DUFFY et al v. USA, No. 1:2014cv00288 - Document 21 (Fed. Cl. 2015)

Court Description: REPORTED OPINION and ORDER converting 7 Motion to Dismiss - Rule 12(b)(1) and (6) into a motion for summary judgment under RCFC 56; and granting said motion. The Clerk is directed to enter judgment. No costs. Signed by Judge Charles F. Lettow. (dls) Copy to parties.
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DUFFY et al v. USA Doc. 21 ORIGIF{At lfn tlir @nitt! $trtos 60urt No (Filed 0f ftlors[ @laints l,r-2887 February li.20l j) 6lLEp FEB 13 20j5 for Flund of incone tlx p,id on procccds of a serdetoenr aeteenenli "orig,n olthe clann" docti.ci inapplicabilily of exclusi.. lion ldation clain l JAMES T AND REATRIZ N. DUIIFY, underlRc.$ 104(a)(2)ipr.cccdsldable as ordinary incoDe od nolcapital gains UNITEDSTATES, lmes C! P. Dulty and BcalrizN. Dufy, pro re, walnut Creek, Calilbhia Attomey. ComFercial LitlSanon Brdch, Td Dilision. United Srares Depanmenlol Juslicc, washinston, D.C , for defendml. With him on the bnch {ere 'l anara W. Ashford- Acring ,\sGtanl Anomcy Ce.eFl, Tax Dn ision. md David I Pincus, Chiei CounofFedenl clains scclion, u.iled States D eFanncnl of Ju stice. washingt. n. D c olcounselNas Mar) M balc, Ashtanl chiet Coun ofFcdcialclains Secrion,Unitcd Slales D.Fanment of Jusiic€. washi ngton, D c. D wascmd, Trial OPI:{ION AND ORDDR Inthis rrx relundcasc, plaintifs lanes P. and Beatiz N Duff)" (collectirell,'1hc Du$yJ l seek aElundol$lr,049in inconc taxes allesedly olfpaid fot lax yelr 200? An. Contl ! l,EClNo.l In detr contlain! thc Duffys maintain dar thc proceeds ofd agFemenr e.tercd by Mr. DulTy lo senle a cllifr he had made *€rc not kxablc lusuul to 26 U.SC.("lR.C.)SlOa(x)(2)bccausparnent\rasonaccountofMrDufys-.phtsicalinjurv .r phlsicalsickne$ ' Ad. conpl.l lls. ln tie altemarve. lhc Dullys lver lhar the Pocccds s€E not laxable !s odlndy incone, but rather were ldablc as capital gains Bemr lo restore impaired goodwill. An. Compl. lF I 19, 125. Pend,ns beloE the coun is thc sovennentt notionlodisnNs foriailurclo stateaclainupon{hichrclief canberrantedpuNmlloRule l2lb)(6)oflheRuldsolthc CounofFederal ClainsCRCIC-). Mot. bDnnissofLnil€d Dockets.Justia.com SraFs( Dct'sMor. ),ECFNo.7is?eHisTr'al8:1922(Jd 27,2015)' Forthere4ons $ared. lhe coud con'ens the sovcment's notion to disDiss undo RcFc I2(b){6) into a nolion for sunnaryjudsmenr undct RCaC 56 ad concludes lhat lhc goveme'l is cn led1o judemenl as d nrner of law on the Duffys bx refund clsin BACKGROUND ln2004,Mr Du& maintained a pnvare consulting busines An Compl'"6 He sorked wilh the Uniled conmercial Banl ("UcB or 'the Bok") in Sil Frdcisco, California. Md thcn bame Td Dircctor dd Fnst Vice PBsident oflhe Bank //. While Norking al UCB, Mr. Duily was responsible lbr ensud.e lnat 3ll accouring policies sd pocedms witbin his depar.meni conplied with tbe Public Conpany ccounlins Refod dd Inlestor ltulection Act of2002 f'sdba;es oxley acf). Pub. L lo7 204,116 stat. ?45 An. conpl f l?,Ex B2 To thar end, he "had rhe opporlunily L obsene liCB s conplimce sith rdious lcgil, ecomt.g, and inecial procedures dnd . . panicipalcd in ndy sienincel decisions anicling UCBt ilndcial siaremenls An. Contl !r 17. In 2006, Vr. Dury sihessed o clion al Uclr thal *3s allegedly fiaudulcnl and not in conplihce silh lhe Sarboes Oxlcy Act Am. Cohll ' 13. llesubsequenrltreFodcdtheincidenlromanagemonlalUCB,includingthcChieflinacidl oficd. tte co;hiki.a6drhe SarbaneFoxley Dnector. Am conpl. !l'll 13_19,22.: Mr'Dulav sas Dlced on adminislalivc lcav€ shonly lherealtei n. Compl at Ex. D On Novenber 9, 2006, UCB tem inated h is onplo ymenl iFunher ciblions lo the co.tact An.Conpl !170-7l,Ex.H trssripl of the hedne held on Jmus] 2?, 2015 sill oDit a rln the wake of the col lapse . I Enron c orporation, Coneres s cnacled lhe S dbanes Ox lcl' Act S??S. Rep.No l0? 146,at I (2002). Ils purpose is [l]o protect invcslots by inploving " $e acclracy ed reliabilily of coryorare discbsms nade pusunt to thc sccurities la\s . . rMr. Dufy was convinced thal a pdftdd ld adjusiaent, suggesFd by Deloine Touche Tohnarsu Liniled ( D& f ), violared Generauy Accepted Accounlins Pdnciples .tet -^m Compl..ll22 23 Alrhoueh thh adjuslmenl \ould hare incr.ascd cash flow [al UCBI dd Esulted in a ldge ben€ill to lhc books," An. Compl. fl24, it was possibly liaud," r,e Am Compl.jl48. Accordine to Mr. Dufly, UCB nmgeDenl nevenncbs booked the D&T adju$nenl incontaventionofde Sdbdes oxley Act. J_ee Am Compl ni 53,57_58 In 2008, UCD's p!rent company, UCBH Holdinss, Inc ("UCBH"), rcceived bushly million in bailoul tunds fron lhc Uniled Sratos l usurj-''s Truubled Asscl ReliefPnsFm $298 ('TARI") An. C.npl. ll 96. Approxindely one yee l.ler. lhe Bdk collapscd md wd taken n Compl.ll96, Er K fhe pnmary over by the Federal Deposil lnsurance CoaoFlion Roard ofDnedos od reasonforUCB'sliilue was inadeludrc oversigh by lhe 'se n&aecnenl . . . [V]anous UcB offciah nisrepresenGd or omired rclerant l.d pcrform.nce data, alleEd docunenG to inprove tbe perception ol lom quality. and nlde othcr nisEDEsenulions rhal inpacled UCBIh find.ial sbtcmenls." Am. Conpl attx K UCBH was rhe fi6i recipienr oI I RP funds 10 fail. md ldpaym los their entne $298 nillion invcsibe.t. Sge Hr'g Tr.3l:lS lo l2:17. : ?0n- tri h he A. J R UI', vr DLlr) ri eo d cl.rm.gdni l o BaL on'D(d) D.pdrenr' dl'o' d les ns eml o) r c| dF.r mrnd'ron n'rola on oi l8 U S C 6 \laral Am. CodDl. al Ex. D. Mr. DuflY nainuined that "UCB rcminated his edplovnenl bectusc or his paniciFation in m edlny protccled by the Sdbdcloxlev Act, md thal UCB r€talialed aaainsl hih lo punish hin for his rcfusal L paniciplte in the unelhical md illesal cohduct of UC8." An. Conpl. !16t. UCB filed d objection io M. Dultt onplainr on or about Ap.il 5, 2007. An. ConDl. ar ux D.5 Following his depanuF froi ucB.Mr' Dui! pusued olher cmployment opponmides md altenpled 1o expmd his cons tine praclice, vr.An Conpl lltl 73-74. bul was not successtul in lhese endeavos bccause "[potential cmplove$ ed clienls] rcquned a rcfeEnce fiom UCBL,I shich ws nol po$iblc," An Conpl 'll 76_78 During lhis 1ime, Mr. Dufy rcponedly suliered $rcss md anxieq lion thc Sdbmes Oxlev Elaliation Hre l lr.21 8 10,*hichallcsedly"afectshinevenloday,"An Compl.ll106. A ltw dsys bcaore an Adninistative Law Judse wd eheduled 10 hw Mr DDt\t cde against IJCB, Mr. Dully enlered into t'Serdemcnt Agreem€nl dd Ccneral Release resollin3 i all clains acain$ the 8.nl Am contl l80,Ex l C'selllene.l aetcneni ) The setlcmenl Asrenenr wd i full dd complete dan8enenl for lhe pemanent leminalion of lMr'l Duttt\ employncnt iclalionship wirh [UCB], ' Senlenent Asreemenl ' 4, and specified that lUcB I has entered inlo this Agreencnl for the ercl,rn" ?,/p,r? ,/ ar.i.1ihg the.,p.rre an.l inconrehiehce oJfulther liti$nioh lhis Agreencnl shall not be deened, aL myline or in any lbrun,6 d adnission by mr penon or enlity releded by lhis AsEemenL ol liabilitr to, oi the validily of my dain, by [Mr.l Dufy. ol the Sdbdcs-Oxley Acl, I 8 U s.c $ I 514(a), vas conbal dd lhwan a colpodle climate lhal discouEgelsl enplotces frcn reponine aThc rhistleblower Drovision eMded ro fraudulenr bchavior not only 10 the proper aurhorilics, such 6 ihe [Fedeial Bureau of I nvesd gari onl &d thc lunned Slales Secuili es ed Exchmge Conm hsi onl , bDt even inrcmlly." S. Rep No l0T- 1,16, at 5 (2002). Acconlingly, Scclion 15 l4(r) lolects lwhGtleblowdsl rhcn $el tatc lavtul acs lo disclos iniomalion or othesise assisl cdmnd invcstisalors. federal regulrlo^, constc$, superyiso$ (or other proper people vilnin a al llan corlonlion),orpaniesinajudicial procccd ing in delec ri ng dd sloppi ng ftaud " cmFloyer does llke Ftaliatoiy aclion aeainsl lhe vhisdeblower, fs]ubsction (b) lotSalion /l ltl4lalloNslheeDployeelollleaconplaint$ithlheDepannenlof Labor.. rThe complainl *€s disnissd in May 2005 on iimeliness grouds. lde lr . & Ph Reply btl toDettMot.tollismhs(Ph'Oppn)a14.ECFNol0Mi.Duilyobject.dlolhaldecision ed sousht rcinstatemenl of his claim. See n. Conpl. al Ex. D. According to lho Dufl)"s. 'lhis reinslalcn€nl issue *€s resolred in lavor of Mr. DulTyl ' and th€ case asainst UCR sas lhen scheduledforahedngon ihnerilsfortevievonoctabc4l Is.200?.' /.1 6Mr. DDfy conrends thal 'had [he] nor be.n under sucb unbedablc cmotional disftss and be€n ol righr nind lwhen consideing seulencnl], md had he not had such poor legal ashtance, UCB rould havc been found suilty of liaud." Am Conpl. fl 8 I ./l !13 (enphdn added). LJnderthetemsolihcs€tdement,UCBagreedtopavatotalsumol S?s.000. \'irh $5o,0oo b,:ins awsded to Mr Duary md $25,000 bcinapaid o hn atumevs al ihe Popelka LaR Crow, .!.C. 1d jllll.l-1.2 ,\ccording ro lhc SenlenenL Agrcemenl M! Duttv ss to innediatelt { ithdra} all chihs againsl UCB cudenllt Pending beforc the Depslnenl ofl-abor, thus allosing lhc Sccr€tary ofLabor lo cnler a finalordcr dhmissing thos clains wilh pEjudne I s. Mr. Dully aho conscntcd lo the lbllowing stipulation: d [UcB I md i1s counsel have madc no represenlarioru or Rmudes con.cmins lhe tax tredhent or characlerizarion oflh€ consideF aion for lhis AgFemenr LMr,lDulTy is solely Esponsible for any Ll{ liabilities occasioned by lUCBl s P.yment ol Lhe o.sideration I I 7. An AdDinislEtire Law Judge revicwed de iems ol lhc proposed agdmenl md appruved thc senlenent Asreemenl on oclobr 21.200?. S?eDet s Mol. atEx.6('l lind $e tems ofde agreemc.t to be fair and redonable dd adequately po&ct Mi. Dully."). Thercaftft, lhc Du$ys filed a Fom 1040 (L.S. lndividual lncone 'lax Relurn) for 200?, acknowledging rhc rcccipr of $50,000 iion a'lawsuit" md entedns thal sun s 'olher tdable incone." Det s]''or !t Ex lt.] Ihc Dulrys aho included Schcdule D (Capital Clins &d Lo$es) witb lheir incone ld retum, in shich lhey repofted long-t€m caPilal lo$es, bul no capnalgains. /d OnDecenberI,2008,rheDlifysrercissuedau!iefundinthemounlof 51,50OfromtheUS Depdment oltbe Trersury,lnlemal RevaN€ Sdicc ( lRS") /latEx. 