Court Opinion

ID: 4551048
Source: CourtListenerOpinion
Date Created: 2020-07-24 18:11:27.199033+00
Date Added: 2024-06-11T08:40:13.622334
License: Public Domain

J-A13038-20

NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37

 PAUL OLSON AND ANDREA OLSON,                  :   IN THE SUPERIOR COURT OF
                                               :         PENNSYLVANIA
                 Appellants                    :
                                               :
                      v.                       :
                                               :
 EUROFINS ENVIRONMENT TESTING                  :
 US HOLDINGS INC.,                             :
                                               :
                  Appellee                     :      No. 1945 EDA 2019

                 Appeal from the Order Entered June 17, 2019
               in the Court of Common Pleas of Chester County
                    Civil Division at No(s): 2019-03310-MJ

BEFORE:      BENDER, P.J.E., LAZARUS, J. and STRASSBURGER, J.*

MEMORANDUM BY STRASSBURGER, J.:                            FILED JULY 24, 2020

       Paul Olson and Andrea Olson (collectively, the Olsons) appeal the

order entered June 17, 2019, which sustained in part the preliminary

objections of Eurofins Environment Testing US Holdings Inc. (Eurofins) on

the basis of improper venue, and ordered the transfer of the matter to a

state court in Iowa. We vacate the order and remand for further

proceedings.

       This action involves a dispute over a stock purchase agreement (SPA)

entered into between the parties. The Olsons seek a declaration that they do

not owe payments to Eurofins under the SPA and allege breach of contract

by Eurofins. Briefly, the dispute centers on allegations that Eurofins avoided

____________________________________________

* Retired Senior Judge assigned to the Superior Court.
J-A13038-20

paying contingent consideration to the Olsons under the SPA. On April 4,

2019, the Olsons, who are residents of Chester County, filed the instant

action in the Court of Common Pleas of Chester County.1 On May 22, 2019,

Eurofins filed preliminary objections pursuant to Pa.R.C.P. 1028(a)(1),2

____________________________________________

1 Three actions related to the SPA have been filed between these parties in
three venues. On January 24, 2019, the Olsons filed a federal complaint
against Eurofins in the U.S. District Court for the Southern District of Iowa,
making the same allegations and seeking the same relief as the instant
action. Eurofins filed a motion to dismiss the federal action on March 19,
2019, for lack of diversity jurisdiction. Also on March 19, 2019, Eurofins filed
a state complaint against the Olsons sounding in breach of contract in the
Iowa District Court for Polk County. According to the parties, the state action
in Iowa is pending. On April 3, 2019, the Olsons moved to dismiss the
federal action and it was terminated on April 4, 2019, which is the same
date the Olsons filed the instant action in Chester County, Pennsylvania. See
Preliminary Objections, 5/22/2019, at Exs. B, C; Memorandum of Law in
Response to Preliminary Objections, 6/17/2019, at Exs. 1, 3.

2   Rule 1028(a)(1) provides as follows.

        (a) Preliminary objections may be filed by any party to any
        pleading and are limited to the following grounds:

              (1) lack of jurisdiction over the subject matter of the
              action or person of the defendant, improper venue or
              improper form or service of a writ of summons or a
              complaint[.]

Pa.R.C.P. 1028(a)(1). Further, “[o]f the three grounds available to challenge
venue, only improper venue may be raised by preliminary objection as
provided by Rule 1006(e).” Id. (Note). Rule 1006(e) provides as follows.

        Improper venue shall be raised by preliminary objection and if
        not so raised shall be waived. If a preliminary objection to venue
        is sustained and there is a county of proper venue within the
        State the action shall not be dismissed but shall be transferred
(Footnote Continued Next Page)

                                           -2-
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arguing, inter alia, that the complaint should be dismissed for improper

venue.3 It averred that the SPA included a forum selection clause, which

stated that all litigation arising from the parties’ agreement must be

contested in the federal or state courts of Iowa.4 On June 11, 2019, Eurofins

(Footnote Continued) _______________________

        to the appropriate court of that county. The costs and fees for
        transfer and removal of the record shall be paid by the plaintiff.

