Court Opinion

ID: 3118211
Source: CourtListenerOpinion
Date Created: 2015-10-16 07:58:40.11865+00
Date Added: 2024-06-11T11:45:14.345978
License: Public Domain

Opinion issued May 9, 2013.

                                    In The

                              Court of Appeals
                                   For The

                         First District of Texas
                         ————————————
                              NO. 01-12-00332-CV
                          ———————————
  METROPOLITAN CHRISTIAN METHODIST EPISCOPAL CHURCH,
                       Appellant
                                      V.
 FRANK VANN, BARNABAS INVESTORS, INC., JOHN OTTINGER, JR.,
   SENIOR HOUSING SERVICES, INC., CORNERSTONE CAPITAL
    ADVISORS, INC. AND GEORGE DIXON, AS THE PERSONAL
  REPRESENTATIVE OF THE ESTATE OF CECIL BROOKS, Appellees

                   On Appeal from the 157th District Court
                            Harris County, Texas
                      Trial Court Case No. 2008-41574

                         MEMORANDUM OPINION

      Metropolitan Christian Methodist Episcopal Church appeals from the trial

court’s rendition of summary judgment in favor of appellees Frank Vann, Barnabas
Investors, Inc., John Ottinger, Jr., Senior Housing Services, Inc., and Cornerstone

Capital Advisors, Inc., and from the dismissal for want of personal jurisdiction of

George Dixon, the personal representative of the Estate of Cecil Brooks. The

Church sued the appellees for fraud, breach of contract, and several other theories

related to a plan to form an HMO for the Church to provide healthcare for its

members. The Church secured funding for the plan by mortgaging its real property

to Cornerstone Ministries, Inc., an entity related to the corporate appellees, which

is not a party to this proceeding. The trial court dismissed Dixon for want of

personal jurisdiction and rendered summary judgment in favor of the other

appellees. We affirm.

                                   Background

A.    Factual Background

      Cecil Brooks and John T. Ottinger Jr. founded Cornerstone Ministries

Investment, Inc. (CMI), a for-profit company that loaned money to faith-based

businesses and institutions. Brooks and Ottinger served as employees, officers,

and directors of CMI from its founding, and—Brooks in particular—controlled

CMI and several affiliated businesses.

      In 2003, Dr. Benjamin Woods of Universal Healthcare Integrated, Inc.

(UHI) approached Cecil Brooks. Woods proposed that he and UHI start an HMO

for low-income families through churches and other community organizations.

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Brooks contacted Nick Howard, the president of Senior Housing Services (SHS),

to bring SHS on as an investor. SHS provided “seed money” to UHI to explore the

HMO business.       Barnabas Investors, Inc. was formed—with Howard as its

president—to be the investment company that would found and manage the HMOs

under UHI and Woods’s direction.

      Later that year, CMI held a meeting in Houston to attract investors. As an

incentive for churches to invest, it represented that, in addition to church members

being able to utilize the HMO, a portion of the profits would be returned to

participating churches for enhancing various church ministries and programs.

Wallace Lockett, the Church’s pastor, orally committed the Church to participate.

      The following summer, Brooks contacted Lockett to obtain the Church’s

investment. Brooks arranged for CMI to loan money for the investment to the

Church. The loan was secured by a deed of trust on real property owned by the

Church. The proceeds of the loan were invested with Barnabas. Lockett averred

that Brooks assured him that the Church would not have to make any payments on

the loan and that, after a year, i.e., in 2005, the deed of trust on the property would

be released.

      Brooks utilized another of his and Ottinger’s companies, Cornerstone

Capital Advisors, Inc., to provide office and payroll functions for CMI and

Barnabas. After receiving the Church’s funds, Barnabas—acting through CCA—

                                          3
repaid SHS and UHI for their investments in Barnabas. The Church alleges that

Frank Vann, an employee of CCA and of CMI, is the person who made or

authorized the transfers to SHS and UHI.

      CMI did not release the lien on the Church’s property in 2005. Instead,

CMI filed for bankruptcy. When it did, Lockett hired an attorney to protect the

Church’s interest in the real property that secured the note. Later, in an adversarial

proceeding in CMI’s bankruptcy, the Church was sued over the unpaid balance on

the note.

