        RECOMMENDED FOR FULL-TEXT PUBLICATION
             Pursuant to Sixth Circuit Rule 206
     ELECTRONIC CITATION: 2000 FED App. 0099P (6th Cir.)
                 File Name: 00a0099p.06


UNITED STATES COURT OF APPEALS
               FOR THE SIXTH CIRCUIT
                 _________________


                                  ;
                                   
 DANIEL C. GREER,
                                   
            Plaintiff-Appellee,
                                   
                                   
                                       No. 98-6593
            v.
                                   
                                    >
 UNITED STATES OF AMERICA, 
          Defendant-Appellant. 
                                  1
       Appeal from the United States District Court
     for the Eastern District of Kentucky at Ashland.
No. 96-00117—Henry R. Wilhoit, Jr., Chief District Judge.
                 Argued: August 6, 1999
           Decided and Filed: March 22, 2000
  Before: JONES, SILER, and GILMAN, Circuit Judges.
                   _________________
                        COUNSEL
ARGUED: Kenneth W. Rosenberg, U.S. DEPARTMENT
OF JUSTICE, APPELLATE SECTION TAX DIVISION,
Washington, D.C., for Appellant. Patrick F. Nash, Lexington,
Kentucky, for Appellee. ON BRIEF: Kenneth W.
Rosenberg, U.S. DEPARTMENT OF JUSTICE,
APPELLATE SECTION TAX DIVISION, Washington, D.C.,
for Appellant. Patrick F. Nash, Lexington, Kentucky, for
Appellee.

                             1
2    Greer v. United States                      No. 98-6593

                    _________________
                        OPINION
                    _________________
  NATHANIEL R. JONES, Circuit Judge. The United States
appeals the district court’s grant of summary judgment in
favor of plaintiff-appellee Daniel C. Greer (“Greer”) in his
suit to recover monies that were withheld from him for tax
purposes when he was terminated by his employer. For the
reasons that follow, we REVERSE and REMAND for
proceedings consistent with this opinion.
                              I.
  Greer worked for Ashland Oil, Inc. (“AOI”) from 1969
until his termination in July 1993. During his years of
employment with AOI, Greer held a variety of positions,
including executive assistant to the executive vice president
and executive assistant to the president. In 1988, he served as
AOI’s environmental compliance director. Although Greer
regularly received positive performance reviews during his
twenty-four years at AOI, he was fired in July 1993.
   Greer and AOI dispute the company’s motivations for his
firing. According to Greer, the circumstances of his firing
were highly suspicious. As environmental compliance
director, Greer was required to perform environmental
compliance audits of AOI’s petroleum operations. Greer held
this position for two- and one-half years, and he visited and
audited approximately 120 sites. Greer claims he uncovered
and documented violations of environmental regulations at
AOI refineries. According to Greer, AOI executives feared
that his reports might be released to enforcement authorities
at a time when AOI was already under their close scrutiny.
  In 1991, AOI removed Greer from the environmental
compliance department and appointed him director of cost
management. Despite the fact that he had no computer
programming experience, Greer was assigned the task of
creating a complex computer program. After Greer
No. 98-6593                            Greer v. United States           3

completed the project, he was given little to do for several
months. Eventually, AOI’s human resources department
informed Greer that his position was being eliminated. Even
though Greer claims to have “begged to do anything else in
the company,”1 he was dismissed and told that he simply
“didn’t fit in.” Greer appealed his dismissal all the way to
AOI’s chairman of the board.
   Given the events leading to his abrupt termination, Greer
believes AOI terminated him because he had too thoroughly
identified and documented AOI violations of environmental
regulations. When Greer learned that his termination was
final, he told AOI representatives, “I will seek whatever
remedies are available to me to protect myself in whatever
way I can.” However, Greer never explicitly threatened AOI
with a wrongful termination lawsuit, nor did he sue AOI. In
fact, Greer admitted in his deposition that he “didn’t have the
foggiest idea” what his legal rights were at that time.
   Shortly after notifying Greer of his impending termination,
AOI proposed a compensation package to Greer. After
consulting with his attorney, Greer signed the proposed
agreement on his last day at AOI. AOI’s normal severance
policy was to grant one week’s salary for each year of service.
In Greer’s case, a normal severance package would have
totaled $51,000. However, AOI and Greer agreed that AOI
would pay Greer $331,968 in exchange for Greer’s
surrendering all claims against AOI. Specifically, by
accepting the offered compensation, Greer signed a document
titled “Severance Agreement and Release” (“the agreement”)
which waived:
  any and all claims, rights, and causes of action [against
  AOI] of all nature, which may have arisen, or which may
  arise, known or unknown, out of any events or actions
  occurring before the date of his execution of this release,
  including, but not limited to, his employment, the

