- 29 -
the settlement proceeds in any way they wished. The
circumstances surrounding the State court judge's entry of
judgment also supported those findings, in that the parties
presented the final judgment to the judge at his home in the
evening, the meeting lasted no longer than 1 hour, and neither
the final judgment nor the settlement agreement was discussed in
detail during that meeting. Therefore, the Tax Court did not
give conclusive effect to the State court judgment's allocation
of settlement proceeds and instead allocated the proceeds on the
basis of the jury verdict, "the best indication of the worth of
the Robinsons' claims." Robinson v. Commissioner, supra at 38.
This case is distinguishable from Robinson. There the
allocation had no relationship to the jury award and was not
entered into by the parties in an adversarial context at arm's
length. Here, in contrast, although the parties' interests were
not directly adverse as to the structure of the settlement, there
was a bona fide basis for it aside from the tax consequences.
First, the emotional distress claim was not an afterthought; 85
percent (17 of 20) of the causes of action alleged in the
complaint sought damages for emotional distress. Second, the
Bank Defendants' chief lawyer was familiar with dozens of
depositions and answers to interrogatories of the plaintiffs
alleging emotional harm, and he believed the Bank Defendants were
vulnerable on those claims. Third, Judge Tenner was familiar
Page: Previous 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 NextLast modified: May 25, 2011