Property Firm That Lost Value Sues Halliburton

AUGUST 5, 2010 - St. Joe Co., a large Florida real-estate developer that owns resorts on the Gulf of Mexico, filed suit against oil-services company Halliburton Co., seeking more than $1 billion in damages related to the Deepwater Horizon oil-rig explosion and subsequent oil spill.

In a complaint filed in state court in Delaware late Wednesday, St. Joe said that Halliburton, which provided key structural work on the oil well, "ignored multiple warning signs" that could have prevented the disaster.

St. Joe, which owns 577,000 acres of land in Florida mostly within 15 miles of the Gulf and is the biggest landholder in the Florida Panhandle, said the April disaster resulted in huge losses for the company when hundreds of tourists canceled vacation plans to stay at its resorts.

The company's stock price fell by 40% in the weeks after the blowout, resulting in a $1 billion decline in market capitalization. The shares have remained depressed even since BP stopped the gushing oil on July 15.

Although Halliburton had workers aboard the rig the day of the explosion, it was not responsible for making most decisions on the well.

Halliburton, in a statement, said it has not seen the lawsuit yet, but from what it has seen in the media, "it appears to be without merit and we will vigorously defend it."

Gulf Coast residents, businesses and environmental groups have filed hundreds of lawsuits against Halliburton, BP PLC, which operated the well, Transocean Ltd., the rig's owner, and others, seeking compensation for damage from the spill. The suit by St. Joe is one of the first by a publicly traded company claiming damages, in part, due to a loss of investor equity.

St. Joe sued Halliburton first, rather than BP, because it was the quickest way for the company to recoup the majority of its losses, said William Brewer, a partner with Dallas-based Bickel & Brewer, who is representing St. Joe. The company hasn't sued Transocean because Transocean has asked a federal court to cap its liability at $27 million, Mr. Brewer added. St. Joe said it still may file claims against BP, Transocean and other companies involved in the disaster.

In June, BP agreed to establish a $20 billion claims fund to address losses for Gulf Coast residents and business owners. Mr. Brewer said St. Joe wasn't seeking compensation from that fund because doing so might require the company to release BP from liability for any other claims. Mr. Brewer said St. Joe chose to target Halliburton because it considered it equally responsible with BP for the blowout.

"Our market cap has stayed depressed, our sales are impacted, and there is certainly an interruption in our business," Mr. Brewer said, adding that investors will avoid the Florida Panhandle for some time because of a perceived heightened risk.
source: online.wsj.com