- 21 -
Significantly, if respondent had been made aware of the
expert reports, that information would not have caused
respondent’s position in the deficiency notice or in the
litigation to be unreasonable or unjustified. The evidence
already available to the Appeals officer sufficiently showed that
the cost to repair the residence exceeded the amount of the
insurance recovery. In addition, the Appeals officer was in
possession of probative evidence supporting her conclusion that
the payment may have been made in satisfaction of the punitive
damages claim. In that setting, additional evidence bolstering
petitioners’ argument regarding the cost of repairs was
cumulative. Therefore, petitioners’ failure to provide the
expert reports did not result in a failure to exhaust their
administrative remedies.
Respondent also contends that under the language of the
regulation--specifically “all relevant information that is known
or should have been known”, petitioners were required to seek out
and present evidence of the intent behind the insurance company’s
settlement payment. We reject respondent’s contention. It
appears that respondent is employing the “known or should have
been known” phrase out of context. The regulation requires
disclosure of information, the relevance of which was “known or
should have been known to the party or qualified representative
at the time of * * * [the Appeals] conference.” Sec. 301.7430-1
Page: Previous 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 NextLast modified: May 25, 2011