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their privies, in a later suit on a different cause of action, of
issues of fact and law actually litigated and necessarily decided
by a court in reaching a prior judgment. United States v. Mendoza,
464 U.S. 154, 158 (1984). As we stated in Hudson v. Commissioner,
100 T.C. 590, 593-594 (1993):
For obvious reasons, where a trial
court's judgment is vacated, reversed, or set
aside by an appellate court, collateral
estoppel will not apply to the trial court's
conclusions of law or findings of fact. * * *
where a trial court's conclusions of law or
its findings of fact are challenged on appeal
and where the appellate court affirms the
trial court's judgment on grounds different
from those relied upon by the trial court and
does not pass on the trial court's conclusions
of law or findings of fact, collateral
estoppel will not apply to the trial court's
conclusions of law or findings of fact. * * *
The underlying rationale for this
limitation on collateral estoppel is that,
where an appellate court does not pass on a
trial court's conclusions of law or findings
of fact with regard to a particular issue that
is appealed, the party who lost before the
trial court has not had a full and fair
opportunity to litigate, at the appellate
level, the trial court's conclusions of law or
findings of fact. * * * Under this limitation,
where a trial court's conclusions of law or
findings of fact are not passed on by the
appellate court, the trial court's conclusions
of law or findings of fact are effectively set
aside, and the trial court's conclusions of
law or findings of fact cannot be used as the
basis for collateral estoppel in a subsequent
proceeding between the same parties. * * *
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