By: Derek Hawkins//July 28, 2015//
Tax
7th Circuit Court of Appeals
Officials: FLAUM, KANNE, and SYKES, Circuit Judges.
Estate Tax Settlement – Abuse of Discretion
No. 14-1216 Maria Billhartz. V. CIR
Where courts failure to adhere to appellants request to vacate settlement agreement with Tax Commissioner did not amount to abuse of courts discretion. The settlement conclusively “established the amount that the Estate could deduct. It was not the province of the Tax Court to determine whether this amount was correct.”
“Second, as we alluded to above, the Estate’s argument is contrary to the very nature of settlements. Consider a lawsuit arising out of a car accident, in which the plaintiff, after consulting with an auto mechanic, initially claims $1000 in damages. The defendant does not think he is actually liable, but fears a large jury verdict and offers to settle for 40% of the plaintiff’s claim ($400). The plaintiff accepts the settlement, but a couple of weeks later her car breaks down, and she discovers that the damage from the accident was more extensive than she initially thought—closer to $2000. Under the Estate’s theory, the plaintiff could then try to vacate the settlement because the parties were “mistaken” as to a “fact”—i.e., that the amount of damage to the plaintiff’s car had been finally determined at the time of the settlement. But, of course, that’s not right: by agreeing to a settlement, the plaintiff waived any right to later argue that she actually deserved more than she previously asked for. It makes no difference that the settlement was calculated as a percentage of the amount claimed by the plaintiff—all monetary settlement amounts can be expressed as a percentage of the amount claimed by the plaintiff.”
Affirmed.