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234, and California law. Finally, petitioners assert that the
portion of the settlement in dispute was paid for personal
injuries or sickness as reflected in the settlement agreement.
Respondent does not contest that under California law intentional
infliction of emotional distress is a tort for purposes of United
States v. Burke, supra. Rather, respondent maintains that the
settlement agreement is not reflective of the true intent behind
the payment. Respondent asserts that this was a business dispute
and that under California law a claim for intentional infliction
of emotional distress could never have been sustained in
litigation. Therefore, respondent reasons that personal injury
was not the motivation for any portion of the payments to Mr.
Wright.
III. Analysis
It would have been difficult to sustain a cause of action
for the intentional infliction of emotional distress; however,
the same could be said for the assertion of 40-percent ownership
by Mr. Wright’s counsel in the negotiations which led to the
settlement in question. There is also little direct evidence of
physical harm to Mr. Wright. It is uncontested that he suffered
severe emotional distress as a result of the shock of learning
that his longstanding business partners rejected his deeply held
belief that he was the 40-percent owner of MEC, but he rejected
advice to see a physician. Regardless, under the law controlling
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Last modified: November 10, 2007