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Redfield v. Insurance Co.

filed: August 6, 1991.

FREMONT G. REDFIELD, PLAINTIFF-APPELLANT,
v.
INSURANCE COMPANY OF NORTH AMERICA, DEFENDANT-APPELLEE



Appeal from the United States District Court for the Central District of California; D.C. No. CV-84-0321-WJR; William J. Rea, District Judge, Presiding. {Counsel}{Q}Counsel{/Q}{/Counsel}

John C. McCarthy, John C. McCarthy and Associates, Claremont, California, for the plaintiff-appellant.

Gregory B. Tobin, Philadelphia, Pennsylvania, for the defendant-appellee.

Dorothy W. Nelson, Melvin Brunetti and Diarmuid F. O'Scannlain, Circuit Judges. Opinion by Judge Diarmuid F. O'Scannlain.

Author: O'scannlain

Order

Appellant's petition for rehearing is GRANTED.

The memorandum disposition filed September 24, 1990 is withdrawn. A new disposition will be filed in its stead.

O'SCANNLAIN, Circuit Judge

This appeal from the district court's order granting relief from judgment pursuant to Federal Rule of Civil Procedure 60(b)(5) in an age discrimination case presents, surprisingly, a question of federal income tax law.

I

Fremont Redfield brought suit in state court against his former employer, Insurance Company of North America ("ICNA"), alleging violations of the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621-634, and the California Fair Employment and Housing Act ("FEHA"), Cal. Gov't Code §§ 12900-12996, wrongful discharge (breach of employment contract), breach of the implied duty of good faith and fair dealing, and intentional infliction of emotional distress. After removal to federal court, the district court concluded that ICNA had discriminated against Redfield on the basis of age, in violation of both the ADEA and FEHA, and that ICNA had breached an implied employment contract and that contract's covenant of good faith and fair dealing. Accordingly, the district court awarded Redfield $189,500 in "economic damages," $25,000 in "emotional distress damages," and $75,000 in "punitive damages." The judgment was subsequently upheld on appeal by this court. See Redfield v. Insurance Co. of North America, 833 F.2d 1017 (9th Cir. 1987) (unpublished disposition).

Pursuant to the district court's order awarding damages to Redfield, ICNA's attorney forwarded five checks to Redfield's attorney in a letter dated March 1, 1988. The first check was for $142,535.50, representing the net amount remaining from the $189,500 "economic damages" award after the sum of $46,964.50 was withheld for federal income tax, Federal Insurance Contributions Act ("FICA") tax, and California state income tax. Two checks were for $75,000 and $25,000, representing punitive damages and emotional distress damages, respectively; ICNA did not withhold taxes from these payments of damages. The remaining two checks were for attorney fees awarded to Redfield in the district court and this court.

Because taxes were withheld from the "economic damages" payment, Redfield refused to acknowledge satisfaction of judgment. ICNA then moved in the district court for relief from final judgment pursuant to Fed. R. Civ. P. 60(b)(5) on the basis that ICNA had paid all the monies due Redfield, and therefore the district court's judgment had been satisfied. In an order entered July 21, 1988, the district court granted ICNA's motion, ruling that ICNA properly withheld federal and state income taxes and FICA taxes.

Redfield now appeals from the district court's order. We review the district court's grant of a Rule 60(b)(5) motion under an abuse of discretion standard. See Dias v. Bank of Hawaii, 732 F.2d 1401, 1402 (9th Cir. 1984). A district court abuses its discretion by making a clear error ...


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