B.    Procedural Background

      The Church sued Brooks, CCA, SHS, Barnabas, Ottinger, Howard, Vann,

UHI, and Dr. Woods (and two other individuals affiliated with UHI). Brooks

passed away, and the Church substituted George B. Dixon Jr. as the personal

representative of Brooks’s estate. The only parties to this appeal are: (1) Dixon;

(2) Barnabas, CCA, SHS, and Ottinger (hereafter, collectively “Barnabas”); and

(3) Vann.

      In its live pleading, the Church asserted claims for breach of contract, fraud,

violations of the Securities Act of 1933, unjust enrichment, negligence, violations

of the Deceptive Trade Practices Act, and violation of the Insurance Code.

Barnabas removed the case to federal court on the basis of diversity jurisdiction,

and Dixon was served in the federal suit. While in federal court, Dixon sought

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dismissal for want of personal jurisdiction. The federal court granted Dixon’s

motion. Following Dixon’s dismissal, the federal court determined that it lacked

subject matter jurisdiction and remanded the case.

      CMI initiated an adversarial claim in the bankruptcy proceeding, seeking the

unpaid balance of the loan to the Church. The state trial court determined that the

outcome of the adversarial proceeding would affect this case and, accordingly,

stayed this case pending the resolution of adversarial proceeding.       Later, the

Church moved to lift the stay, asserting that the adversarial proceeding had

concluded with an agreed dismissal with prejudice of all claims and counterclaims

and the Church receiving a release of the lien on its property.

      Barnabas moved for summary judgment. It filed a no-evidence motion,

asserting that the Church could provide no evidence of damages, an essential

element of each of it claims, because it had received a release of lien and CMI had

dismissed its claim for the loan balance with prejudice. The Church responded, but

did not provide any evidence with its response. The trial court initially granted

summary judgment for Barnabas and for Vann.            Twenty-eight days later, the

Church filed a motion for reconsideration and attached evidence. The trial court

entered a new order, clarifying that the prior summary judgment did not cover

Vann and that, because it did not dispose of the claims against Vann, it was an

interlocutory order.

                                          5
      Vann moved for summary judgment on both traditional and no-evidence

grounds. In the no-evidence portion of his motion, Vann identified each element

of every cause of action asserted by the Church—except for the Insurance Code

claim—and asserted the Church had no evidence of any. In his traditional motion

for summary judgment, Vann argued that the alleged Insurance Code violation was

not actionable as a matter of law. Vann also sought sanctions against the Church.

      In its final order, the trial court granted Vann’s motion for summary

judgment, but expressly denied Vann’s request for sanctions.         The trial court

severed the claims against the UHI defendants, and thus rendered a final judgment.

The Church appealed, challenging each of the summary judgments and the

dismissal of Dixon for lack of personal jurisdiction.

     Federal Court’s Dismissal of Dixon for Lack of Personal Jurisdiction

      In its first and second issues, the Church contends that the federal district

court erred by dismissing Dixon for lack of personal jurisdiction and the state trial

court erred by refusing to determine that it had personal jurisdiction over Dixon.

A.    The Church’s Argument

      The Church argues that because the federal court determined that it had no

jurisdiction over the subject matter of the suit and remanded the case, its prior

order dismissing Dixon for lack of personal jurisdiction is void. See, e.g., In re

Dep’t of Family & Protective Servs., 273 S.W.3d 637, 641 (Tex. 2009) (observing

                                          6
that orders made without jurisdiction are void). The Church contends that the state

court should have determined whether it could properly exercise personal

jurisdiction over Dixon. In other words, the Church contends that a federal court

must decide subject matter jurisdiction before it can determine an issue of personal

jurisdiction.

      The trial court disagreed. In its order dismissing Dixon for lack of personal

jurisdiction, the trial court found that “Judge Atlas’s order dismissing [Dixon] . . .

is not void because the Court later determined that it lacked subject matter

jurisdiction. . . . Accordingly, [the Church] is barred and estopped from re-

litigating this issue in this forum.”