    1
      AOI officials claim that Greer never requested a transfer to another
position after his position was eliminated.
4      Greer v. United States                      No. 98-6593    No. 98-6593                        Greer v. United States   21

    termination of his employment, or any prior agreements        that punitive damages are not “on account” of personal
    between the parties, and expressly including, without         injuries or sickness); Burke, 504 U.S. at 238-39 (holding that
    limitation, as claims to be released, any claims of           remedies such as backpay and frontpay are not excludible).
    wrongful discharge, or any claims related to acts or
    omissions of the Company involving him, or of                    For this reason, although we agree that the payment was
    discrimination under any federal, state or local law, rule    made in lieu of Greer’s tort claim, we believe the district
    or regulation. Examples of such federal, state or local       court acted too hastily when it granted summary judgment in
    law, rule or regulation regarding discrimination include,     Greer’s favor. Because a crucial issue remains in dispute, a
    but are not limited to, any claims arising under Title VII    trial may be necessary. Greer faces the burden of showing the
    of the Civil Rights Act of 1964, 42 U.S.C. § 2000e et         court either that AOI made the entire “bonus” payment on
    seq., or any claims arising under the Age Discrimination      account of his personal injuries, or presenting evidence which
    in Employment Act, 29 U.S.C. § 621 et seq. This               would allow the court to determine that a distinct portion of
    release is for any relief, no matter how denominated,         the payment was made on account of personal injuries.
    including but not limited to wages, back pay, front pay,
    compensatory damages, or punitive damages.                                                 IV.

J.A. at 116 (emphasis added). In his deposition, Randy              We find that the district court correctly concluded that the
Lohoff (“Lohoff”), AOI’s vice president of human resources,       $280,968 payment above and beyond AOI’s standard $51,000
testified that it is AOI policy to include this general waiver    severance payment was in lieu of Greer’s tort claim. At the
whenever it grants an employee an increase in the normal          same time, a genuine issue remains as to whether that
severance pay.                                                    payment was made “on account” of personal injuries. For this
                                                                  reason, we believe the district court must determine if the
   AOI’s standard practice is to withhold taxes from every        payment was indeed “on account” of Greer’s claimed
settlement amount it pays. The company applied that policy        personal injuries, making the amount paid excludible under
to Greer’s case and withheld $108,873 from the compensation       the Code. Pursuant to III.D.1.c of this opinion, the district
package for federal income tax purposes. On June 25, 1996,        court may apportion between the excludible and non-
Greer filed for a refund in the district court pursuant to 26     excludible amounts of the payment if the evidence allows for
U.S.C. § 104(a)(2), seeking to recover the amount of his          such a fine-tuned determination. We therefore REVERSE
compensation package that was withheld for taxes.                 the district court’s holding, and REMAND for proceedings
                                                                  consistent with this opinion.
  After depositions were taken of Greer and Lohoff, both the
Government and Greer filed motions for summary judgment.
Greer argued that the funds he received from AOI constituted
the settlement of his potential wrongful discharge claim. He
asserted that the circumstances of his termination diminished
his personal and professional reputation, and inflicted stress,
humiliation, mental anguish, self doubt and emotional pain.
Because they were part of the settlement of this potential
claim, Greer argued, the funds he received under the
agreement could not be taxed. The Government countered
20   Greer v. United States                      No. 98-6593      No. 98-6593                         Greer v. United States   5

                              d.                                  that the extra compensation from the agreement covered both
                                                                  the release of all potential claims as well as consideration of
  In sum, we find the following factual showings made by          his past service. Because the funds paid to Greer comprised
Greer to be undisputed: Greer had a bona fide tort-based          non-excludible compensation, the full amount could be taxed.
claim against AOI for wrongful discharge; the claim existed
at the time the agreement was reached; and the claim                 On September 22, 1998, the district court filed an
encompassed personal injury.           Other undisputed           unpublished opinion granting Greer’s motion for summary
facts—primarily the exorbitant amount paid to Greer relative      judgment and denying the Government’s motion. The district
to a standard AOI severance package and the evidentiary           court determined that the compensation package constituted
showing that AOI officials were aware of Greer’s potential        a nontaxable personal injury tort settlement. Specifically, the
claim—establish that the agreement constituted a settlement       district court concluded that $280,968 was nontaxable and
in lieu of prosecution of that claim.                             that approximately $51,000 of the agreement constituted
                                                                  normal severance pay that could be taxed as income.
                              2.
                                                                    The Government filed this timely appeal. Greer does not
  Despite the strength of his evidence that the payment was       contest the finding that $51,000 was taxable income.
made in lieu of his tort claim, Greer has failed to surpass the
second factual hurdle to gain exclusion under                                                   II.
§ 104(a)(2)—that the payment was “on account of personal
injuries or sickness.” Schleier, 515 U.S. at 330. As stated          This court will review a grant of summary judgment de
supra, there is no doubt that Greer’s tort claim may have         novo. See Terry Barr Sales Agency, Inc. v. All-Lock Co., 96
encompassed personal injuries. “Personal injuries” include        F.3d 174, 178 (6th Cir. 1996). Summary judgment is
nonphysical injuries, “such as those affecting emotions,          appropriate where there exists no genuine issue of material
reputation, or character,” Burke, 504 U.S. at 235 n.6, and can    fact and the moving party is entitled to summary judgment as
include “intangible as well as tangible harms.” Schleier, 515     a matter of law. See id. (citing Fed. R. Civ. P. 56(c)).
U.S. at 329 & n.4. Emotional distress, mental pain and            Although both parties below stipulated that there were no
suffering, and injury to personal and professional reputation     disputes over any material facts in the case, and each
also constitute personal injuries for exclusion purposes. See     submitted motions for summary judgment, that fact “does not
supra. These are precisely the types of injury that Greer now     require [us] to rule that no fact issue exists.” Cherokee
claims his wrongful discharge rendered: damage to his             Insurance Co. v. E.W. Blanch Co., 66 F.3d 117, 123 n.4 (6th
personal and professional reputation, as well as distress,        Cir. 1995) (quoting Begnaud v. White, 170 F.2d 323, 327 (6th
humiliation, and mental anguish. However, Greer has not           Cir. 1948)). Indeed, “summary judgment in favor of either
presented concrete evidence demonstrating the precise causal      party is not proper if disputes remain as to material facts.”
connection between such personal injuries and AOI’s               Taft Broadcasting Co. v. United States, 929 F.2d 240, 248
payment to him, a showing Schleier requires before a court        (6th Cir. 1991). At the same time, “cross motions for
can render a settlement payment excludible. For example,          summary judgment do authorize the court to assume that there
AOI may have intended portions of the payment to have been        is no evidence which needs to be considered other than that
on account of lost wages, lost future earnings, or punitive       which has been filed by the parties.” Harrison Western
damages, none of which are excludible under § 104(a)(2).          Corp. v. Gulf Oil Co., 662 F.2d 690, 692 (10th Cir. 1981).
See O’Gilvie v. United States, 519 U.S. 79, 83 (1996) (stating
6    Greer v. United States                     No. 98-6593      No. 98-6593                             Greer v. United States         19

