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pleadings or elsewhere in the record of the underlying litigation
did petitioner claim such damage as a result of Lindsey’s
actions.
Based on the foregoing, we find that the allocation in the
Lindsey settlement agreement was not the product of adversarial
negotiation, and thus we disregard it.
b. Nature of the Underlying Claim
Having disregarded the express allocation, we must examine
the facts and circumstances surrounding the settlement to
determine “In lieu of what” the damages were paid. Robinson v.
Commissioner, 102 T.C. at 126. Petitioners contend that Mr.
Burditt had a mental anguish claim against Lindsey, which Lindsey
paid to settle. The record does not support this contention.
Mr. Burditt did not assert any claims in his individual
capacity against Lindsey in the original and first amended
petitions. The intent of the second and third amended petitions
with respect to any individual claims by Mr. Burditt for mental
anguish was ambiguous. The second and third amended petitions
assert a claim under the Texas Deceptive Trade Practice Act -
Consumer Protection Act (DTPA), and petitioners argue that
recoveries for mental anguish claims are permitted under the
DTPA. However, it is not clear from the language in the
pleadings whether Mr. Burditt or CRI is asserting the DTPA
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