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attorneys underwent various steps: (1) Filing an administrative
claim, (2) filing a complaint in U.S. District Court, (3)
participating in mediation, (4) filing various court papers, (5)
pursuing settlement discussions, and (6) drafting a settlement
agreement. We evaluate each step to determine whether the
settlement proceeds paid by the FDIC were on account of
petitioner’s claim of harm to business reputation.
Petitioner filed an administrative claim with the FDIC which
was subsequently dismissed. The record does not contain the
administrative complaint filed by petitioner with the FDIC. As
to the types of damages alleged by petitioner in the
administrative complaint, an FDIC internal memorandum suggests
that petitioner sought $2.5 million plus interest for the loss of
his Modern World stock.
In his original and amended complaints in the U.S. District
Court, petitioner never alleged that his business reputation was
harmed. Instead, as to Counts I, III, and V in the amended
complaint, petitioner claimed that First City Bank’s actions
caused him to lose his equity interest in Modern World. The
remaining counts did not specify any damage resulting from harm
to business reputation. Petitioners argue that as to all counts
in petitioner’s amended complaint, petitioner sought actual and
consequential damages which included harm to business reputation.
The language of the original and amended complaints and the
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