                              III.                               AOI was aware of the potential for such a claim. This clear
                                                                 evidence distinguishes this case from Pipitone and Taggi and
   Under § 61(a) of the Internal Revenue Code taxpayers are      renders the lower court’s apportionment of the payment
liable for all gross income, meaning “all income from            proper.
whatever source derived . . . .” 26 U.S.C. § 61(a) (1994). As
the Supreme Court has oft repeated, this section is to be           Finally, to the extent that Taggi and Pipitone stand for the
construed liberally “in recognition of the intention of          proposition that courts can never engage in apportionment—a
Congress to tax all gains except those specifically exempted.”   stance the Government takes—we disagree with that
Commissioner v. Glenshaw Glass Co., 348 U.S. 426, 430            conclusion. Such a hard-and-fast      rule not only stands on
(1955). Thus, there is no dispute that the compensation paid     weak legal ground,6 but would defy the established
to Greer under the agreement falls well within the broad         framework of scrutinizing the totality of the circumstances to
sweep of § 61(a) unless it is specifically excluded elsewhere    determine the intent of the payor whenever a written
in the Code. See Commissioner v. Schleier, 515 U.S. 323,         severence/settlement agreement is not clear as to its purpose.
328 (1995) (concluding that the taxpayer’s settlement            If in undertaking this inquiry, a court finds the evidence to be
agreement “constitutes gross income unless it is expressly       sufficiently clear that it can determine that a specific amount
excepted by another provision”); United States v. Burke, 504     was paid for settlement purposes under Schleier, we see no
U.S. 229, 233 (1992) (“There is no dispute that the settlement   reason why a court should not set that amount aside as
awards in this case would constitute gross income within the     excludible. Indeed, we believe this is what the relevant
reach of § 61(a).”). Exclusions to § 61(a) are narrowly          precedent requires. Of course, outside of an explicit
construed, see Schleier, 515 U.S. at 328; Commissioner v.        apportionment, evidence will rarely be clear enough to allow
Jacobson, 336 U.S. 28, 49 (1949), and the taxpayer bears the     for such a determination. Nonetheless, we find this to be that
burden of proving the amount he is entitled to recover. See      rare case where it is.
United States v. Janis, 428 U.S. 433, 440 (1976).
   Greer claims that most of the compensation at issue should        6
be excluded because it falls within § 104(a)(2) of the Code,           Taggi cited a 1985 Minnesota district court decision in support of
which excludes from gross income any “damages received           its statement that the court “was not in a position to apportion the
                                                                 payment among the various possible claims.” 35 F.3d at 96 (quoting
(whether by suit or agreement and whether as lump sums or        Villaume v. United States, 616 F. Supp. 185, 190 (D. Minn, 1985)), and
as periodic payments) on account of personal injuries or         also cited several Tax Court cases. See, e.g., Whitehead v. Commissioner,
sickness.” 26 U.S.C. § 104(a)(2). The Supreme Court in           49 T.C.M. (P.H.) ¶ 80,508 (1980). These cases all look back to a 1979
Schleier set forth a two-prong test that must be met for         Tax Court decision, Gunderson v. Commissioner., 48 T.C.M. (P.H.)
compensation to fall within § 104(a): exclusion is warranted     ¶ 79,099 (1979). But Gunderson never enunciated a rule against non-
                                                                 apportionment. Instead, the Gunderson Court only held that based on the
only when an amount is received (1) through the prosecution      facts of the case before it, there was no evidence that the payor intended
of an action or the settlement entered into in lieu of           the lump sum payment to the employee to be anything but to settle
prosecution of an action based upon tort or tort-type rights;    contractually based rights. See Gunderson, 1979 T.C.M. (P.H.), at 79-
and (2) the amount is paid on account of personal injuries or    435 (“[T]here is [no] factual basis in the record upon which we could
sickness. See 515 U.S. at 337; Gerbec v. United States, 164      make an allocation of the settlement to any specific claims that petitioner
                                                                 might have asserted against [his employer].”). Thus, it appears that later
                                                                 cases such as Whitehead converted Gunderson’s fact-based conclusion
                                                                 into an ironclad rule of law, and cases like Taggi propounded
                                                                 Whitehead’s mistake. Moreover, none of these “non-apportionment”
                                                                 decisions articulated any reason for such a rigid non-apportionment rule.
18   Greer v. United States                       No. 98-6593      No. 98-6593                              Greer v. United States            7

