Stipulation That Resolves Entire Amount Must Reflect Intent of Parties

In Minor, the IRS held a priority claim for the debtor's 2009 tax debt, which the parties agreed was nondischargeable. Typically, a taxing authority is able to pursue additional nondischargeable tax debt, even if the IRS included such debt in a proof of claim in the bankruptcy proceeding. However, here, the IRS and the trustee entered into a stipulation, approved by the bankruptcy court, which allowed the IRS's 2009 priority tax claim in the amount of $997,869.07. When the IRS attempted to pursue the debtor for further amounts owed by the debtor from his 2009 taxes, he argued, relying on the doctrines of issue and claim preclusion, that the IRS was foreclosed from collecting any 2009 tax debt above the amount agreed to in the stipulation. After the bankruptcy court granted judgment on the pleadings in favor of the IRS, which the district court affirmed, the debtor appealed to the Ninth Circuit.

In going through its analysis, the court first set out the factors for claim preclusion — "a final judgment on the merits in a case precludes a successive action between identical parties or privies concerning the same claim or cause of action" — and then noted that the intent of the settling parties determines the preclusive effect of an order entered in accordance with a given settlement agreement. The court also set forth the factors for issue preclusion — "there was a full and fair opportunity to litigate the issue in the previous action; the issue was actually litigated in that action; the issue was lost as a result of a final judgment in that action; and the person against whom collateral estoppel is asserted in the present action was a party or in privity with a party in the previous action."