                           121 T.C. No. 17



                       UNITED STATES TAX COURT



         WALLACE AND DONNETTA DUNCAN, ET AL.,1 Petitioners v.
             COMMISSIONER OF INTERNAL REVENUE, Respondent



     Docket Nos. 16607-97,   13579-98,       Filed November 24, 2003.
                 10022-02,   11095-02,
                 11313-02,   11324-02,
                 11326-02,   11327-02,
                 11338-02,   11339-02,
                 11441-02.



          Certain factual issues common to these
     consolidated cases have been submitted for voluntary


     1
       The following cases are consolidated herewith: Stevan B.
Little, docket No. 13579-98; Edward J. and Lillian C. Lefevre,
docket No. 10022-02; Frank M. and Maria B. Foley, docket No.
11095-02; Stephen M. and Linda M. Kirchner, docket No. 11313-02;
Bernard and Sherley H. Koteen, docket No. 11324-02; Richard E.
Briggs and Peggy E. Perry, docket No. 11326-02; Gregory S. and
Susan H. Lewis, docket No. 11327-02; Estate of Marion Cornell,
Deceased, Barbara A. Cornell, Administrator, and Barbara A.
Cornell, docket No. 11338-02; Arthur D. and Hildegard B. Lewis,
docket No. 11339-02; and Harvey B. Jacobson, Jr., docket No.
11441-02.
                                - 2 -

     binding arbitration pursuant to Rule 124. The
     arbitration agreement requires the parties to submit
     certain information to the arbitrator by a prescribed
     deadline and gives the arbitrator discretionary
     authority to request additional information. Ps made
     a timely submission of information to the arbitrator
     and another untimely submission to which R waived any
     objection on condition that Ps submit no additional
     information. Ps have moved to delay entering the
     arbitrator’s findings in the record on the ground that
     the arbitrator failed to request and consider certain
     additional information that they consider essential to
     their case. Held: Absent good cause, we shall not set
     aside the terms of an arbitration agreement. Ps’
     motion is denied.



     Moshe Schuldinger, for petitioners.

     Roger W. Bracken and Avery B. Cousins III, for respondent.



                               OPINION


     THORNTON, Judge:    A primary issue in these consolidated

cases is the fair market value of numerous West Virginia natural

gas wells with respect to which petitioners claimed charitable

contribution deductions.   The parties have agreed to resolve this

factual valuation issue by voluntary binding arbitration,

pursuant to Rule 124.2   The case is now before us on petitioners’

motion to delay entering the arbitrator’s findings in the record.




     2
       Unless otherwise indicated, all Rule references are to the
Tax Court Rules of Practice and Procedure.
                               - 3 -

                            Background

     On April 14, 2003, the parties filed a Joint Motion for Rule

124 Arbitration, moving that certain factual issues common to

these consolidated cases be submitted for voluntary binding

arbitration.   Attached as an exhibit to the joint motion was the

parties’ arbitration agreement, executed by the parties’

representatives.   On April 18, 2003, this Court granted the joint

motion.

     In the arbitration agreement (reproduced in the appendix

hereto) the parties agreed, as relevant herein, to place “no

limitations on the materials or sources used by the Arbitrator”.

The arbitration agreement states:

     Given the Arbitrator’s unique knowledge of the facts
     * * *, coupled with both parties’ confidence in the
     Arbitrator’s good faith and neutrality in this
     arbitration, the parties agree that there is no need
     for either party to submit testimony, expert reports,
     written summaries or affidavits supporting their
     respective positions to the Arbitrator. * * *

          The parties agree that the Arbitrator may request
     that the parties clarify the Issues or request any
     additional information that the Arbitrator deems
     necessary, during any phase of the arbitration process
     provided all parties are notified of such requests and
     are given the opportunity to participate in any
     discussions. * * * [Emphasis added.]

     Pursuant to the arbitration agreement, the arbitration

schedule began with a 30-day discovery period, during which

petitioners were required to provide previously requested

information to the arbitrator, and each party was to provide “any
                                - 4 -

additional information * * * relevant and probative” to the

arbitral issues.    At the conclusion of the 30-day discovery

period, if the arbitrator determined that he had sufficient

information to prepare findings, then a 30-day review period was

to commence.   If the arbitrator determined that he did not have

sufficient information to prepare findings, then the 30-day

review period could be tolled for up to 30 days to allow the

arbitrator to request and the parties to provide additional

information.   At the conclusion of the review period, the

arbitrator was required to provide his written findings to both

parties simultaneously.    Within 10 days thereafter, the parties

were required to submit the arbitrator’s findings to the Court.

