- 47 -
Respondent specifically argues that the allocation of $4
million to the defamation claim was not adversarial. We
disagree. The allocation of the $4 million of the settlement
payments to petitioner’s defamation claim was at arm’s length, in
good faith, and part of an adversarial negotiation.24
Respondent points to the fact that Mr. Dunham did not object
to the allocation of $4 million in the settlement agreement to
the defamation claim. We see no reason why UTA’s counsel would
object to a term his clients negotiated. Mr. Dunham stated that
one reason that the $4 million allocation was not contested when
the settlement documents were being exchanged was that the
allocation was consistent with the agreement the parties had
reached. The record evidences that the agreement was reached as
part of an adversarial confrontation.
During the negotiations, UTA disputed several issues in the
defamation agreement relating to the tax treatment of the
settlement payments including the allocation of the settlement
payments among petitioner’s defamation and other claims. Mr.
Berkus initially objected to the allocation of $4 million to the
defamation claim; however, UTA ultimately agreed to this
allocation. This was just one of many issues on which
compromises were reached. The allocation contained in the
24 We note that UTA did not want to admit to anyone that it
had defamed petitioner.
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