Pa.R.C.P. 1006(e).

3   Eurofins did not file a petition for a change of venue.

4   The relevant portion of the SPA provides as follows.

     Section 9.4      Choice of Law; Venue and Forum.

        (a)   This Agreement shall be governed by and construed in
              accordance with the internal laws of the State of Iowa
              without giving effect to any choice or conflict of law
              provision or rule (whether of the State of Iowa or any
              other jurisdiction) that would cause the application of Laws
              of any jurisdiction other than those of the State.

        (b)   ANY LEGAL SUIT, ACTION OR PROCEEDING ARISING OUT
              OF OR BASED UPON THIS AGREEMENT OR THE
              TRANSACTIONS    CONTEMPLATED    HEREBY  MAY   BE
              INSTITUTED IN THE FEDERAL COURTS OF THE UNITED
              STATES OF AMERICA OR THE COURTS OF THE STATE OF
              IOWA IN EACH CASE LOCATED IN POLK COUNTY, IOWA,
              AND EACH PARTY IRREVOCABLY SUBMITS TO THE
              EXCLUSIVE JURISDICTION OF SUCH COURTS IN ANY
              SUCH SUIT, ACTION OR PROCEEDING. SERVICE OF
              PROCESS, SUMMONS, OR NOTICE OR OTHER DOCUMENT
              BY MAIL TO SUCH PARTY’S ADDRESS SET FORTH HEREIN
              SHALL BE EFFECTIVE SERVICE OF PROCESS FOR ANY
              SUIT, ACTION OR OTHER PROCEEDING BROUGHT IN ANY
              SUCH    COURT.   THE  PARTIES  IRREVOCABLY   AND
              UNCONDITIONALLY WAIVE ANY OBJECTION TO THE
(Footnote Continued Next Page)

                                          -3-
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timely filed its brief in support of preliminary objections, as set forth in Rule

1028(c) of the Chester County Rules of Civil Procedure.

        Six days later, on June 17, 2019, before the Olsons had responded,

the trial court sustained in part the preliminary objections on the basis of

improper venue, and ordered the transfer of the action to the Iowa District

Court for Polk County, Iowa. Order, 6/17/2019, at 1 .1. Two days later, on

June 19, 2019, the Olsons filed a memorandum of law in opposition to the

preliminary objections.5 On June 24, 2019, the trial court issued an order,

which    treated   the    Olsons’   June       19,   2019   filing   as   a   motion   for

reconsideration and denied their purported motion, thereby affirming its

prior June 17, 2019 order. Order, 6/24/2019. Also on June 24, 2019,

Eurofins filed a reply brief in support of its preliminary objections. This

timely filed appeal followed.6

(Footnote Continued) _______________________

             LAYING OF VENUE OF ANY SUIT, ACTION OR ANY
             PROCEEDING IN SUCH COURTS AND IRREVOCABLY WAIVE
             AND AGREE NOT TO PLEAD OR CLAIM IN ANY SUCH
             COURT THAT ANY SUCH SUIT, ACTION OR PROCEEDING
             BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN
             AN INCONVENIENT FORUM.

Preliminary Objections, 5/22/2019, at Ex. A (SPA, 6/23/2017, at ¶ 9.4).

5 According to the parties, after the trial court’s ruling, the Olsons sought
and obtained permission of the trial court to file their response. See Olsons’
Brief, at 25, 33; Eurofins’ Brief at 8.

6 Both the Olsons and the trial court complied with the mandates of
Pa.R.A.P. 1925.

                                           -4-
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      The Olsons present the following issues for our review.

      1. The [trial c]ourt erred as a matter of law and abused its
      discretion by issuing its June 17, 2019 order granting Eurofins’
      preliminary objection of improper venue prior to the twenty (20)
      day response period ended [sic], as set forth in Chester County
      Court of Common Pleas Civil Rules, Rule 208.3(b).

      2. The [trial c]ourt erred as a matter of law and abused its
      discretion by granting Eurofins’ preliminary objection of improper
      venue, because the forum selection clause is invalid and
      unenforceable.