  I guess I’d have to refer to the agreement itself and it         F.3d 1015, 1025 (6th Cir. 1999) (citing Schleier).2 This two-
  would -- it’s provided because of the promises made and          part test tightly packs a number of discrete elements. Due to
  accepted between Mr. Greer and Ashland as stated in the          the complexity of this case, we find it useful to disaggregate
  severance agreement and release as to why the payments           the test into its disparate elements. To satisfy Schleier, the
  were made . . . . I think the document speaks for itself.        taxpayer must show that 1) there was an underlying claim
                                                                   sounding in tort; (2) the claim existed at the time of the
J.A. at 105.                                                       settlement; (3) the claim encompassed personal injuries; and
                                                                   (4) the agreement was executed “in lieu” of the prosecution of
   In short, although Lohoff’s testimony creates an issue of       the tort claim and “on account of” the personal injury,
fact as to whether he personally knew of the full set of           rendering it a settlement rather than a mere severance
circumstances regarding Greer’s termination, his testimony         agreement. By requiring each of these elements, courts can
does nothing to counter Greer’s showing that other AOI             effectively distinguish between severance and settlement
officials—and most critically, Thomas—were aware of the            agreements and prevent parties from “creating contrived
background circumstances leading to Greer’s ultimate               ‘settlement agreements’ to avoid taxation of [severance]
termination. Because cross motions for summary judgment            proceeds.” Lubart v. Commissioner, 154 F.3d 539, 542 (5th
allow a reviewing court to assume that there is no additional      Cir. 1998).
evidence to be considered, we find that there is no issue of
fact regarding Greer’s showing that AOI was aware of his tort         The Government argues that the agreement between Greer
claim.                                                             and AOI lacks several of these elements and thus constitutes
                                                                   a fully taxable severance package under § 61(a). We disagree,
                               c.                                  concluding that the agreement and the unique circumstances
                                                                   leading to its inception satisfy most of these elements; indeed,
  Finally, we believe the facts of this case are sufficiently      we find that the agreement meets the first prong of the
unique and the evidence sufficiently clear to allow the district   Schleier test—that it was made in lieu of a viable, existent tort
court to apportion the payment into the components that were       claim. At the same time, we believe a genuine issue remains
“in lieu” of a tort claim and those that were clearly not.         as to what amount of the payment, if any, was “on account of”
Unlike Taggi and Pipitone, where the evidence was not              personal injuries.
adequate to enable those courts to apportion among various
claims, see Pipitone, 180 F.3d at 165; Taggi, 35 F.3d at 96,                                           A.
the undisputed evidence in this case allows for such a
determination. First, it is clear that AOI’s standard                The compensation AOI paid to Greer satisfies the first
calculation would have provided Greer with a severance             element we listed supra: that the alleged claim be based upon
payment of $51,000, an amount that is not excludible.              tort or tort-type rights. See Schleier, 515 U.S. at 337. To
Second, Greer has adduced that there were no other viable          make this determination, we must “focus[] on the origin and
claims at the time of the agreement. Under cross-
examination, Lohoff acknowledged that AOI officials
perceived Greer to have no viable claims against AOI for age           2
discrimination or Title VII discrimination, which were the               This test emanated in part from treasury regulations that had defined
only other specific claims waived by the agreement. The            the term “damages received” as “an amount received . . . through
                                                                   prosecution of a legal suit or action based upon tort or tort type rights, or
record thus leaves wrongful discharge as the only bona fide        through a settlement agreement entered into in lieu of such prosecution.”
claim at the time of the agreement, and, crucially, evinces that   Treas. Reg. § 1.104-1(c).
8    Greer v. United States                      No. 98-6593      No. 98-6593                     Greer v. United States    17