     The 30-day discovery period began on May 5, 2003.    In a

June 30, 2003, letter, the arbitrator advised the parties that he

was extending the initial 30-day discovery deadline from June 5

to July 1, 2003, after which “no additional information” could be

accepted.   On June 13, 2003, petitioners submitted information to

the arbitrator.    On July 6, 2003, 5 days after the extended

deadline, petitioners submitted additional information to the

arbitrator.    Respondent alleges, and petitioners do not dispute,

that on July 24, 2003, the parties informally agreed that

respondent would not object to petitioners’ July 6, 2003,

submission as being untimely if petitioners would submit no

additional information to the arbitrator.
                                  - 5 -

     On August 29, 2003, the arbitrator submitted his written

findings to the parties and the Court.3      On October 6, 2003,

petitioners filed a motion to delay entering the arbitrator’s

findings in the record.    In their motion, petitioners note that

the arbitrator’s written findings include this statement:

     Mr. Williams [petitioners’ consultant] correctly points
     out that if all of the behind-the-pipe reserves were
     immediately completed to produce, the discount for time
     would be greatly reduced. However, there has been no
     information provided to me that this practice had
     become a standard procedure in 1993, or even since that
     date. [Emphasis added.]

Petitioners argue that by failing to request the information

alluded to in the just-quoted passage, the arbitrator “reached

his conclusion as to the fair market value of the subject wells

without the benefit of * * * full and complete data and

information with respect to an essential element of Petitioners’

presentation.”

     On October 23, 2003, respondent filed his opposition to

petitioners’ motion.

                                Discussion

     Under Rule 124, “The parties may move that any factual issue

in controversy be resolved through voluntary binding

arbitration.”    Rule 124(a).    The parties must attach to their

motion requesting arbitration “a stipulation executed by each


     3
       Contrary to the terms of the arbitration agreement, the
parties have not submitted the arbitrator’s written findings to
the Court.
                              - 6 -

party or counsel for each party” regarding the arbitral issues,

an agreement to be bound by the arbitrator’s findings, and other

matters related to the arbitration.   Rule 124(b).

     An arbitration agreement represents a contract between the

parties.   See First Options of Chicago, Inc. v. Kaplan, 514 U.S.

938, 943 (1995); AT&T Techs., Inc. v. Communications Workers, 475

U.S. 643, 648 (1986); United Steelworkers of Am. v. Warrior &

Gulf Navigation Co., 363 U.S. 574, 582 (1960).     Consequently, a

stipulated arbitration agreement, like other stipulations in this

Court, is governed by general principles of contract law, cf.

Bankamerica Corp. v. Commissioner, 109 T.C. 1, 12 (1997);

Dorchester Indus. Inc. v. Commissioner, 108 T.C. 320, 330 (1997),

affd. without published opinion 208 F.3d 205 (3d Cir. 2000);

Stamos v. Commissioner, 87 T.C. 1451, 1455 (1986); Robbins Tire &

Rubber Co. v. Commissioner, 52 T.C. 420, 435-436 (1969), and is

enforceable, like other contracts, according to its terms and the

parties’ intentions, see, e.g., First Options of Chicago, Inc. v.

Kaplan, supra at 947; Mastrobuono v. Shearson Lehman Hutton,

Inc., 514 U.S. 52, 63 (1995); Volt Info. Scis., Inc. v. Bd. of

Trs., 489 U.S. 468, 479 (1989).   Absent good cause, we shall not

set aside the terms of an arbitration agreement.     Cf. Dorchester

Indus. Inc. v. Commissioner, supra at 334; Saigh v. Commissioner,

26 T.C. 171, 176 (1956).
                              - 7 -

     In the instant case, the arbitration agreement provides a

schedule for submitting information to the arbitrator.   After the

initial 30-day discovery deadline was extended from June 5 to

July 1, 2003, petitioners made an untimely submission of

information to the arbitrator on July 6, 2003.   Respondent agreed

to waive any objection to the untimeliness of this submission on

the condition that petitioners submit no additional information.

