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economic harm to HGTG and petitioner; and (3) the defendants were
unaware that petitioner was asserting any claims for mental
anguish, and, accordingly, the defendants did not intend to
settle any particular claims for mental anguish.
As previously explained, petitioner must meet a two-prong
test for exclusion of any part of the settlement proceeds. As to
the first part, petitioner must show that the underlying cause of
action giving rise to the recovery is based upon tort or tort
type rights. In that regard, some of the 13 counts alleged in
the pleadings sounded in tort, and would therefore satisfy the
first prong of the Schleier test. We note, however, that
petitioner’s factual allegations in the pleading concerned
commercial loss, and no allegations were made with respect to
petitioner’s emotional distress or sickness. In fact, the format
used by petitioner’s attorneys to formulate the pleadings was
derived from another proceeding that concerned fraud and
misrepresentation that resulted in commercial loss.
Petitioner, in the trial of this case, produced testimony
from Alabama attorneys that the broad-based tort allegations in
petitioner’s pleadings would, under Alabama law, provide a
foundation for subsequent allegations and proof of damages caused
by personal injuries.3
3 We find it unnecessary to analyze petitioner’s position
that he was able, at the time of the settlement, to subsequently
(continued...)
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