characteristics of the claims settled in determining whether      that Lohoff concluded that he had not been aware of any
such damages are excludible under § 104(a)(2).” Pipitone v.       claims on the horizon. See J.A. at 99-101 (stating that he
United States, 180 F.3d 859, 862 (7th Cir. 1999) (citing          “didn’t recall him ever making that type of statement,” and
Burke, 504 U.S. at 237). In particular, we look to state law to   that he “didn’t recall [Greer] making any statements” that
determine the nature of the claim. See Burnet v. Harmel, 287      AOI had violated environmental regulations “to me”).
U.S. 103, 110 (1932) (“[S]tate law creates legal interests, but
the federal statute determines when and how they shall be           But as both Greer and Lohoff testified, Greer expressed his
taxed.”). In this case, Greer alleges that his underlying claim   displeasure directly with other, more senior AOI officials.
was wrongful discharge, which is a clearly recognized tort        First, Greer testified and Lohoff acknowledged that he had a
claim under Kentucky law. See Firestone Textile Co. Div. v.       closed-door meeting with the chairman of AOI, John Hall,
Meadows, 666 S.W.2d 730, 733 (Ky. 1983).                    The   about his termination. Second, Greer discussed these matters
Government does not dispute that wrongful discharge is a tort     on numerous occasions with Richard Thomas, who during the
that could give rise to § 104(a)(2) exclusion.                    period in question was vice president of human resources,
                                                                  vice president of the law department, general counsel for the
                              B.                                  petroleum company, and responsible for all environmental
                                                                  activities in the company. Thomas was not only the person to
    Second, we conclude that the wrongful discharge claim         whom Greer had directly reported when he was responsible
existed at the time Greer and AOI struck the agreement. As        for environmental compliance, but he “reviewed” with
other courts have stated, for an agreement to be rendered a       Thomas the controversial findings he had made in that
settlement, there must be an actual dispute and existing claim    position. Thomas was also the official who personally
at the time of that agreement. See Pipitone, 180 F.3d at 862;     informed Greer of his termination. According to Greer,
Lubart,154 F.3d at 542. Claims for potential future personal      Thomas—who was Lohoff’s boss at the time—was also a
injuries are insufficient. See Pipitone, 180 F.3d at 862;         point-man in the negotiations that culminated in the
Lubart, 154 F.3d at 542 (“If section 104(a)(2) were construed     agreement, and Greer directly told Thomas that he would
to encompass releases of potential unspecified future claims,     “have to seek whatever remedies are available to me,” J.A. at
. . . manufacturing section 104(a)(2) tax treatment would be      37. Overall, therefore, given his broader role in the company
simple.”). The dispute must be bona fide, although it need        and long-time supervision of and interaction with Greer,
not be valid or sustainable. See Pipitone, 180 F.3d at 862.       Thomas was the key AOI official who, according to Greer’s
                                                                  testimony, knew of the environmental violations and also was
   We find that a bona fide claim for wrongful discharge          directly involved in hammering out the settlement agreement.
under Kentucky law existed at the time of the settlement.         Yet nowhere in the record has the Government attempted to
Kentucky law recognizes a cause of action for wrongful            rebut this evidence regarding Thomas’s involvement and
discharge “based on public policy.” Firestone Textile Co.         knowledge. Thomas was not himself deposed, and the
Div., 666 S.W.2d at 732. Such a public policy-based               Government asked Lohoff nothing about Thomas’s or other
wrongful discharge claim exists when the “alleged reason for      officials’ perceptions of Greer’s potential claim. Only once
the discharge of the employee was the failure or refusal to       was Lohoff directly asked whether, “[a]s far as Ashland was
violate a law in the course of employment,” or when the           concerned,” the payment was of the nature of severance pay
reason for the discharge “was the employee’s exercise of a        or a settlement. J.A. at 105 (emphasis added). Rather than
right conferred by well-established legislative enactment.”       countering Greer’s account, his answer was nonresponsive:
Nelson Steel Corp. v. McDaniel, 898 S.W.2d 66, 69 (Ky.
16    Greer v. United States                       No. 98-6593      No. 98-6593                       Greer v. United States       9

