Gilbert Hyatt Loses in Federal Court

A federal court in Sacramento ruled against inventor Gilbert Hyatt last week. Mr. Hyatt is involved in a 22-year old battle with California’s Franchise Tax Board (the state’s income tax agency). This all stems over when Mr. Hyatt moved to Las Vegas, and that seven month difference has resulted in a case that has already made it once to the US Supreme Court.

The underlying issue is a residency audit of Mr. Hyatt to discover when he moved to Nevada. Did he move at the end of September 1991 or April 1992? At audit, the FTB ruled it was April (leading to an additional $7.4 million of income tax owed to California). Mr. Hyatt appealed to the California Board of Equalization. That appeal remains unresolved and that got Mr. Hyatt upset.

He filed a federal court case in Sacramento demanding that the appeal be heard. The Court dismissed the case; Mr. Hyatt will appeal. Meanwhile, later this year I expect the retrial of Mr. Hyatt’s intentional infliction of emotional distress damage award against the FTB for committing fraud against him. Last year, the Nevada Supreme Court threw out most of a $500 million verdict for Mr. Hyatt, but did leave $1.4 million of damages (based on the FTB committing fraud) and ordered a retrial on the IIED damages related to the fraud.

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