B.    Discussion

      The United States Supreme Court has rejected the Church’s argument that

there is a “sequencing of jurisdictional issues,” mandating that subject-matter

jurisdiction be decided before personal jurisdiction. Ruhrgas AG v. Marathon Oil

Co., 526 U.S. 574, 584, 119 S. Ct. 1563, 1570 (1999). In Ruhrgas, the Supreme

Court held that a district court did not err by deciding an issue of personal

jurisdiction before determining subject matter jurisdiction. Id. at 588, 119 S. Ct. at

1572. It explained, “[A] court that dismisses on . . . non-merits grounds such as

. . . personal jurisdiction, before finding subject-matter jurisdiction,” does not

violate any separation of powers principles between the federal and state judicial

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systems. Id. at 584–85, 119 S. Ct. at 1570 (quoting In re Papandreou, 139 F.3d
247, 255 (C.A.D.C. 1998)). Because the Supreme Court has rejected the Church’s

argument that subject matter jurisdiction must be decided before personal

jurisdiction, the federal court did not err in determining Dixon’s challenge to

personal jurisdiction before determining that it lacked subject matter jurisdiction.

See id. at 588, 119 S. Ct. at 1572.       We conclude the federal court’s order

dismissing Dixon was not void. And because the order was not void, it was a

proper determination of the merits of the court’s personal jurisdiction over Dixon,

and should not be re-litigated. See id. at 585, 119 S. Ct. at 1571 (citing Baldwin v.

Iowa State Traveling Men’s Assn., 283 U.S. 522, 524–27, 51 S. Ct. at 517–18

(personal jurisdiction ruling has issue-preclusive effect). Accordingly, we hold

that the trial court properly refused to revisit the issue of whether personal

jurisdiction over Dixon was proper.

      We overrule the Church’s first and second issues.

               Summary Judgment for the Barnabas Defendants

      In its third issue, the Church argues that the trial court improperly granted

Barnabas’s no-evidence summary judgment on the element of damages. 1

1
      The Church’s third issue also addresses the summary judgment in favor of Vann,
      discussed separately below.
                                         8
A.    Arguments in Summary Judgment and on Appeal

      Barnabas moved for summary judgment on the ground that the Church could

produce no evidence of damages. Specifically, Barnabas pointed out that the

Church’s only theory of damages was that its real property was encumbered by a

lien, and that the Church conceded that the lien had been released. Thus, Barnabas

asserted, the Church had no evidence of damages.

      In its response, citing Texas National Bank v. Karnes, 717 S.W.2d 901 (Tex.

1986), the Church asserted it could recover both contract and tort damages—

including exemplary damages—if it could prove both a breach of contract and an

independent tort. But the Church filed no evidence to support its response.

      On appeal, the Church argues that a no-evidence summary judgment was

improper for two reasons. First, the Church contends the collateral source rule

prevents Barnabas from relying on the release of the lien to establish that the

Church was not damaged. Second, the Church contends its attorney’s fees and

other costs expended in defending the adversarial claim are properly considered

actual damages in this case.

B.    Law Pertaining to No-evidence Motions for Summary Judgment

      Pursuant to Texas Rule of Civil Procedure 166a(i):

      After adequate time for discovery, a party without presenting
      summary judgment evidence may move for summary judgment on the
      ground that there is no evidence of one or more essential elements of a
      claim or defense on which an adverse party would have the burden of
                                         9
      proof at trial. The motion must state the elements as to which there is
      no evidence. The court must grant the motion unless the respondent
      produces summary judgment evidence raising a genuine issue of
      material fact.

TEX. R. CIV. P. 166a(i).     A motion for a no-evidence summary judgment is

essentially a request for a pretrial directed verdict. Imkie v. Methodist Hosp., 326
S.W.3d 339, 342 (Tex. App.—Houston [1st Dist.] 2010, no pet.) (citing Mack

Trucks, Inc. v. Tamez, 206 S.W.3d 572, 581 (Tex. 2006)). A motion that properly

identifies an element, on which the nonmovant has the burden of proof, shifts the

burden to the nonmovant to defeat the motion by presenting evidence that raises a

genuine issue of material fact on the challenged element. Id. at 343 (citing Mack

Trucks, Inc., 206 S.W.3d at 582; Landers v. State Farm Lloyds, 257 S.W.3d 740,

744 (Tex. App.—Houston [1st Dist.] 2008, no pet.)). “Absent a timely response, a

trial court must grant a no-evidence motion for summary judgment that meets the

requirements of Rule 166a(i).”      Id. (citing TEX. R. CIV. P. 166a(i)).       “If a

nonmovant wishes to assert that, based on the evidence in the record, a fact issues

exists to defeat a no-evidence motion for summary judgment, the nonmovant must

timely file a response to the motion raising this issue before the trial court.” Id.

