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The record shows that, in negotiations leading up to the
settlement agreement, petitioner took the position that its
settlement offer would serve to compensate the Government for its
losses. In this regard, Mr. Kilberg's January 31, 1986, letter
stated: "This sum shall be compensation for any and all
restitution and damages that may be owing by Stencel to the
United States for any possible labor mischarging that may have
occurred prior to December 20, 1984".
However, Ms. Branda rejected Mr. Kilberg's January 31, 1986,
settlement offer. In particular, by letter to Mr. Kilberg dated
February 7, 1986, Ms. Branda stated: "While we believe that the
offer is made in good faith, we cannot accept its terms." Ms.
Branda went on to present a counteroffer in which she expressly
adopted specific portions of Mr. Kilberg's earlier offer. Ms.
Branda did not adopt Mr. Kilberg's characterization of the
settlement payment as compensation. In fact, although Ms. Branda
had characterized a portion of the settlement as a penalty in her
in-house communications, Ms. Branda did not characterize the
settlement payment at all in her counteroffer to Mr. Kilberg.
Petitioner did not clarify the matter. The parties executed
a settlement agreement that is silent on the subject of the
characterization of the settlement payment.
The Court of Appeals emphasized that petitioner "suffers the
consequence" if evidence to establish entitlement to the disputed
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