      3. The [trial c]ourt erred as a matter of law and abused its
      discretion by granting Eurofins’ preliminary objection of improper
      venue, because the venue is so inconvenient as to be oppressive
      and vexatious, thus denying the Olsons their opportunity to have
      their day in court.

Olsons’ Brief at 7 (unnecessary capitalization omitted and party designations

altered).

      Our well-settled standard of review is as follows. “Generally, this Court

reviews a trial court order sustaining preliminary objections based upon

improper venue for an abuse of discretion or legal error.” Lugo v. Farmers

Pride, Inc., 967 A.2d 963, 970 (Pa. Super. 2009) (citations omitted).

      The Olsons first complain that the trial court erred by ruling

prematurely on Eurofins’ preliminary objections, thereby causing their

response to be treated as a motion for reconsideration, which “tainted” the

trial court’s evaluation and “ultimately hindered” its analysis. Olsons’ Brief at

34; see also id. at 22. As a result, the Olsons argue that the trial court

“missed or ignored entire sections” of their arguments set forth in, and the

supporting evidence attached to, their response. Id. at 34. They contend

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that the trial court failed to “properly take into consideration the evidence

and caselaw” that supported their arguments that the forum selection clause

is invalid and unenforceable, and that litigating outside of Chester County,

Pennsylvania is so oppressive and vexatious that they are effectively denied

their day in court. Id. at 23, 36. As evidence of the trial court’s improper

consideration of the Olsons’ response, the Olsons point to the trial court’s

Rule 1925(a) opinion, which stated that the Olsons “have not responded to

this objection to venue.” Id. at 36, quoting Trial Court Opinion, 8/1/2019, at

5.

       We begin our analysis by addressing the timing of the trial court’s

order sustaining in part the preliminary objections. C.C.R.C.P. 1028(c)7

governs preliminary objections in Chester County and provides as follows.

       (1) Except for preliminary objections subject to subparagraph
       (2) below, a brief and praecipe for determination in the form
       described in C.C.R.C.P. 206.6 must be filed by the objecting
       party within twenty (20) days of the filing of the preliminary
       objections. Responsive briefs shall be filed within twenty (20)
       days of the filing of the praecipe for determination. The assigned
       judge may, at his or her discretion, extend the time for filing
       briefs. If the party filing the preliminary objections has failed to
       file a praecipe for determination within twenty (20) days of the
       filing of the preliminary objections, any other party may file a
       praecipe for determination to bring the objections before the
       court, in which event no brief shall be required to be filed with
       the praecipe. If the objecting party fails to file a brief as
____________________________________________

7 As noted by Eurofins in its brief, the Olsons cite C.C.R.C.P. Rule 208.3(b)
for the 20-day timeframe, but that rule relates to motions, not preliminary
objections. See Eurofins’ Brief at 8; Olsons’ Brief at 7, 19, 23; In any event,
as discussed infra, the time to respond is indeed 20 days.

                                           -6-
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      aforesaid, the court may dismiss the preliminary objection as
      abandoned. If the objecting party does file a brief, all other
      parties may file briefs within twenty (20) days thereafter.

      (2) Where the preliminary objections properly assert facts not
      otherwise of record and the preliminary objections have been
      endorsed with a notice to plead, no praecipe for determination
      nor brief shall be required until the matter is ready to be
      submitted to the court, either upon the basis of the preliminary
      objections alone, if no answer has been filed, or upon the basis
      of the preliminary objections and answers thereto, or after a
      record has been developed pursuant to Pa.R.C.P. 1028(c)(2). If
      an answer is filed and any party wishes to develop a record on
      any disputed issues of material fact, depositions shall be
      completed within forty-five (45) days of the date of service of
      the answer to the preliminary objection. The time limit for the
      taking of the depositions may be shortened or extended by
      agreement of the parties or by the Court.

C.C.R.C.P. 1028(c) (emphasis added); see also C.C.R.C.P. 206.4(c)(3)

(relating to admissions and providing an answer to preliminary objections

shall be filed on the date on which answer is due under Pennsylvania Rules

of Civil Procedure); Pa.R.C.P. 1026(a) (providing 20-day timeframe for filing

an answer).