(citing Landers, 257 S.W.3d at 746); see TEX. R. CIV. P. 166a(i)).

      Texas Rule of Civil Procedure 166a(c) provides, “Except on leave of court,

the adverse party, not later than seven days prior to the day of hearing may file

and serve opposing affidavits or other written response.” TEX. R. CIV. P. 166a(c)
                                        10
(emphasis added). “Summary judgment evidence may be filed late, but only with

leave of court.” Benchmark Bank v. Crowder, 919 S.W.2d 657, 663 (Tex. 1996),

quoted in Speck v. First Evangelical Lutheran Church of Houston, 235 S.W.3d
811, 815 (Tex. App.—Houston [1st Dist.] 2007, no pet.). If nothing in the record

indicates the trial court granted leave to file the summary judgment response late,

we presume that the trial court did not consider it. Speck, 235 S.W.3d at 815

(citing Benchmark Bank, 919 S.W.2d at 663; INA of Tex. v. Bryant, 686 S.W.2d
614, 615 (Tex. 1985)); see also Imkie, 326 S.W.3d at 343 (stating that under Rule

166a(c) response must be filed seven days before hearing).

      A similar rule applies to pleadings. Rule 166a provides that a trial court

shall render summary judgment if the pleadings and summary judgment evidence

“on file at the time of the hearing, or filed thereafter and before judgment with

permission of the court” show the movant is entitled to judgment as a matter of

law. TEX. R. CIV. P. 166a(c) (emphasis added). A timely amended pleading, or an

amended pleading filed with leave of court, that adds a claim generally requires a

party moving for summary judgment to amend or supplement its motion for

summary judgment to address the claims asserted in the amended pleading. 2

Mensa-Wilmot v. Smith Int’l, Inc., 312 S.W.3d 771, 778 (Tex. App.—Houston [1st

2
      There are exceptions to this general rule—none of which apply to this case—such
      as where the motion for summary judgment applies equally to the claims added in
      the amended pleading. See Mensa-Wilmot v. Smith Int’l, Inc., 312 S.W.3d 771,
      779 n.1 (Tex. App.—Houston [1st Dist.] 2009, no pet.).
                                        11
Dist.] 2009, no pet.).   An amended pleading that is filed after the summary

judgment hearing but before the trial court grants summary judgment must be filed

with leave of court. Id. (citing, inter alia, TEX R. CIV. P. 63, 166a(c)). If a party

files an amended pleading after the summary judgment hearing, without leave of

court, it should not be considered in determining the motion for summary

judgment. Id. at 779; see also Taylor v. Sunbelt Mgmt., Inc., 905 S.W.2d 743, 745

(Tex. App.—Houston [14th Dist.] 1995, no writ) (stating “we cannot consider

appellants’ pleadings which were admittedly filed after the motion for summary

judgment hearing”).

C.    Discussion

      Barnabas filed a motion for summary judgment asserting that there was no

evidence of damages, an essential element of all the claims asserted by the Church,

on October 13, 2011. The burden then shifted to the Church to produce some

evidence of damages. See Imkie, 326 S.W.3d at 343 (citing Mack Trucks, Inc., 206
S.W.3d at 582; Landers, 257 S.W.3d at 744)).

      The Church responded on October 28. But its response did not assert that its

attorney’s fees in the adversarial claim constituted damages it could recover in this

suit. Nor did the Church provide evidence of the damages to its property or of its

attorney’s fees in the adversarial proceeding. The Church’s live pleading at the

time did not seek recovery of attorney’s fees in the adversarial proceeding as

                                         12
damages. The trial court heard the motion for summary judgment on November 3

and granted summary judgment on November 4.

      It was not until December 2 that the Church filed a “Motion for

Reconsideration and Clarification,” asserting that Vann had been erroneously

included in the summary judgment, and, that attorney’s fees incurred in the

adversarial claim and closing costs of the loan from CMI constituted actual

damages. This response attached: (1) the closing statement for the loan from CMI

secured by the Church’s property; (2) an affidavit from the Church’s attorney

concerning fees incurred in both this suit and the adversarial proceeding in the

bankruptcy court, including billing records; (3) Lockett’s affidavit describing the

events made the basis of this suit; and (4) the transcript of Lockett’s deposition.

