Ralph W. Emerson and Suzanne O. Emerson - Page 15

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          complaint had “no operative effect whatever on the settlement.”             
          Even if we were to conclude that petitioner’s claim for personal            
          injury was valid, the settlement agreement did not specifically             
          allocate any of the payment towards settlement of that particular           
          Intent of the Payor                                                         
               Crandall, Jr. testified that the defendants had two reasons            
          for settling the case.  First, they wanted to have clear title on           
          the patents.  Second, they were afraid that, if they were tied up           
          in litigation for a period of time, they would lose their                   
          “marketing opportunity”.  Crandall, Jr. further testified that              
          their “main objective in settling this case, our main reason to             
          settle this was not over a personal injury.  It was to make clear           
          the intellectual property that we wanted so that we could go to             
          market and make money.”  The defendants’ counsel, Dyer, also                
          testified similarly that the mediation and settlement were to               
          transfer clearly all rights in the patents to ProGuard.                     
          Crandall, Jr. testified that the entire mediation discussion                
          revolved around the contractual dispute and there was no mention            
          of a claim for personal injury.  See Dickerson v. Commissioner,             
          T.C. Memo. 2001-53 (no evidence of personal injury discussed in             
          negotiations); Coblenz v. Commissioner, T.C. Memo. 2000-131 (no             
          discussion regarding tort claim during final settlement).                   

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