7 The Dufls Droceeded ro filc a forn 1040X (Anended U S. Individul Incone Td Rclm) onApill5,20lirequestingarctundinthcmounlol$l3,049lobecEdnedo$cn2007tax liabihv. /d atFx 9 Tho mcndcd relum slaled ihd the inclusionof$50.000d incone i.lh. rThe Duifys did not include the 325,000 paid o rhc Popelka LaR Croup on lhon bx €run. Deil s Mol !tEx 3 The sovcm.nt nai.tains that "lllhe $2s,000 Nd pbperlyLdable al 5 Becaus the as incone to lhe Dufys as p,id ro thct anomcys for their benefir, sralule oflinitltions on a$essncnls md collcclions bd expned. rca LR.C $ 650l,nisnol nece$ary ror rhe coun to rcach a decision $ to Nbe$er lhe Duflys should have Fponed $e thc Coverment cmor $25,000aslaxable incone, s?e Dct s Mot atj n.5 (conceding .ou.ldclain for lh€ utreponed setllenenl proceeds fsn 2007), J.g atuo Reply Br' oflhe United I/ .5 $ lo Disiss ("Def sRepll)ar I n l, lCFNo Il ("[T]he aovemenl does nol seek rccovcry of taxcs Elated to the $25,000 ponion of that mount lhat plaintiiTs dnecFd lo be paid ro rhcir altorncy as lesal fees dd excludcd frcm incone on $eir Slates in Supponof i$Mol In all elents. rhe Duflvs conlcnd lhal lhe America Jobs crcalion Acl of 2004, Pub. L No 108-357.til.VIIS?03(a),(b),Il8Sbt.I546,15,1?, afr€ndcd lhe lntenal Rerenue Code ro allos a ldpa)€r 10 deducl lion gross income anorney s fees ed coun cosls paid by, oi on behallol lhe taxpayer in comection wilh a clain o I unla$ tu| discrini nalion orretaliation lbr a protectcd aclility." Ph. Opp n !t 6 Giliig LR.C. 0 62(eX20). G)) lhe Duffys aver thd $c claim bascd on Strb&es-Oxley qas a p(lesred aclilny. /d "wd nol ldable " /r' fhe Dufivs subsequeltlyliledasccondanendeddrelunonOctobr4i2011lotxplainl]Nhvlhis incone..tsdlnolsubjecttotaxor[could]bcofseragainstrhctaxpaverlsl caFital loss car.] tosard." Ph. Opp n al rix. 2 ln a slalenenl atrached 10 the second anended ttud,lhe 2()O7 iax retum was incorrecl becausc lnat mount Dufys nade the iouosine declaratlon: Because of the phtsical injury md physical sickncs thal the ldpaycr suffered as !lesulr ol rhc conduct oilucBl, [r]he settlcnc.t proceeds should be ercludcd fron income tdatlon pusmt to u.R.c. $l 104. In lhe .lcmative. ibe seLll€ncnl proceeds should be lreated 6 capilal Cain incone b4ause oflhc injury lo the lupaycrs busincss Fpularion @d business soodwill fhe decline in ulue of lhe dpatels business repuanon dd business good*iu, d t result of ihe elions of orh€rs. should be tEatedasrhcdisposnionof acapital asel. /, Tbc IRS disauoRed the Dufts rcqucst lor a refund on April12,1012, slating that ltlhc $50,000 non-employee com pen sari on lron [r]CBlis h{able as origi.ally 6led ' Dell\ Mol al Ex. l0i Jde abo Pls.' Opp'r al Ex 5-6. Jusl shon of l*o ycm affer tbe nolice of diello{m€, on Ap l I I,2014,lhc Dufiys nlcd sun in lhis coun, arguing rhal lhe IRS ctroneously denied $cn retund clain. An mcnded cohplainr w.s filedonMay2,2014. ln the pleadinss. tbe Duils presenled identical dgmcnts lo thosc raned in the second aiended td elm, i . . thal $e] de cntilled 10 reover a td rctud oa$11,049 because the selllemenl taynentol$s0,000 was excludablc fron stos income udei LR.CSI04(a)(2),oraliernatively,$!slaxableascaFitalsainsforlostC.odwillConplatl; An Conpl. al I \olably absent fron these Flcadines Nas any Eferencc to the seond mcnded td retm or d acconp&yine altachnent ofenher mcnded rrx relum. On tuly 28, 20 14, the govement responded wi$ a molion ro disniss for lack ol subject mallq juisdidioi pualant lo RCIiC l2(bX l) dd ior Itilue b surc a clain upon which relief cd be eranted puruanl to RcFc l2(bx6) In opposition to ihe go!ffient's motio. lo dhniss,lhe DulRs pro ffercd nev docmcns, includ ins the second adendcd retur. ll led on Oclober 4, 20 I I s.? th Opp natEx 2. lnlishtoftheseextF pleading nalcriah,lhe sovemnent {iddrew lls clain ior & k o I s ubj ed nancr j urisdiction { Follos ing bricnnC and a heanng, the casc is Eadv ree abo I sThc solcment's dsmenl uder RCFC l2(b)( I ) Ms predicaled on thc 'subslmlial vdiocerurc. Dct s Mo1. at 8 | see vamaaata I U,tedslar.r,1l,1Fed. Cl I59,177(2014) ( 'lundql rhe subsknial vddce tule . . a ldpaler is bmcd fron presenling clains in a bx reiund suit rhar sub$mri.lly rary ihe f&lul bdes od legal rhcories thal weE ser fonh in rhe tax rcfund crain niEscnrcd to lhe IRS. ) (cilins Ca,r,rr ,Sa/B , I / v Unite.l Stdle!. 