that AOI officials had good reason to know that a bona fide         1995) (internal quotation marks and citation omitted).
wrongful discharge claim existed at the point of Greer’s            Whether or not Greer could have prevailed on such a
termination. Moreover, Lohoff, the Government’s only                wrongful discharge claim in state court is irrelevant here.
witness, largely bolstered Greer’s account of events. First, he     Rather, we find that Greer’s account of the unique
confirmed the basic career progression that Greer had               circumstances of his firing—an account which, as we explain
described. Second, Lohoff testified that he knew that Greer         infra, the Government largely failed to dispute—was
was not pleased with his dismissal, and that he was                 sufficient to state a bona fide claim for wrongful discharge at
sufficiently disgruntled to appeal it through several levels of     the time of his termination.
management. His testimony, coupled with the agreement
itself, also showed that the agreement took Greer’s individual        The Government wrongfully asserts that a claim could not
needs into account. Lohoff acknowledged, for instance, that         have existed unless Greer actually filed that claim against
AOI adjusted the agreement after Greer indicated he felt that       AOI before the settlement. Circuit courts and the Tax Court
Ashland may have “somehow wronged him” regarding certain            have consistently rejected such a formalistic requirement.
investment losses. J.A. at 100-01; J.A. at 118. See also J.A.       See, e.g., Pipitone, 180 F.3d at 863 (“The fact that Pipitone
at 109 (acknowledging that “there are provisions in it that . . .   did not file a formal suit alleging these claims . . . is not
are specific to Mr. Greer”).                                        necessarily detrimental to his efforts to establish the existence
                                                                    of an underlying cause of action.”); Carey v. Commissioner,
   Most importantly, Lohoff’s testimony failed to rebut             74 T.C.M. (CCH) 705, 707 (1997) (stating that the claim
Greer’s assertions that AOI had reason to know of his bona          “need not have been previously asserted”); Phillips v.
fide wrongful discharge claim. This is because most of              Commissioner, 74 T.C.M. (CCH) 187, 190 (1997); Keel v.
Lohoff’s statements simply described his own personal               Commissioner, 73 T.C.M.(CCH) 3092, 3095 (1997); see also
conversations with Greer and his impressions based on those         Hamm v. Commissioner, 74 T.C.M. (CCH) 279, 282 (1997)
conversations, which were of limited value to the Government        (“[W]e have not found . . . any authority for the proposition
in light of both Greer’s and Lohoff’s testimony that a number       that the taxpayer must file a claim prior to the settlement
of the crucial conversations in question did not involve            agreement in order . . . to qualify for the exclusion.”). We
Lohoff at all. In fact, relative to other persons with whom         also find that the Government mischaracterizes the Second
Greer interacted at AOI, Lohoff was in a poor position to           Circuit’s holding in Taggi when it suggests that that opinion
know of Greer’s potential claims against the company.               required that a claim actually be made. See Gov’t Br. at 21-
Lohoff himself acknowledged that Greer and he did not               23, 26 (reading Taggi to say that “if the taxpayer has not
interact much at AOI. He further testified that he was aware        asserted a claim, there is nothing to settle”). In fact,
of other conversations Greer had had regarding his                  consistent with other courts, the Taggi Court considered
termination, the details of which he was not knowledgeable.         Taggi’s failure to make a formal claim as but one factor of a
J.A. at 98-99 (acknowledging that Greer “appealed [his]             multi-factor analysis. See 35 F.3d at 96. Directly after
dismissal beyond [him]” and that he “was not privy to those         observing that no claim had been filed, the court proceeded to
conversations”); J.A. at 99 (stating that Greer “had                consider the contents of the agreement, the amount paid to
discussions with other people as well, including the Chairman       Taggi, and the consequences of the signing of the agreement
of the Board”). Nevertheless, the sole evidence the                 (namely, no subsequent litigation). See id. Had the court
Government elicited comprised Lohoff’s narrow testimony             used a strict filing requirement as the Government suggests,
about what Greer had told him personally in their limited           the latter analysis would have been wholly unnecessary. See
interaction, and it was based only on this limited interaction      generally Hamm, 74 T.C.M. (CCH) at 282 (reading Taggi
10       Greer v. United States                      No. 98-6593       No. 98-6593                           Greer v. United States        15

similarly). Thus, we conclude that Greer’s failure to file suit          First, this case stands out among most of this type, which
against AOI does not defeat his argument that a bona fide              often involve conclusory allegations of claims and employer’s
claim existed.                                                         knowledge of claims—allegations that courts have properly
                                                                       found unavailing. See, e.g., Lubart, 154 F.3d at 542 (rejecting
                                  C.                                   taxpayer for only alleging “potential unspecified future
                                                                       claims”); Kroposki, 74 T.C.M. (CCH) at 1435 (rejecting
  Third, we find that Greer’s tort claim potentially involved          taxpayer’s allegations as after-the-fact, self-serving, and
injuries that were personal. Courts and the IRS have long              uncorroborated); Keel, 73 T.C.M. (CCH) at 3095 (opining
recognized that §104(a)(2)’s reference to personal injuries            that “we are furnished with no clue as to the nature of the
“encompasses . . . nonphysical injuries to the individual, such        claimed injuries”). In contrast, Greer presented substantial
as those affecting emotions, reputation, or character . . . .”         evidence suggesting not only that the tort claim based on
Burke, 504 U.S. at 235 n.6. See also Schleier, 515 U.S. at             personal injury existed, but that AOI had good reason to know
329 & n.4 (stating that § 104(a)(2) covers “intangible as well         of the potential wrongful discharge claim. This evidence
as tangible harms”). Specifically, personal injuries include           went largely undisputed by the Government. Greer testified
emotional distress, see Burke, 504 U.S. at 235 n.6, mental             that he was transferred from his position as environmental
pain and suffering, see Bent v. Commissioner, 835 F.2d 67, 70          compliance director shortly after issuing a series of
(3d Cir. 1987), and injury to personal and professional                “embarass[ing]” reports documenting various environmental
reputation. See Threlkedl v. Commissioner, 848 F.2d 81, 83-            regulation violations by AOI. J.A. at 62. The new position
84 (6th Cir. 1988); Church v. Commissioner, 80 T.C. 1104,              was one for which he was ill-qualified technically, and after
1109 (1983).        Here, Greer’s tort claim sufficiently              some time, the post demanded little responsibility from Greer
encompasses personal injury. Specifically, Greer claims                for the $100,000-plus salary it paid him. Finally, on short
injuries to his personal and professional reputation, as well as       notice and with little explanation, AOI terminated him.
distress, humiliation, and mental anguish. These claims of             Moreover, unlike the numerous cases where there is no
non-physical injury 3fall within the broad ambit of § 104(a)(2)        evidence that taxpayers had “even talked to” the employer
“personal” injuries.                                                   about a possible tort suit, Morabito v. Commissioner, 74
                                                                       T.C.M. (CCH) 62, 64 (1997), Greer presented such evidence
                                  D.                                   below. First, he appealed his dismissal all the way to the
                                                                       chairman of the company. Second, he specifically warned
  Fourth, and most critically, we must determine the                   AOI officials that he would “seek whatever remedies [w]ere
motivation behind the agreement itself. In determining                 available to [him],” and indicated that he would “protect
whether it was reached “in lieu” of the tort claim in existence        [him]self in whatever way [he] could.” J.A. at 74, 79.5
at the time and “on account of” the personal injuries
underlying that claim, 26 U.S.C. § 104(a)(2), we consider all            Based on Greer’s testimony as to his employment history
facts and circumstances. See Kroposki v. Commissioner, 74              and his dialogue with his AOI supervisors, the record shows
T.C.M. (CCH) 1434, 1436 (1997). We first look to the

