminal and racketeering type activity by BP.

As the liberal Center for Public Integrity blog states:

“It shows their corporate criminal history,” said Brian Barr, a partner with a Pensacola law firm representing condo owners in five Florida Panhandle counties in the case filed last month. “In a RICO case you are trying to show they are a corrupt enterprise and they’ve been a corrupt enterprise for a period of time. It’s just like if some were to conduct an indictment. They would list their acts so you know what kind of felon you’re dealing with.”

The RICO law is often associated with organized crime cases, but it also allows private parties with a damaged business or property to sue. The law is an attractive tool for plaintiffs’ lawyers because it allows for more extensive civil penalties, including tripling the amount of actual damages.

To win a RICO suit, plaintiffs must show a pattern of racketeering activities. In this case the Florida condo owners contend BP fraudulently acquired oil lease contracts by pressuring the U.S. Minerals Management Service to approve offshore oil drilling projects despite obvious environmental and safety risks. Additionally, the plaintiffs state BP claimed it could clean up any spills even though the company knew it could not.

Interesting accusation since there is no final investigation that finds BP guilty of criminal negligence at the time of this filing. But I guess, for the class action types, innocent before proven guilty is only an option.

But the sheer offense of Rinke’s attorney’s don’t stop there… instead seizing on the media hyperbolic description of the oil spill. Opening statement begins with “The Gulf of Mexico is in the midst of an ecological Armaggedon that could literally destroy the marine and coastal environment and way of life for generations of Americans.”

Oh the drama…. spare me. If the well cannot be capped, and this is eternal gushing, I might buy into that Armaggedon thing. But again this is premature speculation, and simply emotional hype. And why? Cash. Cash for desperate homeowners in a crashing real estate environment, and most especially cash for those “hurtin’ for money” class action trial lawyers.

In Rinke’s defense, he’s not alone in trying to tap the oil giant for a handout… Louisville, KY condo investor, Larry O’Bryan, is also whining about rental prices – not property damage – for his panhandle properties in Destin, FL. He and his attorney have managed to round up about another 20 investors to join in the litigation fray, saying it’s all about holding BP “accountable”.

Yeah, right… and I guess that cash in pocket doesn’t hurt either.

These are just a few of the examples of opportuntists, swarming the court system like vultures, looking for their piece of the BP road kill carcass. They will not be the last of the pondscum that will emerge with their hands out. Obviously the oil spill may be catastrophic for some, but for the ever enterprising… if not necessarily morally upstanding… American, there’s always a silver lining.