729 t: td 1:152, 1367(fcd. Ci 2011)iro.kheed MarhnC.tP I Lrirad Jrarsr, 2 l 0 F ld 1366.1371 (Fed cn.2000)) Because the DurTls' liBt mended ld r€tun s6 devoid of &y contenlion lhat rhe scnkncnt proc@ds should be reared a capnal Cains, re. Det s Mol. al Er 9,1he govement mainrained rhal ibe claim "musl be disiisscd as al substmlial larioce with ftne Du&J] dains 6r €fund, ' rd al I After rhe Dunys ptoscnted 1|e second uendod hx rclum rilh fien STANDARNS FOR DECISIO]\ A, Jurhdiction TuckerAct,23 U.S.C. $ 1316(a)(l), srunts this courljunsdiclion 1o consider tbdeml tax retund clains Shithr United gat.s,19s fed. Appx 44.48(Fed.Cir 2012)rrsrl"rlr unn..lStdtes,297 f 3a t1J8, \382lled. Cn 2002); Mccahk r. Uk'red Srarer, I 05 Fed. Cl.120, 122 (2012), atfl,2A12 wL 6a39 761 (Fed Cn Nov. 27, 2012)r r.? aia LR.C $ 7122(e). (i). C) te lifling lo $e concurenl juhdiclion ol lhis oout under lhe Tucko ct and the dislricl couns undd 28 U,S.C, $ l3a6(axl),lo @nsider suns for |a\ refundt. s a pany seekin8 redre$ in lhis coun, lhe taxpaler has rhe burden ofestablishing rhaljuhdiclionexisls by a pEponderance ofibeevidence,V.Ca,,, l05Fed Cl. arl2z'see olso Rocarichv Lrrel&,reJ,93l a.2d99l, 993(FcdCir l99l) lo naintain a taxjefund suil in lhis coun, the ldpayer nusl nst pay the asse$ed tax in iull, l'?d/,/./, 297 F.ld at 1382, dd lile d administarive clain lor a tax refmd snh the IRS rhal complies wilh all regulations, see LR.C. $ 7422(a) [A] rgulalion requircs the eiund clain lo 'delail each clained sround for a Efund, and provide sutncicnl l.'cls lo appriserhelRSofirsbasis. Cdarlerv. Unne.lStates, Fed Cl , ,2014wL69,12189. ar ;2 (rtd. Cl Dec. 8, 201,f) (quariI.g Chicd4o Mlvdukee Corp r. i/,'/s./Srdr"r,40F.:rd37r, l7s (Icd. Cn.1994) (i. rurn cirins Treas. R.s. { 1016402-2(b)(1))). If the lRSdoies ret .lain, rhe tdpaler nust Ccnerally nb sun in $is coM wilhin l}o yeus alier the denial,'he LR C. ! 6532(a)( l), lnd then nay only Fise those dgunm$ rhat sere preliousl, sel fonh in the adninistnrivc claih ro thc rRS. Lackhe.d Manih,2r0l.1dar lill:. see ako Ott@a Sihca Co r Urite.lState!,699F.2A1124,ll:r8(Fed.Cn 1933)( Ioscthcr. [.R.C $ 7a22(a)] md [TEas. Re8 $ 101.64021(b)(l)l pFclude a taxpayeFphinliffron subslorialll varyinC al lrial lhe f&lul bdes ofils dgumenls from those raised in the Efund clains it presenled lo the IRS."). lf these requnenents !rc ner, the coun nay adjudicale $e rax retund clain. The B, Corr€niotr of! Motion urder Rulc l2(b)i6) lo ()ne ulder Ruls 12(d) AnotionunderRCFCl2(b)(6)islddftscdonlhepleadin8s Aclaimforeliefsraredin rbepleadinesnusr"contlinsulncienttacrulialtci,rccepledaslrue,lo state a clain lo reliel thal is plausible on its face r \h.roll \ r4bo1,556 \t.5. 662.678, (.2009) lqwrine Bel Atl Corp I Tvanb\.550 U.5. 544, 570 (2007)). A claim is trcixlly plausible lhen lbe plaindn plcads facrual conrcnr rhat allows the coun ro draw the esonable inf.rcncc lhal tbe defenddl is liable lbr rhe ni{onducr allcecd. .ltDal,556US at678 (citing l-o-6t,550 U.S al55?). Addirionally, the facts alleged nusl " phuiblr_ sugg6l[] (not mercly [be] consistent wirh) a showinc o I entitlemenr to reliet " Catrr UnitedStote!,552F 3d l37l,1176(Fed.Cir.2009) (quoing s50 L.S. ats57). While lhe coDplainr "does not nccd detailed factual naked Asnionlsl s50 U S. at 545, it nusl pul foN&d nore lllegarions," L?,r& Iro,br, the devoidol furiher factual enlocement," .Iqrdl,556U.S. ar6?8 (cilins lto,bt,550 U S. ar 55 i) (alteiation in orieinal), or 'the'defendml'unlawlully-h@ed-m+mcusationlsl," tl (ciliiC opposilion, rhe govemnonl conccdcd lhatlhc goodwill/clpitll gains arcunent *€s nised ad considftd lbyrhclRsl, Det s Reply al2-i, and wnhdie$ ils vdiance arsunenr "lbr pu+oscs df $is nolion b dnnns only," rd al lr ree d/o Hr'g Tr. 3: 16-22 Iydrt 550 L.S al555) When claluting a nolion ro disniss under RCFC l2(b)(6) and decidins wherher a claimed righl io reli.f is plausiblrnol nerelt po$ibl-de com nusl ''dras on irs judicial cxperience md conmon sense." /d al 679. ln thal comeclion, lhe coun complainl's undisputed tacrDal allesations od should conshe dm in a ''mun accepl4 tle Irredsrakr,558 F3d lll1.1335 (Fed. tisht nost favorable b lhc plainl,tr." Canbti.lse fi. Pq,rd, r,4l1ai,,,lt8 f_.2d l2?1,l2?4(Ied. Cn l99l). Cif.2009) (cjting ' U S.265,23r (1986)r Ooul.l, In. ' LinitedStates,9l5 Iithc pdies pre*nr nalle* oulside rhe pleadinss on a molion lo dhnns undqRCFC 12(b)(6), rhe coun has dhcelion 10 consider lhose nalcriah. tdstet r UnitedSt.n.s.575F ld 1ll2,r3:15(Fedcit.21At)GitineAu(CoastBa,ld'6rC,r,!t./cr,35sF.3d35,38_19 sc charles Alan Wrisht & Anhd R. Millet, agd? /41 Ptoctie & Procedwe (2008), $ l3?1,ar273 (3d cd.2004))ls€e aho Fotbes I United States,a4 Fed Cl.319,l2l (I si Cn 200,1): d/A3lrFed Appx.s73(led.Ci..2009).' uhenrhecounlakesc.sniaceofnancrnol encompssed b-v lhc Flcadinss, RCFC l2(d) Equies rh. nolion to dismiss lo bc lrcaled 6 one for sunmdy j udgnent Dndcr RCIC 56. RCFC l2(d); t., abo ,9,,tinston Prcnatbhat & s,ppu, LLc\ Uait..ls!dl.!,t14Fed cl. 760, 76? (2014) coiielalively, belb.e the coun nav conven a notion disniss inlo a nolion for summry iudgnen! thc panies nust be put on noticc olthecorve6ioninaccordwirh RcrC l2(d). ,Valr," v Unite.t Slole!,96fed. C.