Now, apparently, petitioners wish to have the arbitrator consider

additional information.

     Petitioners have not persuaded us that they should not be

bound by the deadlines set forth in the arbitration agreement for

submitting information to the arbitrator.   With respondent’s

agreement, they have already made an untimely submission of

additional information to the arbitrator.   If petitioners failed

to include in prior submissions information that they now believe

would have been useful, they have only themselves to blame.

     Furthermore, in the arbitration agreement, petitioners

agreed that there is no need “to submit testimony, expert

reports, written summaries or affidavits supporting their

respective positions to the Arbitrator” and that the arbitrator’s

authority to request additional information was discretionary.

Petitioners have no valid cause to complain that the arbitrator

did not exercise his discretion to request the additional

information that petitioners wish to have considered.
                              - 8 -

     Petitioners have not persuaded us that they should not be

bound by the terms of the arbitration agreement.   Accordingly, we

shall deny petitioners’ motion.   To reflect the foregoing,


                                              An appropriate order

                                         will be issued.
                                 - 9 -

                              APPENDIX

                        ARBITRATION AGREEMENT

     The Petitioners and Respondent (collectively referred to as

“the parties” herein) voluntarily agree to submit certain factual

valuation issues (“the Issues”), present in the above-entitled

United States Tax Court cases, for binding arbitration.    The

parties further voluntarily agree to the procedures and terms set

forth as follows in this Arbitration Agreement (“the Agreement”).

     1.   ARBITRATOR.   The parties agree to select Forrest A.

Garb, Forrest A. Garb & Associates, Inc., (“the Arbitrator”), as

the sole arbitrator for the issues set forth in paragraph 2

below.    The petitioners acknowledge that Mr. Garb was previously

employed by Respondent as his expert in the instant Tax Court

litigation.   The parties further agree that the fees and costs of

the Arbitrator will be shared equally by the two parties, subject

to the applicable rules and regulations for Government

procurement, and that the specific costs and fees will be set

forth in a separate contract between the parties and the

Arbitrator.

     2.   ISSUES AND FINDINGS.   The parties agree that the Issues

submitted for determination by the Arbitrator are solely factual

in nature and do not require the Arbitrator to render any legal

opinions.   The parties further agree that the Arbitrator’s final

written determinations (“Findings”) should address the following:
                                 - 10 -

            A.    Determine the reserve volumes and classifications

as of December 31, 1993, for the following 16 natural gas wells

subject to this arbitration, all of which are located in the

Roaring Creek/Valley District, Randolph and Barbour Counties,

West Virginia:

     Anderson 1              Lamb 1              Talbott 1
     Flanagan 1              Ricottilli 1        Talbott 2
     Findley 1               Ricottilli 81-22    Talbott 3
     Keeley 1                Simmons 1           Thacker-Luff
     King 1A                 Tahaney-Clark       Wilson 2
     King 2A

             B.   Prepare projections of production and revenue for

each of the subject wells using industry standard procedures,

considering all technical and economic data available.

             C.   Prepare summary projections of future net revenue

and discounted future net revenue by classification for the

subject reserves.

             D.   Determine a fair-market-value for the subject wells

using industry accepted guidelines and methods.

     3.    MATERIALS USED BY THE ARBITRATOR.    The parties agree to

place no limitations on the materials or sources used by the

Arbitrator, except that the Arbitrator’s Findings should be based

solely on data that would have been available as of December 31,

1993.     While the Arbitrator is not permitted to make any findings

of law, it may be necessary for the Arbitrator to refer to

existing applicable law, regulations and other industry

information normally relied upon and used by petroleum engineers
                                 - 11 -

in determining such valuation issues.     To the extent that the

Arbitrator refers to any authority or information which he

believes is not usually relied upon in the petroleum/gas industry

in making similar determinations, such reference(s) should be

specifically detailed in or attached to his “Findings”.

     4.   ARBITRATION PROCESS.    Given the Arbitrator’s unique

knowledge of the facts underlying the Issues listed in paragraph

2 above, coupled with both parties’ confidence in the

Arbitrator’s good faith and neutrality in this arbitration, the

parties agree that there is no need for either party to submit

testimony, expert reports, written summaries or affidavits

supporting their respective positions to the Arbitrator.     The

parties further agree that there is no need for a formal

arbitration meeting of the arbitrator with the parties.

