Allen Burditt II and Sarah Maunee S. Burditt - Page 20




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          pleadings or elsewhere in the record of the underlying litigation           
          did petitioner claim such damage as a result of Lindsey’s                   
          actions.                                                                    
               Based on the foregoing, we find that the allocation in the             
          Lindsey settlement agreement was not the product of adversarial             
          negotiation, and thus we disregard it.                                      
               b.  Nature of the Underlying Claim                                     
               Having disregarded the express allocation, we must examine             
          the facts and circumstances surrounding the settlement to                   
          determine “In lieu of what” the damages were paid.  Robinson v.             
          Commissioner, 102 T.C. at 126.  Petitioners contend that Mr.                
          Burditt had a mental anguish claim against Lindsey, which Lindsey           
          paid to settle.  The record does not support this contention.               
               Mr. Burditt did not assert any claims in his individual                
          capacity against Lindsey in the original and first amended                  
          petitions.  The intent of the second and third amended petitions            
          with respect to any individual claims by Mr. Burditt for mental             
          anguish was ambiguous.  The second and third amended petitions              
          assert a claim under the Texas Deceptive Trade Practice Act -               
          Consumer Protection Act (DTPA), and petitioners argue that                  
          recoveries for mental anguish claims are permitted under the                
          DTPA.  However, it is not clear from the language in the                    
          pleadings whether Mr. Burditt or CRI is asserting the DTPA                  







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