- 24 - separate and apart from plaintiffs' contract claims against Knudsen. The origin of the claim for milk losses (raised in the bankruptcy court and in claims against Knudsen's directors) was Knudsen's breach of contract. However, the milk producers had no contract with the banks. The origin of the claims in the milk producers action against the banks was the Bank Defendants' behavior. We think it significant that the settlement agreement did not foreclose petitioners' rights to collect the full amount of milk proceeds in other arenas. In fact, they did eventually collect small amounts from the directors' insurance.8 We hold that the milk producers action was based upon tort or tortlike rights. Personal Injuries or Sickness Finally, we examine whether the proceeds were paid "on account of" the emotional harm done. Respondent argues they were paid on account of Knudsen's default and not on account of petitioners' emotional distress. We disagree. Petitioners' 8 See Banks v. United States, 81 F.3d 874 (9th Cir. 1996), where the Court of Appeals for the Ninth Circuit, the court to which this case is appealable, held that a claim against a union for breach of duty of fair representation is tortlike and distinct from a claim against the employer for unjust discharge, even though the settlement amount paid by the union was based on an estimate of past and future wages. "Unions do not pay wages to their members, and what the Union paid in settlement * * * did not constitute wages", id. at 876, but damages to compensate the taxpayer for its unfair and arbitrary treatment. Thus, the claim against the union was tortlike. Here, we might say: "Banks don't buy milk."Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 Next
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