                                                                           5
     3                                                                       Because it is the intent of the payor that matters, the Government
     In 1996, Congress amended § 104(a)(2) to read “on account of      errs when it argues that Greer did not know that he enjoyed a wrongful
personal physical injuries or physical sickness.” (emphasis added).    discharge claim in particular. Gov’t Br. at 23. The crucial question is
Because the amendment took effect after AOI and Greer executed their   whether AOI officials interpreted Greer’s threatening statements to mean
agreement, it is not applicable to this case.                          that they potentially faced a wrongful discharge suit.
14   Greer v. United States                      No. 98-6593      No. 98-6593                              Greer v. United States        11

Greer dwarfed the amount that would have resulted using           agreement itself for indicia of its purpose. If the agreement
AOI’s standard calculation of severance pay—one week of           lacks express language of purpose, we look beyond the
salary paid for each year of service. Based on Greer’s length     agreement to other evidence that may shed light on “the intent
of service—twenty-four years—and his salary at the                of the payor as to the purpose in making the payment.”
time—$112,000 per year—a standard severance payment               Knuckles v. Commissioner, 349 F.2d 610, 613 (10th Cir.
would have been approximately $51,000. AOI paid him just          1965); see also Lubart, 154 F.3d at 541 (“[T]he intent of the
under $332,000—well over six times the standard amount.           employer [] determine[s] the treatment of the payment.”).
Although AOI acknowledged that it generally provides more         This includes considering the amount paid, comparing the
compensation than standard severance when a terminated            circumstances and amount paid to other agreements the
employee releases claims, neither AOI nor the Government          company has entered into, considering the factual
provided any explanation for the dramatic increase in Greer’s     circumstances that led to the agreement, and weighing other
“bonus.” Lohoff’s only explanation was that “[i]t ha[d] to do     facts that may reveal the employer’s intent. See generally
with some relationship to a salary.” J.A. at 103. Nor have we     Pipitone, 180 F.3d at 864-65. We also heed the wisdom that
found any other cases where the release “bonus”                   “[w]hen assessing the tax implications of a settlement
approximated such a dramatic increase. In Taggi, for              agreement, courts should neither engage in speculation nor
example, AT&T supplemented the standard severance                 blind themselves to a settlement’s realities.” Bagley v.
payment owed to Taggi, $29,700, with an additional $19,800        Commissioner, 121 F.3d 393, 395 (8th Cir. 1997). Applying
for the general release. See 35 F.3d at 96. In Pipitone, the      this fact-based analysis, we find that the unique circumstances
employer provided Pipitone with twice the number of months        of Greer’s termination rendered the agreement       a settlement
owed under the severance policy, which was the standard           reached “in lieu” of the existent tort claim.4 Nonetheless, we
bonus paid for such releases. See 180 F.3d at 865. Thus,          find that there remains a dispute as to whether the agreement
unlike other cases finding agreements to be for severance         was “on account of” personal injuries. The case must be
purposes only, we can not conclude that the payment made to       remanded for this factual determination.
Greer was either standard for AOI or based on a standard
severance calculation. To the contrary, it was far in excess of                                       1.
such a calculation, as well as far in excess of AOI’s standard
severance agreement.                                               First, we conclude that there is no genuine issue as to
                                                                  whether AOI provided the payment in lieu of Greer’s existent
                              b.
   Second, courts look to other evidence to divine the payor’s
intent in executing the agreement, including the                      4
                                                                        In doing so, we find that the material facts on this issue are not in
circumstances leading to the termination, the filing of a claim   dispute. The agreement itself is clear, and there is no dispute over the
against the employer prior to the agreement, and other            amount paid. Greer’s description of his job history at AOI was largely
statements by and events involving the parties. While “the        undisputed by Lohoff. Most importantly, the presence of a bona fide, if
absence of any knowledge of the claim on the part of the          not necessarily valid, tort claim is also not in dispute; neither is AOI
employer-payor obviously has a negative impact in                 officials’ knowledge of the potential for such a claim. For reasons stated
                                                                  below, given Greer’s description of the events culminating in his
determining the requisite intent of the payment,” Keel, 73        termination, Lohoff—the only witness the Government deposed—was
T.C.M. (CCH) at 3095, we find the record to support Greer’s       only minimally effective in countering Greer’s account. Therefore, even
assertion that AOI had knowledge of his potential claim.          viewing the evidence in the record in a light most favorable to the
                                                                  Government, there is no dispute over the material facts on this issue.
12    Greer v. United States                       No. 98-6593      No. 98-6593                        Greer v. United States   13