      Eurofins admits, and there can be no dispute, that the trial court ruled

on the preliminary objections before the Olsons filed their response, and

before the 20-day period for them to respond had lapsed. See Eurofins’ Brief

at 5-6, 8-10. Pursuant to the aforementioned rules, the Olsons had 20 days

from the filing of Eurofins’ brief in support of preliminary objections, or until

July 1, 2019, to file their response. They timely filed their response on June

19, 2019, but as noted supra, the trial court had already filed its order

                                      -7-
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sustaining the preliminary objections two days prior, on June 17, 2019. In its

Rule 1925(a) opinion, the trial court explained as follows.

            Here, [the Olsons] have not responded to this
      objection to venue. As a result, there has been no allegation
      that the inclusion of the forum selection clause was induced by
      fraud or overreaching, no claim that the clause is so unfair or
      inconvenient that is [sic] has deprived [the Olsons] of their
      opportunity to be heard, or an argument that the clause violates
      public policy.

Trial Court Opinion, 8/1/2019, at 5 (emphasis added). The court went on to

explain that

      [i]n short, [the Olsons] appeal, claiming they did not have
      enough time to file a brief raising issues over the forum selection
      clause. The [Olsons] seek to violate the parole [sic] evidence
      rule. It matters not what the [Olsons] thought or believed about
      the forum selection clause. [The Olsons] acknowledge that Iowa
      is the agreed forum. Iowa is the forum they agreed to with
      [Eurofins].

Id. at 6. Finally, in addressing the ability to conduct remotely court

proceedings in Iowa, the trial court stated it found “it hard to believe that

even if the [Olsons] had filed a meaningful reply that they would have

addressed the technology of the day,” and that “the delay sought by [the

Olsons] to file yet another brief on a well-settled issue of law does not …

create reversible error, but rather raises yet another delay to the eventual

resolution of the case.” Id. (emphasis added).

                                     -8-
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       Based on the foregoing, we agree with the Olsons that the trial court

failed to consider their response to the preliminary objections. 8 The trial

court plainly stated in its Rule 1925(a) opinion that the Olsons did not

respond to Eurofins’ improper venue objection when the record clearly shows

they did. Further, contrary to the trial court’s Rule 1925(a) opinion and as

discussed infra, the Olsons did in fact respond with allegations of fraud,

overreaching, unfairness, inconvenience, and violation of public policy.

       Eurofins    argues     that,   even     though   the   trial   court   sustained

prematurely its preliminary objections without giving the Olsons sufficient

time to respond, the error was harmless. Eurofins’ Brief at 6, 8-10. They

contend that this Court may “affirm a lower court’s decision regardless of

any legal error, as long as there was a legal basis for that decision raised in

the lower court.” Id. at 9. According to Eurofins, the forum selection clause

in the SPA is binding and enforceable, and therefore we may affirm the trial

court’s grant of preliminary objections based on improper venue. Id. at 10.

       However, while a challenge to improper venue may be made by filing

preliminary objections, if an issue of fact is raised by the preliminary

objections, the court shall take evidence on disputed facts. Pa.R.C.P.

____________________________________________

8 Further, it does not appear the trial court considered Eurofins’ June 24,
2019 reply brief in support of its preliminary objections. The timestamp on
the trial court’s June 24, 2019 order, which affirmed its June 17, 2019 order
sustaining the preliminary objection to venue, shows the order was filed at
3:59 p.m., while Eurofins’ reply brief was filed at 4:09 p.m. that day.

                                           -9-
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1028(c)(2) (“The court shall determine promptly all preliminary objections.