The Church, however, did not plead a claim for attorney’s fees incurred in the

adversarial proceeding until February 13, 2012, when it filed a supplement to its

Third Amended Original Petition.

      At the time the trial court granted summary judgment in Barnabas’s favor,

the Church had not filed a response producing some evidence on the challenged

element of damages. Summary judgment was thus proper. See TEX. R. CIV. P.

166a(i) (“The court must grant the motion unless the respondent produces

summary judgment evidence raising a genuine issue of material fact.” (Emphasis

added.)); see Imkie, 326 S.W.3d at 343.       Because the Church’s motion for

                                        13
reconsideration was filed after the hearing and after summary judgment was

granted, without leave of court, we may not consider the response or the evidence

included with the response as grounds for reversing the summary judgment. See

Speck, 235 S.W.3d at 815 (citing Benchmark Bank, 919 S.W.2d at 663); see also

Imkie, 326 S.W.3d at 343. Additionally, the Church’s supplemental pleading was

not filed by the seventh day before the summary judgment hearing; it was filed

more than three months after the trial court heard and granted the summary

judgment. Nothing in the record shows that the Church sought or received leave of

court to file a supplemental petition. We therefore cannot consider the amended

pleadings adding a damages claim for attorney’s fees incurred in the adversarial

proceeding. Mensa-Wilmot, 312 S.W.3d at 780; Taylor, 905 S.W.2d at 745.

      The Church did not file a response raising a genuine fact issue on the

element of damages before the summary judgment hearing. We do not consider

the responses and evidence filed after the hearing and judgment without leave of

court in our review of the trial court’s summary judgment. Accordingly, we hold

that the trial court properly granted Barnabas’s summary judgment.

      We overrule the Church’s third issue as it relates to Barnabas.

                                        14
                     Summary Judgment in favor of Vann

A.    No-evidence Motion for Summary Judgment

      In its third issue, the Church contends the trial court erred by granting

Vann’s no-evidence motion for summary judgment on the element of damages.

Vann, however, moved for summary judgment on each element of all of the

Church’s claims, except for the Church’s claim under the Insurance Code, which

we address separately below.

      Where a party moves for summary judgment on multiple grounds, and the

trial court’s order granting summary judgment does not specify the ground or

grounds on which it was based, a party appealing the order must negate all possible

grounds on which the order could have been based. McCoy v. Rogers, 240 S.W.3d
267, 271 (Tex. App.—Houston [1st Dist.] 2007, pet. denied) (citing Star–

Telegram, Inc. v. Doe, 915 S.W.2d 471, 473 (Tex. 1995); Ellis v. Precision Engine

Rebuilders, Inc., 68 S.W.3d 894, 898 (Tex. App.—Houston [1st Dist.] 2002, no

pet.)). If summary judgment may have been rendered, properly or improperly, on a

ground not challenged on appeal, the judgment must be affirmed. Id. (citing Ellis,

68 S.W.3d at 898); see also Vawter v. Garvey, 786 S.W.2d 263, 264 (Tex. 1990)

(proscribing reversal of summary judgment without properly assigned error), cited

in McCoy, 240 S.W.3d at 271.

                                        15
      Here, Vann moved for summary judgment on multiple no-evidence grounds;

Vann challenged each element of each of the Church’s claims (other than the

Insurance Code claim).      The trial court granted summary judgment without

specifying the basis. On appeal, the Church has addressed only the element of

damages and has not addressed the no-evidence challenge to any of the other

elements. Accordingly, we must affirm the no-evidence summary judgment on all

claims other than the Insurance Code claim. See McCoy, 240 S.W.3d at 271.

