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claims against the banks were (except for the derivative claims,
which were dismissed by agreement) separate and apart from their
claims against Knudsen. While petitioners undoubtedly suffered
emotional harm from the default itself, they alleged additional
and separate harm caused by the banks' violation of duties owed
to them. Moreover, the settlement did not affect or limit their
right to pursue any and all claims for lost milk money in
bankruptcy or another forum.
Petitioners must prove their recovery was received on
account of personal injuries or sickness. Respondent points to
the lack of bills for medical or psychiatric treatment and the
lack of personalized proof of individual damages, arguing that
the recovery was simply payment for the lost milk, not for
emotional distress. Again, we disagree.
"Personal injury" within the meaning of section 104(a)(2)
comprehends both tangible and intangible harms. Commissioner v.
Schleier, 515 U.S. at 329 n.4 (citing Justice Scalia's concurring
opinion in United States v. Burke, supra at 244 n.3,
acknowledging that "personal injuries or sickness" includes
nonphysical injuries). Traditional harms associated with
personal injury are pain and suffering, emotional distress, harm
to reputation, or other consequential damages. United States v.
Burke, supra at 239.
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