\ 627,629 (20rr)(cirins,,l&rur Unite.lStatet,s2tsed ci.6t9.622(2008)). RcFC l2(d)providesin nolion und€r RCFC l2(bx6). ., nattcs oulslde lhe pleadinss dc Fescnlcn to dd nol excluded by lhe courl.lhc motion nusl bc tealcd as on€ tor sunnay judsnent undd RcIc 56. AIraflis nd be Ciwn u r.asanable oppoaunil! to Ptes.tu ull the nateriul thdt i peflinehl to the motian Itl on a RCFC r2(d)(emphashadded)isee dlloBaathr UnnedStdt.s,990F.2d617,620Gcd Cn 1993) ( rhe notico rquir€nenr ofRcFc 12(b) hecodiied as Rcfc l2(d)l offss $e pancs a tull opponuny o Fcparc for and onply with the Fqdeienh oa Rule 56.") (citins r_?/'/ & Sons,Inc Nna Foal\|eq th. , 705 I 2d 1316.ll22 (Fed cn. l98l)) llowever,when its thc non-moving pany dll inmduces cxta-tlcadins malter, thar prnl is dened lo be on constDcl ilc .olice lhal the cou mlyconve rhe motion into a nolion for smnary judsment. ' I Errer,575r.rdarrrl5-361./GutatrItvineh.ure,|90l.1dJ7,4l(2dCt.1999)('The Rh€ther the [non m ovant] should rcaso nably have Fcognized lhc po $ ibil ity ihat lhe norion 6ighl bc onvened into oDe for sunhary judgnenl or sd tlken by sD+rie md deprived of redonable opp.dunity to m*l fach ouiside $e plcadngs. ). c ssenti al in,tuiry i s snotedintheEcitationofbackgoundf.cls.thecourthsreceivcddocumenlsfionlhe Duffys, including thc sccond Mcnded ld Elum. $hich mplify sd exlend the aueAa.ions conrained inlhe plcadings Se.Ph. Opp'natEx.2-6. ln lxn. the golennenl has relied nore. 'lnsene6l, RCFC l2nino^ Fcd. R. Civ !.12,se?RCFC 12, Rules Conntuee 2002 telision, and cses lidn federal couds apFlyins Fed. R.Civ. P 12aEtypicallypesuasire in thn coun. ree P,/,1,r ,v ,lJsocs LP I UktedStutet.tl4Fcd Cl 7?1,780 n2 (2014). \ extcnsively on lhe neslt provided nateials fo. ns dBments. Jee Dcf Replv al 2 4 Addnionally, the coun has uren accounl ol the added e$ibits in construcling thc factual b&keroud ol lhn case and cdnol accmlely address ihe d.iits witbout reson to lhcse mateials. SerHfaIr.9:21 l0:9 Thc coufs consideFlion ofthese exlF pledding sanes, ther€lorc, rcquires conve.sion olthc gov.mmcnfs molion lo dhmGs inlo one lbr smarv judgDent under RCFC 56. rta RC)'C 12(d), conPale Eae*,515 F.3d at lrl5 17 (acceprrns a convcGionsnichhadb€endiscuscdvilhlheDanies). trrTbatrUnitedStutet,96ledCl 288.299 (2010) (declinins ro conven 3 nolionlo dismiss into a summary Judsmerl toolon when lhe cxhibih submitled by de prnies clariry. rather thd add dyrhln8 neH to, lhe allesarions in thocomplai.t ') ln rhis instance, thc coun save notice al lhc hdin8 held on Januar,v 2t, 2Ol 5, that it nad rcceived documenls lion rhc parties span lron lhe pleadirys. and asaEsult,the goremmenas nolion [wa]s really tuning into a sumry j udgienl nolion Hra lr.10:2I The sovcmcnl concured with ihe conle6ion. Hf s Tr. l0:'1 9, od, subsequently, aarer $e hcding, the Duf|ls subnitted a supplcncnlal post-beaing bncf addressins factual points 5!e Ph. Noticc on Hearins for Del\ Mol.lo Disniss("th Po$ Hearing Bi "). DC F No 2 0. Consequently, the slfl clues of RCFC I 2(d) lor co.le6ion of ihe soremmenf s norion lo dhniss into one for suBmary judencnl hale been satislied. c. sunn.ryJudgD.nt Summsl judgnont may be srdted $hen lhe pleadings, aJfrdavils, lnd evidenliary natcriah filed in a cas releal lhat lhde is no genuine dispute s lo my nalerial f&t and lhe novMl is cntilled lojudgment d a nater oil!w." RCIC 56(a). A maleiial facl is one "that nighraflcctthcoutconeoftbe suit under the govening law" ,tnderconI Libery Lobbr,lnc, 477U.S.2,12,243{1936) A cenuine dispule is one that "na, rc.sombly be Fsolled in falot of eitherplny " ./l dl250. lhc novanl has lhe buden ol demonslratinAlhe absence ofsuch senuin€ dnputes Accordinsly, 'the inferences to b€ dr,{n lron the u.derlyins fach . nusl be viesed in rhc lighr nosr faroFble to ibe pany opposine lhe nolion.' Ma^r:hit. Etec lhds CarZenithRadioCorll,4TSU.S.5?4.58?-88(1986)(quotinCLrtitedsratesr.Dieb.td,trc, 369us 65,1,655(1962))rre?,leceloter(:ot11 | cdtrctt.471u.s.3l7,l2l(1986). Tbe non-nordr nal dclial sunmarr-judsDent by coning lntrdd rilh nate !l laclsofils o$u more thm '[d]cr dcnials or concluory slalenenh. indicati4 an evideDtiary onuict crealed .n rhc Eata" Bdmas Bdtnt Mascknenlubrik AG I Mutdtd Md./l , Zrl, 73 I |.2d 83 I , 836 (Fed Cir. 198,r). The coun may gr&t suoh,ry judsnenl '[*lhec &e rccord taken 6 a uhole couldnolleadaraliomllieroflactlolindlbrthcnon'movingpany,,V,rJ,rlira.475USal 599 (,ltcration in original) (cilalions omilied). ANALYSIS A Jurisdi.tion This coun has lhejundical posqlo adjudnat |ne Duliys kx refud clain The Dutt]s paid rhe adoMt .f asscssed tax liabihy in full lor td ycd 200?, ree De|s Mor' al lix 7. md filed a ralid claito l'r a retund with lhe IRS thal con|ncd suPporing evrdene nccessary 10 Frovc thar clain, ree lls ' Opp'n al Ex l-2. Alier the IRS denicd lhenrequest fo. arctund, rda DeltMol.atDx lotssedlroPls'opFnalEx I,5-6,theDutfystinelyfileda|!xfttihdsuit Conpl .t liJeez1so26U.S C. $ 6512(a)(l). Thc DufyJ conplaint docs not " substantially vtry thc lcgal $eones ed faclul bases sel lbnb in lne ld rfund claid presented ro $e IRS. ' Z,ct eed Mat1in.2lq F.1d lil l. Ralher, as the sovemenl concedes, qere raised^in $e second @enden ld relm md then the arsumenh set fonb in lhc conplaint werc considcrcn by lhc lRS. Dea's Retly al 2 li rrapars Pls.' Opp n at Ex. 2, wTr An Conpl !i l19, 125, 135 Gilen tbcso cncumsloces, the Dullis har€ satislied rhe i un sd,cri onal requnenenh for a rd rclund suit in $is coun ,Se? Lllrr r U, eA Shtet. 