Opinion ID: 601582
Heading Depth: 3
Heading Rank: 2

Heading: The Document

Text: 9 A settlement document is a contract and is construed using ordinary principles of contract interpretation. See United States v. ITT Continental Baking Co., 420 U.S. 223, 235-38, 95 S.Ct. 926, 934-35, 43 L.Ed.2d 148 (1975); Republic Resources Corp. v. ISI Petroleum West Caddo Drilling Program 1981, 836 F.2d 462, 465 (10th Cir.1987). Where a contract is unambiguous, its terms are given plain meaning, and the intent of the parties is determined from the document alone. Republic Resources, 836 F.2d at 465; Koch v. Koch, 903 F.2d 1333, 1335 (10th Cir.1990). 10 The taxpayers and the IRS each argue that the plain language of the document supports their position. The IRS directs our attention to a waiver clause in the settlement agreement, while the Anthonys point to the finality clause set out above. We find neither clause dispositive, and the Internal Revenue Code fails to define interest in this context. 11 We next look to the nature of the agreement. Entitled settlement document, the Anthonys argue that it is analogous to a compromise and therefore constitutes a full and final payment. The government prefers that we view it as a closing agreement, which would not include interest. The document does not satisfy the Code requirements for either and so remains open to interpretation. See 26 U.S.C. §§ 7121, 7122; 14 Jacob A. Mertens, Mertens Law of Federal Income Taxation § 52 (specific forms required for closing agreements and compromises). Although we have previously held that Congress has set out a statutory procedure for the settlement of tax disputes which precludes informal agreements, Uinta Livestock Corp. v. United States, 355 F.2d 761, 765 (10th Cir.1966), this was not an informal agreement but a stipulation by the parties, issued as a decision of the Tax Court. The agreement therefore is valid, and we must turn to the intentions of the parties to construe the document. 12 The uncontroverted evidence shows that the IRS assured the Anthonys that the settlement covered all civil liability. The IRS attorney who drafted the document, John Weeda, testified in his deposition that he included the finality clause because of Mr. Anthony's concern that the settlement be final and conclude all civil liability. Aplee.Supp.App., doc. 2 at 35, 38-39. Mr. Weeda informed Mr. Anthony that the settlement would take care of the civil aspects of the case, but not fraud. Id. at 35. In Mr. Weeda's notes of a December 4, 1986 telephone conversation with Mr. Anthony, he recorded: 13 Petitioner also had questions regarding waiver language and his concern that IRS not be able to come back after him for same years. Referenced him to IRC 7481 [and] assured him decision would be final excepting fraud. 14 Aplt.App. at 127. Furthermore, in a letter accompanying the decision document sent to Mr. Anthony by the IRS District Counsel's office, the IRS stated: 15 ... we have included a clause that states explicitly the finality of this agreement for the years in question as regards the civil liabilities. We do not believe such a clause is necessary but have included it at your request and in the interest of settling this matter. 16 Id. at 85. 17 The IRS responds that the taxpayers should have been aware of the additional interest, arguing that it rarely waives interest and that Mr. Weeda has not waived interest in previous cases. These facts, however, are immaterial to the issue of the Anthonys' intent. The IRS further claims Mr. Weeda may have informed the taxpayers of the additional interest because, although he cannot specifically remember doing so in this case, he generally does whenever the issue comes up. Aplee.Supp.App. doc. 2 at 46. The IRS concedes, though, that Mr. Weeda could not remember with certainty telling these taxpayers that interest would be added later. Aplt.Reply Br. at 13. 18 Summary judgment is appropriate because the IRS cannot produce evidence that would allow a reasonable trier of fact to find in its favor. All existing evidence, including deposition testimony by IRS employees, supports taxpayers' claim that they were assured that this settlement would resolve all civil liability. There is no probative evidence of a warning regarding separate interest. The government relies on the testimony of Mr. Weeda, but he cannot remember whether he explained interest to the taxpayers and, if so, whether he did so before or after execution of the document. Aplee.Supp.App., doc. 2 at 44-47. The government has failed to set forth specific facts showing that there is a genuine issue for trial. Applied Genetics Int'l, Inc. v. First Affiliated Sec., Inc., 912 F.2d 1238, 1241 (10th Cir.1990). 19 We are further mindful that an ambiguity is generally resolved against the drafter of the document. Milk 'N' More, Inc. v. Beavert, 963 F.2d 1342, 1344 (10th Cir.1992). This rule applies to the IRS as drafter of a stipulated agreement. Clapp v. Commissioner, 875 F.2d 1396, 1399 (9th Cir.1989). Although a taxpayer is not entitled to a settlement of tax liability as a matter of right, Kennedy v. United States, 965 F.2d 413, 418 (7th Cir.1992), where the government enters into an agreement with its citizens, it has a duty to act with at least a minimum standard of decency, honor, and reliability.... Heckler v. Community Health Serv., 467 U.S. 51, 61, 104 S.Ct. 2218, 2224, 81 L.Ed.2d 42 (1984). The Anthony's disputed the original $30,000 liability and settled with the service for $15,000. The service now seeks a judgment in excess of $30,000. We find that the taxpayers must prevail as a matter of law. The district court's order granting summary judgment in favor of the taxpayer is affirmed.