DocketNumber: Docket No. 2165-89
Citation Numbers: 1991 U.S. Tax Ct. LEXIS 32, 96 T.C. No. 26, 96 T.C. 671
Judges: Cohen,Nims,Chabot,Korner,Shields,Hamblen,Swift,Gerber,Wright,Parr,Colvin,Halpern,Wells,Ruwe,Whalen
Filed Date: 4/24/1991
Status: Precedential
Modified Date: 10/19/2024
1991 U.S. Tax Ct. LEXIS 32">*32 Opinion filed Jan. 24, 1991, at
96 T.C. 671">*671 SUPPLEMENTAL OPINION
On January 24, 1991, our opinion in the above case was filed at
On February 21, 1991, respondent filed a motion to revise our opinion1991 U.S. Tax Ct. LEXIS 32">*33 on the mortgage guaranty insurance issue. Respondent requests certain revisions to our opinion to insure that the decision to be entered in this case accurately reflects our holding. Petitioner objects to respondent's motion.
In the notice of deficiency, as set forth at
As stated in its objection to respondent's pending motion, petitioner contends that:
the appropriate event is the borrower's default, 1991 U.S. Tax Ct. LEXIS 32">*34 which is both the event (i) that, in actual practice, establishes the insurer's liability for the ultimate consequences of the default and (ii) for which the insurer must establish loss reserves for regulatory purposes under the Annual Statement method of computing losses required by insurance regulators. * * *
Petitioner did not report losses as of the time of default, however, but only when notice of default was given by the insured lender. Respondent, on the other hand, did not determine that the loss was not incurred until a claim was filed by the insured lender, even though, as it appears at various places in our opinion, no payment would be made by the insurer until a claim was submitted, accompanied by tender of title, absent other arrangements described in our findings of fact. The parties and the opinion assumed that situations where foreclosure had occurred but claim had not been made were eligible for deduction as losses that were "incurred but not reported" (IBNR).
After full consideration of the parties' respective positions, we concluded "that the PMI companies did not incur a loss under
96 T.C. 671">*673 A claim was payable if the policy was in effect during the period in which the initial delinquency, or default, occurred. This result merely reflects the coverage of the policy
Petitioner's arguments are reflected and adopted in the dissenting opinion of Judge Whalen. The dissenting opinion quotes at length from the majority opinion but disagrees with the majority about what fixes an insurance company's liability for purposes of estimating actual unpaid losses under
Although the substance of our opinion, in upholding respondent's position, did not purport to give any effect to the filing of a claim by the insured lender with the insurer, reference to the filing of a claim -- the prerequisite to payment -- appears in several places in the opinion. Respondent states that such references cast doubt on the decision to be entered under
Petitioner contends that our opinion is incorrect with or without the changes requested by respondent. The issue is subject to substantial and meritorious differences of opinion, but nothing is served by perpetuating superfluous and confusing language.
Petitioner does not object to correction, requested by respondent, of a typographical error in the slip opinion. For the foregoing reasons, respondent's motion will be granted, and our opinion filed January 24, 1991, is modified as follows:
(1)
96 T.C. 671">*674 (2)
(3)
(4)
(5)
Whalen,