tort claim. The government wholly failed to rebut Greer’s           record are substantially dissimilar from cases where courts
evidence that this was in fact the case.                            found agreements to be for severance purposes only.
   First, like most agreements in cases such as this, the                                         a.
agreement does not resolve whether it is a settlement or a
severance agreement. On its face, the agreement does not               First, the amount of compensation Greer received strongly
appear to be drafted with a specific tort in mind. Courts           supports his contention that the agreement was a settlement of
generally find the fact that a waiver is broadly worded to          his tort claim. Generally, other courts have reasoned that the
support a finding that the settlement does not come within the      manner in which an agreement calculates payment provides
§ 104 exclusion. See, e.g., Pipitone, 180 F.3d at 864 (noting       reliable evidence of the nature of an agreement. See, e.g.,
that the agreement “is a general release of all claims and          Pipitone, 180 F.3d at 865; Lubart, 154 F.3d at 541.
makes no specific reference to whether the payment                  Specifically, payments are categorized as standard severance
compensated Pipitone for personal injuries or sickness”); Ball      pay when they are calculated based on the length of the
v. Commissioner, 163 F.3d 308, 309 (5th Cir. 1998)                  terminated employee’s service to the employer (with possible
(concluding that an agreement releasing a “laundry list” of         bonus allowances for their agreement to sign the waiver) and
possible claims is not a settlement for “personal injury or         appear to be consistent with the amount paid to other
sickness” within § 104). The agreement in this case is much         employees under similar agreements. See Pipitone, 180 F.3d
like those of Pipitone and Ball. It waived a variety of claims:     at 865; Lubart, 154 F.3d at 541; Kroposki, 74 T.C.M. (CCH)
wrongful discharge, age discrimination, Title VII, and claims       at 1436. Most agreements at issue in cases such as this have
regarding prior agreements between Greer and AOI. Despite           easily complied with these standards, largely because they
the express waiver of the wrongful discharge claim, such a          were reached with numerous employees as part of a general
“broad” and “generic” release does not render the payments          “downsizing.” See, e.g., Lubart, 154 F.3d at 541 (concluding
excludible, Ball, 163 F.3d at 309, and bolsters the                 that Lubart’s termination agreement, executed as part of a
Government’s argument that AOI did not intend the                   broad IBM downsizing program, “was a standard document
agreement to be a waiver of tort claims. The fact that the          offered to all employees” and its amount was calculated based
agreement provides for the withholding of federal income            on salary and years of service); Taggi, 35 F.3d at 94 (stating
taxes and that AOI withheld the amount at issue in this case        that Taggi’s termination was part of a general AT&T
also boosts the Government’s case that AOI intended the             workforce reduction); Carey, 74 T.C.M. (CCH) at 708
payment to be for non-tort, severance-type purposes.                (concluding that the release at issue “was calculated on length
Nevertheless, that presumption is somewhat diluted because          of service and salary” and was “essentially the same as that in
Lohoff testified that AOI would “typically” withhold even in        the many other cases involving IBM separation pay”); Hamm,
a settlement for a wrongful discharge action. Overall, as in        74 T.C.M. (CCH) at 283 (granting weight to the fact that the
most cases of this type, the agreement itself is not sufficiently   employee’s termination was part of a broader IBM reduction
explicit to resolve this issue.                                     program implemented to reduce the number of employees and
                                                                    increase company efficiency).
  We thus are required to look “beyond the words” of the
agreement to divine the payor’s purpose. Pipitone, 180 F.3d           Greer’s case is strikingly different. His termination was
at 865. When we do so in this case, we find conclusive              isolated, as opposed to part of a general reduction. He was
evidence that AOI intended this to be a settlement of a             told simply that he “didn’t fit in” despite years of positive
wrongful discharge claim. We also note that the facts in the        performance reviews. And crucially, the amount AOI paid
