- 43 -
believe petitioner controlled the bankruptcy litigation.
Petitioner's attorney represented Resyn at and petitioner
attended the bankruptcy trial. We conclude that Resyn and
petitioner are in privity for collateral estoppel purposes.
d. Actual and Necessary Litigation of the Matter in
Issue
The fourth element for collateral estoppel is met because,
during the 6-day bankruptcy trial, Resyn and the Commissioner
actually and necessarily litigated the facts relating to
petitioner's diversion of Resyn income. The test for deciding
whether resolution of the litigated matters was essential to the
prior decision is whether the issue was recognized by the parties
in the prior proceeding as important and by the trier of fact as
necessary to the judgment. Meier v. Commissioner, 91 T.C. at 284
n.14. The parties to the bankruptcy case and the bankruptcy
court recognized that facts relating to petitioner's diversion of
Resyn's income were important and it was necessary for the
bankruptcy court to decide whether petitioner diverted Resyn's
income to Polymer and Chemical Traders and whether Resyn was
liable for fraud.
e. Legal Principles Unchanged
The fifth element for collateral estoppel is present because
the controlling facts and legal principles have not changed. Id.
at 291.
Page: Previous 33 34 35 36 37 38 39 40 41 42 43 44 45 46 47 48 49 50 51 52 NextLast modified: May 25, 2011