5'1 Fed. Ct 261,265 (2003) (holdinC rhal pllintitlhad eslablished subjectnatlerjuisdiction over a rd rcimd clain Rhere plainlill iully paid rhe income td oNcd, filed aclain fora refund wilh lhe IRS, lnd in lhis coun, s.€ limely filed a conplaint subsequent to thc noticc oldisllowdc). B, \unmar' Judcnetr. Tne panies rre ge.erally in lgreement d lo the facrul underpinnings of lhe c$e N c ithd sidc com.srs the facr rhat Mr D u ffy entered i nlo $e S elllefrenl Agreenent with lrCB on Ocrabci I Ii 200? They also agrce rbat Mr. Duny * s paid 550,000 dd his aDsel wN pro! ided $ 25 ,0 00 in co npensali on under lhe lems of the Senl emeni Agreenenl. The panics dhaercc. howclcr, as to thc lrealmenr ofthe senlcnent award. Thc disFule ftms on (l) $helher$e purlose ol lhe Seulement Asreement ws to conpensale l'Ir. Dully lbr physical inju.yorphysical sicknessimd (2) ifthe setilenent proceeds received by Mr. Duf|y were in consideralion for the dhposition or sale oldmaEed Eoodsill The second issue need only be E.ched ifthe nrsl naner is Esohed in lhc govcmnc.i s favor ld fron laxalion pu.suant ro I.R C. ! I04(a)(2)b{ausn\€stheFsullof 'physicalinjuriesinnictedon [Mr. DufIy s]physical heallh." Ph Opp n al 10. Allernalively, lhcy ar8ue lhal the *tdenenl prcceds weE tdable d capilal gains mcml lo conpcnsalc Mr. Dulfy for dmages innidcd upon his business md pe$onal goodull " .Ve Ph Om'n al 5; se ar? Hr'C T. 25:22 24. ln rEsponsc.lhc govendent nakest$oargundnrs Fi4t, itconrends thlt the n,ru€ ofrhe clai6lMr. Dufyl liled,eain$ [UCB] was,,r r.nacc.untofF*onalphrsical injudcs or sickncss. as requned by Lsubsecdonl 10,1(r)(2), but $?s sinply lo serde d enFloynenl discnmination cl.in for wonsful leminalion under28U.S C.A. { 1511[(a)]." Det sReply at I 2(emphasnin original) Sccond, the govcrnmcnl nainlains $at thc scnlenent proceeds camot be trqted as capnal gains because parment Ras nol in consideradon for $e sale or cxchmgc of my capilal The Duffys aver thal paymert ftom UCB has exeDpled aer IJd-'Tle.uL1. 1.J( .al oirle.rdg'rr' i'rh 1. tRC t taalolr. IR.C 6l(a)defines soss incone 6 "all incone lion whatew source derived." The broad sweep oflhis prolision demonstnles th3l Consress intended lo uelhe full nc6rc of ils u!\ingpo{o. ,9 lreli,A ! C/il6l4 r09 U.S 111. i14 l\944)t see dko Cjnerg, Q)rp. I U"r€d,9rdt?s,55 Fed C|.489,512(2001). Cotrelarivelt, lhe Dudys, who de clainiry the tax exenplion, have the burden of esrablisbing lhen enlnlcmcnt to a specific exenption in the tax c.de. ,4br.han!!n I L/rred slz.dJ,223 F.3d 1160.li62-61(Fed.Cir.2000)(cning Ltrs./ s:fares r Jd,is,4l8 U S.433.440-41l.l916ltalhe Bubble Roan, Inc L ar,r,1.rardJ. ls9 f.rd 55r,561([cd. Cn 1998)) The Dufys argue lhal ihe pooeeds of$. Selllenenl Agreen.nt I.R.C. S l0a(a)(2) lhal statute Fovides, in peninc.t pan: aall lbir ibe tms or (a) ln gcnerdl. Dxcept in the cde ofmouns anributable to (dd nol in cxccs ol deductiors allowed undcr scclion2ll (.ela!ng to nedical. elc, exp€nse, lbr ant prior taxable,€d, gross in@ne.ioes h.t incl*le (2) the ona"nt afa,y dandse! lother th& puitive damase, r?.e'td (shelhr by suil ot asreemenl whelher !s lmp suns or as tetiodic paymenls) dd ,r ocotnt ot pesohdl physi.al injvies :ic*nes. or Phfi.at llc supicne Coun hs developed two ind€pendenl lesls thal a raxpayer Dust Decr beaor. a s.tlcncnr mount na) be excluded lion go$ ncome under Sarionl04(a)(2). Co m$ioner' Schteier,5t5r.S 123,317 (1995); see tkoGre.hr Co,,{r,o,r/,507 F.ld 851,867 (5ihCn.2007) '' "Fns! thc ldpayer nustdemonsmlc $al lhe underl ying calse ol action givins rise to the recorer] i s baed upan ton or lon lype ighlJr' and second, rhe laxplycr iusr show lhal lhe ddases were Fceived "on accoml of penonal t.RC. S I 04(a) (emphasi s add€d). lphysicallinjudesorlphlsicarjsickness".s.r/er?r.5l5U.S.allJ7t:eetledeeh,5AlF.3dar 867.Chonbenaike,rel Chonbetloinr llnite,1Sl.les,4O1F.Jd ll5,14l (5tnCn 2005) There is no dnpde that tbe Seltlemenr Agreemem "satisfies the requi.emenl rhat thc udedyng causeofxclionhalon.ii S?e Dei sMol al l0 Tle salient queslion is wherhd thc sctllenent parmenr {2s rcccivcd "on account of Mr. Duflr's phtsical injuries or physical sickncss The "on ecolnl of' phec rcqutes a dteci causal link between lhc dmages md the physical injury or physical sicknessr in this.esFct, danases fmusl] be rweded br reson ol or becausc of, a penonal physical injury Ior physical sicknBsl. Srdd,lt, 16? Fed Appx at 5911 r!S.r/.i.r md Crs?, were decided usins the ld slllute in ellecl beforc 1996. S.e, ?.3, CrEe,,507r ldal867 n6 ( 'Because lhe pafiies ageed . . lhal lhe prel996law govemcd thc tdabililyofrheselrlencnlpatnenlsalissuc,wewillapplyrhalv.