If an issue of fact is raised, the court shall consider evidence by depositions

or otherwise.”); see also C.C.R.C.P. 1028(c)(2) (same). “In such a situation

the court may not reach a determination based on its view of controverted

facts, but must resolve the dispute by receiving evidence thereon through

interrogatories, depositions or an evidentiary hearing.” Delaware Valley

Underwriting Agency, Inc. v. Williams & Sapp, Inc., 518 A.2d 1280,

1283 (Pa. Super. 1986) (citations and internal quotation marks omitted)

(collecting cases); see also Pa.R.C.P. 1028(c)(2), Note (“Preliminary

objections raising an issue under subdivision (a)(1) [(lack of subject matter

or personal jurisdiction, improper venue, or improper form or service)] …

cannot be determined from facts of record.”). “The failure of the parties to

provide the evidence necessary for a proper determin[a]tion of the issue

does not excuse the court from further inquiry. Thus, it [is] incumbent on

the court below to take evidence to resolve the dispute.” Delaware Valley,

518 A.2d at 1283 (citations omitted). The moving party bears the burden of

supporting its objections. Id. (citations omitted).

      In its preliminary objection to improper venue and brief in support

thereof, Eurofins argued that the forum selection clause under the SPA is

presumptively valid and enforceable, and thus the proper venue is in Iowa,

not Pennsylvania. Preliminary Objections, 5/22/2019, at 5; Brief in Support

of Preliminary Objections, 6/11/2019, at 6, citing Patriot Commercial

                                     - 10 -
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Leasing Co. v. Kremer Rest. Enterprises, LLC, 915 A.2d 647, 651 (Pa.

Super. 2006).

      In response, the Olsons contended that a sworn declaration of a

representative of Eurofins acknowledged that Eurofins’ principal place of

business is in Lancaster, Pennsylvania, and attached his declaration thereto.

Memorandum of Law in Opposition to Preliminary Objections, 6/19/2019, at

5, Ex. 2. The Olsons further claimed deception by Eurofins relating to the

forum selection clause and its nexus to Iowa. Id. at 5. They argued the

forum selection clause was “invalid or unenforceable because it was

procured under false pretenses” and that venue in Chester County,

Pennsylvania was proper because all the parties and witnesses are located in

Pennsylvania, and the Olsons suffered harm in and reside in Chester County.

Id. at 9. The Olsons pointed to section 9.8 of the SPA to permit severability

of provisions of the agreement, thereby allowing the forum selection clause

to be held invalid or unenforceable without affecting the validity of its

remaining provisions.

      In addition, the Olsons responded to Eurofins’ argument that the

forum selection clause is presumptively valid by arguing that such a clause is

unenforceable when “‘1) the clause itself was induced by fraud or

overreaching; 2) the forum selected in the clause is so unfair or inconvenient

that a party, for all practical purposes, will be deprived of an opportunity to

be heard; or 3) the clause is found to violate public policy.’” Id. at 14,

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quoting Patriot Commercial, 915 A.2d at 651. The Olsons claimed the

forum selection clause lacked a meeting of the minds to form a valid

contract, and that they could rebut the Patriot Commercial presumption

under both the first and second tests. Memorandum of Law in Opposition to

Preliminary Objections, 6/19/2019, at 14-19. Specifically, they maintained

that Eurofins fraudulently and intentionally misrepresented a material fact of

the corporate entity’s location “by obfuscating the real corporate entity who

was in charge of negotiations and whom agents of Eurofins were actually

representing the contract negotiations.” Id. at 18. Further, citing Morgan

Trailer Manufacturing Co. v. Hydraroll Ltd., 759 A.2d 926 (Pa. Super.

2000), where this Court refused to uphold a forum selection clause that

would “seriously impair” a party’s participation in the litigation due to an

“extreme distance of the forum,” the Olsons argued that the distance

between southeastern Pennsylvania and central Iowa is extreme for them

because they are in their eighties, and have health concerns and travel

restrictions. Memorandum of Law in Opposition to Preliminary Objections,

6/19/2019, at 19.

