- 23 -
Under paragraph 5, the State was to fund annuities for
“additional damages associated with the Final Judgment” in the
whistleblower lawsuit. Because the underlying cause of action
giving rise to the recovery of damages was based on tort or
tortlike rights, petitioner has met the first prong of the
two-prong test set out in Commissioner v. Schleier, supra.
However, petitioner has failed to show that, as he contends, the
additional damages received under paragraph 5 of the settlement
agreement were received on account of personal injuries or
sickness. Although there is substantial evidence that petitioner
suffered mental and physical deterioration between the time of
the judgment in 1991 and the settlement in 1995, there is no
allocation under paragraph 5 for any additional injuries. There
is no allocation in paragraph 5 for any personal injuries or
sickness that arose out of the whistleblower lawsuit, and all
compensatory damages awarded in the final judgment of that
lawsuit were expressly allocated under paragraph 4 of the
settlement agreement.
According to the testimony of Potter, who drafted the
agreement for the State of Texas, there was no independent
investigation in 1995 of either the jury findings in the original
lawsuit or petitioner’s injuries. Potter had no knowledge of
petitioner’s massive bleeding ulcers at the time that he and
Augustine drafted the settlement agreement. Though petitioner
Page: Previous 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 NextLast modified: May 25, 2011