Joseph S. Rozpad and Kathleen M. Rozpad - Page 5

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          surgery over the next 5 years, lost significant use of his leg,             
          received a blood transfusion, and contracted a chronic blood                
          disease for which he continues to receive treatment.                        
               On February 8, 1984, Mr. DiBiasio commenced a medical                  
          malpractice action in the Superior Court of Rhode Island against            
          Dr. Mariorenzi and St. Joseph Hospital.  Mr. DiBiasio settled his           
          dispute with the hospital, but did not settle with Dr.                      
          Mariorenzi.                                                                 
               On May 8, 1989, following a 10-day trial, a jury rendered a            
          verdict against Dr. Mariorenzi and awarded damages of $700,000 to           
          Mr. DiBiasio.  As required by R.I. Gen. Laws sec. 9-21-10 (1985),           
          the court added $572,810 in statutory prejudgment interest to the           
          award, bringing the total judgment to $1,272,810.  Following the            
          judgment, Mr. DiBiasio and Dr. Mariorenzi settled their dispute.            
          The settlement agreement required Dr. Mariorenzi to pay Mr.                 
          DiBiasio $1 million for a release and discharge of any and all              
          past and future claims.  During the settlement negotiations, the            
          parties did not discuss the tax consequences of the settlement.             
          In addition, the agreement did not contain any reference to                 
          prejudgment or postjudgment interest.                                       
               On May 15, 1989, Mr. DiBiasio and Dr. Mariorenzi filed a               
          stipulation of dismissal with the trial court.  The stipulation             
          states that the case is "Dismissed with prejudice, no interest,             
          no costs."  Dr. Mariorenzi's medical malpractice insurer issued a           





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