-11-
We begin our analysis with the second prong. The court of
appeals awarded Kidd an unspecified equitable remedy for the
violation of his rights under the California Constitution and
California Government Code, and the defendants paid $132,000 to
Kidd in settlement of this award. Under the facts herein, we
conclude that the $132,000 was not paid to Kidd for personal
physical injuries or physical sickness within the meaning of
section 104(a)(2). No exclusion is available under that
provision insofar as the settlement was paid to compensate him
for injuries most akin to emotional distress. Sec. 104(a)(2) and
flush language; see H. Conf. Rept. 104-737, at 301 n.56 (1996),
1996-3 C.B. 741, 1041 n.56 (emotional distress, including
symptoms such as insomnia, headaches, and stomach disorders, is
not considered a physical injury or physical sickness, except
that an exclusion may be allowed to the amount paid for medical
care attributable to the emotional distress). See generally
Black’s Law Dictionary 542 (7th ed. 1999) (“emotional distress”
denotes “A highly unpleasant mental reaction (such as anguish,
grief, fright, humiliation, or fury) that results from another
person’s conduct; emotional pain and suffering.”). In fact, Kidd
asserted in this proceeding that he believes that the $132,000
compensated him for the “abuse and mental distress” that he
suffered as a result of the defendants’ treatment of him as a
second class citizen. We conclude that none of the $132,000 is
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