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Judgment based on breach of contract claims was substantially
reduced by the Settlement Agreement.
Petitioner personally was to receive $3,000 a month for 20
years under the Settlement Agreement. This amount had a present
value of $313,000. Mr. Stephen R. Randle (Mr. Stephen Randle),
attorney for petitioner in the District Court action (and brother
of Mr. Paul Randle), claimed he made representations about tort
claims during the settlement negotiations. Because WNIC had
opposed such contentions and the District Court had rejected such
contentions, we do not see how such contentions at the settlement
negotiations could change the nature of the underlying claims
which were based on contract. Moreover, Mr. Stephen Randle
testified that in the Settlement Agreement he designated $1,510
out of the $3,000 monthly annuity as representing personal injury
to petitioner under paragraph 5 of the Judgment. Yet the
Settlement Agreement contains no such designation, and that
$1,510 is the amount we have found above is due to legal injuries
of an economic character arising out of a contract claim. The
only conclusion we can draw is that the remaining $1,490 monthly
payment flows from the commissions plus interest awards and thus
is clearly economic in nature.
As we stated above, petitioner's settlement proceeds may be
excluded from gross income if petitioners show that not only was
the underlying cause of action giving rise to the recovery based
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