^ion.") Priorlo 1996,IR C. i $ 104(a)(2) had excluded lion Cross inconc Mouns Eceived in conpcnsalion for peNonal injuies or sjckness,'which included physicalandnon physical injui€s suchasemotionll disires.&el.R.C{10,1G)(2)(1995).trndcrlhel996amendhehs,moneyrecervedas conpcnetion nor alrributable lo pe6onalphysical injury or physical sictness is nowldable. See Sladryk I C.nh\sianer,367 Fed. Appx. 586, 590 (6lh Cn 201A\ ke alto Murlh! r' lnte dlRerenreS.tr,49lr.ldl70,l?6(D.C.Cn.2007)'whilcrheexclusionhassincebeen nmo scd, the hold ings of these cases desclibe thc gc.era I appmach couns sho uld use in delcminins thc lax teatnenl oi dmages or setrlmcnt proceeds udq [Section] l01GX2) md rcdain Sood la$." &ptro:d v Connilsi.net, 636 lt 3d 747 ,150 (5th Cir' 201 I ) Accordingly, a taxpa!€r bclN $e budcn undd Sation l04G)€), d mendcd. oaproving pe^ondlPru/.al injufts or prlrl1 sicknss. &e M,rpnt\,19i F 3d tA ^r t0 ul!. Grc.t, 507 F.id ar 867 (thecounnu$ask'in lieuolwhalqasthe. settlenent a*aded])ian1,r.o,./,..vLrn'edtdrsr,l10FedCl.650.662(2013)(lptltinglhe"inlieu of' re$). "Vhere damages de rccciled udcr a wtuen seltlenenl agEement, lhe ibcus is o. $e origin and characteisiics ol|ne clains serded in deleminins wherher such damases @ excludablc mdd $ r01G)(2). ' G/es,,50? F.3d at367 (quolins Piptoner U"ned slates,laA se! F.3d859,862(7ficn.1999)l.Tberefore,lhetdlrennenlofdanaseshingesonshelher Daynenl was nadc for lie purpose of setlins a claim lor pesonal physical injury or physical sictness. s.?a'fdel, United States,2ll F.3d J22, t29 (6lh Cn 2000). In considcrins this _originolthcclain-docrine.raslelrC,,r'$-t,,/,l2lL3dl93(8thCn1997),r:.,inlieu ofsharwercdamagesasddorpaid,Delah.!rCannistioner,99Lld20,2324(quoling Ale@nlerrthk.hdlRerS.rr.?2F.]d9i8,942(lstCn1995)(inLudquoli.gXa],,r.,, ltod.CorprConnitliohet,r14F2dll0.lll(lslCn.1944))),lhecoulli6tlookslolhe express ldsuage i. rhe scnlcncnt for indicia ofits pu4oe Only | "lhe setLlenenl a8rcenenl lelc exprss l@gugc ofpurpose, [\'ill] lhe coun lookll bcyond lhe aereenenl to olher i evidence rhal may shed lisht on the 'inlent oflhe plyor as lo the purpose in makng thc payment." Crsg,, 507 F.rd al 86? (quoting &,ctlst co,,nsio,ar,349F2d6l0,6ll (101h r cit.\965\teeahoPiptone-t30r_.ldat864inalrLI,t?ls?drer.25ClCi5l5-5'10(1992), arf4 939 F.2d 1204 (Fed. Cir.l99l) Dullis p.sil lhal lhe seneral release langlagc inlne Senlemenl Agrccnenl is anb isuous d ro $e pu+o sc of rhe paynenl. and lhet lbrc rhc co un should look pri naril v to inlcnt ofthe parlies Ph.'oppnal2. This argment is mvailins because lhe rems of the The the seltlenenl agFenenl unequivocally iesolve *hether $50,000 in mnpensation $as nadc on ecounl or" Mi. Duliyt physical injujes. tadgraPh 3 of lhe set enen ,\gEnent slales fial Nlr. Dufy vas paid for "lhc er.l,Jile p,rpard of avoiding tnc cx!€nse md inconlcni€nce of ludhft lilisalion." Asreemenlll8 (cnphasis added)r./ Oree,.507 F.1d at 868 (finding thal t&agraphs four md six in a serll€menl ageencnl conlain expE$ tdguaCe ofpurpos) No loguagc in lhe Seltlenent Agreenent suggests lhat the proceeds werc for lhe purlose of seltlihg a claim for pbysical injur) orphysicll siclness. SeePipiro,e.l80F ld at864 ( "Irre hleltlenenl lalereenem h a ecncnl rclede ofallclains od malcs no specinc rclerene to shelher lbe paynlenr c.dpcnsatcd [rhe taxpayer] fo! pesonal injuncs or sickrcss. ). cl abfthohet,?28 F.3d at 1:163 ( Rarhf lhanEoecli.san individualizedmoul foreachenploycebasedonthe unique indiridual injunes ofthat cnployee,lhe paynenls reflcctcd an anoul lssociat.d sith And lailure io showlhe specific @ount orthe paynenr rhe enployee's $ork rccod lllocable to thc .lains of ton or lonlike dmsges lot pcrsoml [physical] injuic resulls in the enfte dounfs bcine presumed nol10 be excludablc ,/ise r Corn'snJ,t, 7s T C M (CCH) r5r4(Tc. r993)(ciring laq'?,r Unite.t Stote!. 3s F 3d91, 96 (21cn l994)r c?rryr Connnlioher,91 LC. 160, 175 76 (r988).,l1,h this ksue an.ltur.!okotho itsues,9r) r2d 1486 (9th Cir. l99O)) Accodinsly, palmenl to Mt. Dufy was'conplctcly independenl of lheexisrcnce orextenlolrnl pesonal [physical] injuy. Scrlciet,515US.at330. ) ' For rhc rcasons sated, the sun or350,000 paid to Mr. Duly pusuml io the Settlenent Asrcdc.t does nol quali ry as ercludablc gloss income uder LR $ l04G)(2) c 1l 2. lrocee^ Jron th. sale of sood\|ill. parronagc. raler r c $ 1221, is lh€ cxp4btion ofconlinued Cou-drD,,/.ll8L]d?89.793 (7lh Cn.2003)iJea d&o Dsr Mal,er Busine$ soodwill, a capilal asst under t.R GasCor.Cit,olD6Moir6,238U.Sl53,165(1915)(fcood{illindicateslthatelenentoI valDc which inheFs in thc nxed md iavotuble consideration ofcuslomes. arising trcm an Prcceeds fron the