     The parties agree that the Arbitrator may request that the

parties clarify the Issues or request any additional information

that the Arbitrator deems necessary, during any phase of the

arbitration process provided all parties are notified of such

requests and are given the opportunity to participate in any

discussions.   The parties further agree that there shall be no ex

parte communications between the Arbitrator and a party or agent

for a party and that any information provided to the Arbitrator

must be provided to all parties simultaneously.
                               - 12 -

     The parties agree on the following arbitration time frames

and procedures:

           A.   As of the later of the date the parties’ Joint

Motion for Rule 124 Arbitration (with an original of this

executed Arbitration Agreement) is granted by the Tax Court, or

the date the Arbitrator’s fee and costs contract with the parties

has been executed, an initial thirty (30) day discovery period

will commence during which the Petitioners must provide the

Arbitrator with responses to the information request previously

submitted to them by Mr. Garb, as well as any additional

information that either Petitioners or Respondent believe is

relevant and probative on the Issues set forth in paragraph 2

above.

           B.   If, at the end of this initial 30 day discovery

period, the Arbitrator states in writing to the parties that he

has sufficient information to determine his Findings, a 30 day

review period commences.    If, however, at the end of the initial

30-day discovery period, the Arbitrator states to the parties in

writing that he needs additional information from either party,

the commencement of this 30 day review period is suspended as

follows:   (1) A period not exceeding fifteen (15) days after the

end of the initial discovery period will be provided for the

Arbitrator to prepare and pose in writing any requests for

additional information.    Copies of such requests or any other
                                - 13 -

correspondence from the Arbitrator will be provided to all

parties simultaneously.     (2) From the date they receive any

requests for additional information, the parties will have a

period not exceeding 15 days to respond in writing to the

Arbitrator.     (3) The Arbitrator’s 30 day review period will

commence on the earlier of:     (a) the sixteenth (16th) day after

the parties receive any written request for additional

information from the Arbitrator; or (b) the date the Arbitrator

states in writing to the parties that he has sufficient

information to make his Findings.

           C.   By the end of his 30-day review period, the

Arbitrator will prepare his written Findings on the Issues.

These Findings should state, to the extent necessary, the reasons

for any material revisions to the conclusions contained in the

2001 expert witness report previously submitted by Mr. Garb which

is currently lodged with the Tax Court.     The Arbitrator must

provide his written Findings to both parties simultaneously no

later than the 30th day of his 30 day review period.    The parties

will submit the Arbitrator’s Findings to the Tax Court within 10

days thereafter.

     5.   FINALITY.   The parties agree to be bound by the

Arbitrator’s Findings and that the Findings are final and can not

be appealed.    While the parties agree that the Findings regarding

the Issues specified in paragraph 2 above shall be conclusive and
                                - 14 -

binding on the parties, both parties also recognize that there

are additional legal issues present in these docketed cases which

may give rise to further legal proceedings, including if

necessary, a Tax Court trial.

     The parties further agree that while the Findings are not

binding on any other participants in the various FMF gas well

enterprises who are not petitioners in this consolidated group of

Tax Court cases, there is no prohibition against offering the

Arbitrator’s factual Findings as evidence in any subsequent court

proceeding concerning these docketed cases or any other

proceeding.   Any settlement reached by the parties through the

Arbitration, however, shall not serve as an estoppel in any other

proceeding.

     6.   CONFIDENTIALITY.   Petitioners acknowledge that the

Arbitrator (and any agents he may use during the arbitration

process) may have access to Petitioners’ returns and return

information pertaining to the Issues being arbitrated.

Respondent’s agents involved in the arbitration and the

Arbitrator (and any agents he may use during the arbitration

process), are subject to the confidentiality and disclosure

provisions of I.R.C. §§ 6103(n), 6103, 7213 and 7431.    The

parties acknowledge that employees of the Service and all other

Treasury employees involved in this arbitration are bound by
                             - 15 -

I.R.C. § 7214(a)(8) and must report information concerning

violations of any revenue law to the Secretary of Treasury.




                                      B. JOHN WILLIAMS, JR.
                                      Chief Counsel
                                      Internal Revenue Service


          /s/                 By:              /s/
MOSHE SCHULDINGER                     WARREN P. SIMONSEN
      * * *                                  * * *



Date:     4/9/03              Date:           4/11/03