      Finally, the Olsons raised an argument of forum non conveniens in

their memorandum of law in opposition to the preliminary objections,

arguing that requiring them to proceed with litigation in Iowa is vexatious,

oppressive, and against public policy. Id. at 20-24. Specifically, they claimed

that “Pennsylvania is the only appropriate venue for this litigation, given

                                    - 12 -
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their advanced age[s,] the difficulty of traveling for them, the location of

witnesses and evidence, and that [Eurofins] submitted a Declaration by [a

representative of Eurofins] which admitted that [Eurofins’] Pennsylvania

office was the critical party in this litigation.” Id. at 22. Noting that the two

counties are over 1,000 miles apart and Eurofins’ lack of nexus to Iowa, the

Olsons maintained that Eurofins was attempting to enforce the forum

selection clause in an attempt to “vex” the Olsons. Id. at 23. Lastly, they

contended that the clause is unenforceable because, for the aforesaid

reasons, it is “unreasonable at the time of litigation.” Id. at 23 (emphasis

in original) (citing Midwest Fin. Acceptance Corp. v. Lopez, 78 A.3d 614,

628 (Pa. Super. 2013)). The Olsons attached affidavits and other evidence in

support of their memorandum of law in opposition to preliminary objections.

      In their reply brief in support of its preliminary objections, Eurofins

addressed the Olsons’ claims as to venue, explained Eurofins’ nexus to Iowa,

contested the Olsons’ claims of health concerns and travel restrictions, noted

the Olsons’ vacation home in Minnesota, and attached affidavits and other

evidence thereto. Eurofins’ Reply Brief in Support of Preliminary Objections,

6/24/2019, at 1-4.

      Instantly,   the   trial   court    did     not   order   any   depositions   or

interrogatories. It is clear from the trial court’s opinion that its June 17,

2019 order was based solely upon Eurofins’ view of controverted facts stated

in its preliminary objections and without consideration of the Olsons’ view of

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those facts. Before any factual determination was made as to venue,

however, the trial court was required to order the taking of evidence

pursuant to Pa.R.C.P. 1028(c)(2) and C.C.R.C.P. 1028(c)(2). See Hamre v.

Resnick, 486 A.2d 510, 511 (Pa. Super. 1984) (vacating order sustaining

preliminary objections based on improper venue and remanding for

“evidence [to] be taken in this case either by depositions or otherwise in

order to provide the lower court with a basis upon which to rest a decision

on venue, and to afford [the appellate court] a background from which to

conduct [its] review of such a decision”); Delaware Valley, 518 A.2d at

1283 (vacating and remanding for parties to present evidence to allow a

determination of factual issues raised by preliminary objections for lack of

personal jurisdiction); Luria v. Luria, 286 A.2d 922, 923 (Pa. Super. 1971)

(holding trial court’s taking of evidence pursuant to Pa.R.C.P. 1028(c)(2)

was required before ruling on preliminary objection to jurisdiction, and

remanding for factual findings by the trial court). Thus, “a remand is

necessary to allow the parties a reasonable period of time within which to

present evidence by deposition, interrogatories or otherwise which will allow

a determination of the factual issues raised by the preliminary objections.”

Delaware Valley, 518 A.2d at 1283 (citation omitted).

     In conclusion, the trial court erred by failing to consider the Olsons’

claims relating to venue in their response to preliminary objections, and

failing to conduct fact-finding pursuant to Pa.R.C.P. 1028(c)(2) and

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C.C.R.C.P. 1028(c)(2), before ruling on the preliminary objection to venue to

determine the validity and enforceability of the forum selection clause of the

SPA.9,   10   We therefore vacate the trial court’s order and remand for

proceedings consistent with this memorandum.

       Order vacated. Case remanded. Jurisdiction relinquished.

Judgment Entered.

Joseph D. Seletyn, Esq.
Prothonotary

Date: 7/24/20

____________________________________________

9 As Eurofins points out, the trial court further erred in ordering the transfer
of the action to a court outside of this Commonwealth, rather than
dismissing the action. Pa.R.C.P. 1006(e) (“If a preliminary objection to
venue is sustained and there is a county of proper venue within the State
the action shall not be dismissed but shall be transferred to the appropriate
court of that county.); see Eurofins’ Brief at 5, n.1. However, due to our
disposition, this error is moot.

10 In light of our disposition, we need not address the Olsons’ remaining
issues.

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