B.    Traditional Motion for Summary Judgment

      In its fourth issue, the Church contends the trial court erred by granting

Vann’s traditional motion for summary judgment. Vann moved for summary

judgment on the ground that the statutory provision cited by the Church did not

create a private cause of action. Neither the Church’s response nor supplemental

response to Vann’s motion for summary judgment addresses this ground for

summary judgment or mentions the Insurance Code claim. On appeal, the Church

provides no argument or analysis concerning the Insurance Code claim, but merely

repeats the following allegation from its petition:

      The Defendants have violated Chapter 843 of the Texas Insurance
      Code, which states: “a person may not organize or operate a health
      maintenance organization in this state, . . . without obtaining a
      certificate of authority.” The Defendants never filed an application to
      receive a certificate of authority from the Texas Insurance
      Commission. The alleged HMO, Samaritan Community Plan of
      Houston, Inc. was never created. The specific purpose of borrowing

                                          16
      funds from the Plaintiff and collecting capital by Barnabas from the
      sale of shares was to create the HMO.

      Under Rule 166a(c), “Issues not expressly presented to the trial court by

written motion, answer or other response shall not be considered on appeal as

grounds for reversal.” TEX. R. CIV. P. 166a(c); see also McCoy, 240 S.W.3d at 271

(citing TEX. R. CIV. P. 166a(c) and City of Houston v. Clear Creek Basin Auth.,

589 S.W.2d 671, 677 (Tex. 1979)) (“We will not consider a ground for reversal

that was not expressly presented to the trial court by written motion, answer, or

other response to the motion for summary judgment”). Here, the only ground for

reversal the Church raises on appeal was not presented to the trial court in a written

motion, answer, or other response to the motion for summary judgment. We

therefore may not reverse on that ground. See TEX. R. CIV. P. 166a(c); City of

Houston, 589 S.W.2d at 677; McCoy, 240 S.W.3d at 271.

      We overrule the Church’s third and fourth issues as they relate to Vann.

Because we have overruled the Church’s third issue concerning the no-evidence

summary judgments for both Barnabas and Vann, and the Church’s fourth issue

relating to Vann and the Insurance Code claim, we affirm the trial court’s summary

judgments. Accordingly, we do not address the remainder of the Church’s fourth

issue which addresses the propriety of summary judgment for Barnabas on

traditional grounds. See Star–Telegram, Inc., 915 S.W.2d at 473; McCoy, 240
S.W.3d at 271.
                                         17
                          Vann’s Request for Sanctions

      Vann filed a supplemental brief seeking a reversal of the trial court’s denial

of Vann’s requested sanctions against the Church’s counsel. As part of his motion

for summary judgment, Vann sought sanctions under Chapter 10 of the Texas Civil

Practice and Remedies Code and Rule 13 of the Texas Rules of Civil Procedure.

See TEX. CIV. PRAC. & REM. CODE ANN. §§ 10.001, 10.004 (West 2002) (providing

for sanctions for filing pleading for improper purpose, containing frivolous claims,

or containing allegations without likely evidentiary support); TEX. R. CIV. P. 13

(providing for sanctions for filing pleading that is not formed after reasonable

inquiry, brought in bad faith, or groundless).      The trial court denied Vann’s

request.

      Under Rule 25.1 of the Texas Rules of Appellate Procedure, any “party who

seeks to alter the trial court’s judgment . . . must file a notice of appeal.” TEX. R.

APP. P. 25.1(c). Unless a party seeking to alter a trial court’s judgment files a

notice of appeal of its own, the appellate court is not permitted to grant more

favorable relief than the trial court except for just cause. Id.; see also Brooks v.

Northglen Ass’n, 141 S.W.3d 158, 171 (Tex. 2004); Dean v. Lafayette Place

(Section One) Council of Co-Owners, Inc., 999 S.W.2d 814, 818 (Tex. App.—

Houston [1st Dist.] 1999, no pet); see also Lubbock Cnty. v. Trammel’s Lubbock

Bail Bonds, 80 S.W.3d 580, 586 (Tex. 2002) (holding that county seeking to alter

                                         18
trial court’s partial summary judgment waived this challenge by failing to file

notice of appeal).

        Vann did not file a notice of appeal. Accordingly, we cannot alter the

judgment to grant more favorable relief than the trial court granted. See TEX. R.

APP. P. 25.1(c); Brooks, 141 S.W.3d at 171.

        We overrule Vann’s request for sanctions.

                                    Conclusion

        We affirm the trial court’s judgment. All pending motions are denied as

moot.

                                              Rebeca Huddle
                                              Justice

Panel consists of Justices Keyes, Sharp, and Huddle.

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