sale ofeoodNill enablishcd and Fell-kno*n dd wcll'co.ducted busincss ") \ tinilel Stotes,554 F ld l8l,l88 (lst C;. are sencrally tdable as lapnd ga\ns. M"skat 2aoq. lee also latternn Cohhissianer,81l F 2,1 562.569 (6lh Cii. 1987)r ct I R C $ 1222 (d.nnins a capilalelin as gain frcm the sale orexchmge ofacapnal sscl") Asalcis"a rdnsfer ofpropeny for a lixed pncc in noncy or its equivalcnl, " Schelble r Cohnksione\ IJA F.id 1188, r194-95 (rOlt]Cn.1997)(q!r\neloedI McFatlan.l,l l0 U S 'ltl,4?8(1385), resllling frcn a comract 10 p6s rjghts of propent for money, which thc buyer pa] s or promisesr.payrotheseller[forthelhingboughtmdsold], r./ l.Nori^eM iansonr Berry' 49U.S.495.496(r850));sa?,6aConnittunetr 8rc||n,380V S.56r,571(1965) The salc I olsoodsill occus onlywhenthebusinessorapartofn,brhichlh€good*illaltehesis ltd " s.rd1b1e, rl0 F 3d. at 1l9l,tee alto Bak r,tl9F 3d ar19l C Goodwill caMolbe fansbtred lapanl frcm the busines wnh trhich n h cometed."): cl Dure. I Unit.d Stats, 4,14F2d557,562(cl Cl l9?l)(Asaleenlailinggoodwillresullsincapiblgaintotheseller Dullls mainlain that goodqill exists with r€specl ro [Mr Dufy\l consulling fim, ' Ph ' SuFrcply in Opposilion to Defendbfs second Motion to Dishiss ("Pls. Suieply )at6, 14,EcrNo 16, md lhal the selLleiem paFent Ns in consideFlion tnr dmase innicted on this goodsill, Jee rd al ll,2l. Because there sas no lax bsis in this goodwill.'lh€ Duilys contend lhar the pbcocds should be lrealed as aclpilll gain. /d al24 The sovennent docs nol dispule vhether Mr. Dul\ ow.cd a Cood lla$el. &?Del'sReplyall.'' Rather, the aoverment argu€s lhat rhc acrllcnenl paync.r does not.epresenr a eaih from the disposnion of mysoodwill. See i./. al2 3. IfthcDutisdidnolseuorexchangegoodwilli.considmlionlbr The thc scrtlenent paynent, then $e amoDtreceivcd by Mr. Duffy is sablc as odinary incone. ,v, s.lelble, ll0 L3d at 1194 95; rec a6o r,&r,lr8 F.3d 41794. The soodliu.rr lcms ol lhc Senlenenl Agreemert Ralher, as discusscd do not evinm a dhposnion or sale ot 9pla,lho paynenls wet for'-lhc cxclusile bsncss puryose ol' Mr. Duffy s consulline busines was underpe omins, re, Am Conpl goodwill, Je, D.seret MEnt O,P I Uhited 1l!l 73-?9, does not necessdily indicale ! lack oi tdrsr,I l2 rcd Cl 418,450 (2011) ("There is undeniably a posilive nexus berween thc cxislcne olsood ll and lhe abilily to eereratc prdfir but thal is 10 say ncirhr th.t only proinablc firns have soodwill, no!, especiall), tnat only irms with p.olits abolc lhe nom LL I he fact thal rrThe rdninistialile conplaint filed againsr UCB, ree An. Conpl. at Ex D, ed lhc Duffy s200?laxretum,se?Det'sMotatEx.8,sinildlldonotEferencethedisPositlonofmv goodrvill associatod wilh a capital 6se1. t) a!. idinA thc ex pe.se and incorvenieNe of tunber l i ri gauoh. scltlemenl A8teement f 8, and Mr Duily {as'solcly responsible for any lax liabihies ocoaioncd by {UCBI's pa}menl ofthe considearion loi thh eEenenl; idn1,.f Schelbler. Conni:to,e/, 71 T.C.M. (CCH) ll66 (T.C 1996),r,/4130F.ld1388(lothCir.1997)(holdingth extendcd carnrgs paynmts sere not pnceeds froD rhe sale ofgoodwill sin.c 'thcre was no eaptss sales a8lccncnti nor rdthere6v eridence oflcndiblc busincss ssets.')r E/E/:ro, C."riJi,nel, 6,r 'l.C.M. ' (CCII) 96:l (1992). dll? I F.3d l2rl (lsl Cn. l99l) (finding tbal seltlehenr Farhcds drd noi connifu1e a sale of capital rssts because $e Fcmd tontainled] no exprcss eles agmcncnl, nor ldidl nm.sincvidcnceofvendiblebusine$lssls. ) As in S.re1DL ddErrcrr,,, whalever g.odiill or busincss rcpur!1ion Mr. Dufy had as r consulhl, hc rclained when he signed lbe SctlcncntAcreemenr.Jea/aal.rrUnitedState:,454F2d1t20,1123(8thCir.l9?2), Mr. Dully nay havc i ntended 1o treal the paynenl o l $ 5 0.0 00 as conpensatior bded on the danase inllicred on his lconsDlringl busincss, Ph Surreply al21, bul oncc havDg accepted rhc lsdtlcn€nt AsEement] in ils lbm, he 'nu$ eceFl tbc ld consequences ol his choicci *helher contcnDlalcd of no1, . od nay not enjoy the b.ncil of some other rcule he night hdrechoscnrofollowbuldidno1,,S.relDle,1:10F.rdarlr95(quotinsConDNr,e/r Nution.l )fdfa D.bdratiry & ,Urrts C,., 4l 7 l,I.s. 134, 149 ( l9?4) Gnadons onittcd))i ve aA, Det\ Mor. at !x. l0 (cnins Rev Rul.7,1-251, 1974-l C.B.2l4 (19?4)) nsidedLion plid by UCB to aloid litisstins Mr. Duill\ enploynenld$criminatian md rctaliation clains does no! rcDresenr gain fton lhe sale orexch@Cc of soodwi I I dsoci ated with a capnal asset The settlement prococds, lherefore nay nolbeta\eds Ir sum, lhe co CONCLUSION sovemenas moion lo dismhs uidd RCIC 12(b)(6) n convened into on€ tdr sunnary judencnt mdd RCFC 56. There de no genuinc hsues ofnateial litl in lhis case Rhich pFclude sunndr) judgmcnl, and thc golerment's molioh tor sm.ry judsnent is CILA\TED. The sov€nmenr is.ntillcd tojudsmenl on the Dullis rd rctund claim The clcrk shall enter judgnenl in accoid with rhis dhposilion. The It is so ORDERED ll