Court Opinion

ID: 3086190
Source: CourtListenerOpinion
Date Created: 2015-10-16 02:47:24.165767+00
Date Added: 2024-06-11T12:46:50.763114
License: Public Domain

AFFIRM in part, REVERSE and REMAND in part; Opinion Filed February 10, 2014.

                                                                   In The
                                                Court of Appra1
                                         6iftI Jhürict of CLrxaa at aallaa

                                                        No. 05-11-01537-CV

                                      LAWYERS TITLE COMPANY, Appellant
                                                                       V.
                                 J.G. COOPER DEVELOPMENT, INC., Appellee

                                 On Appeal from the 193rd Judicial District Court
                                              Dallas County, Texas
                                        Trial Court Cause No. 10-02917

                                                              OPINION
                                   Before Justices Lang-Miers, Fillmore. and Brown’
                                               Opinion by Justice Brown

           Lawyers Title Company appeals the summary judgment granted in favor of J.G. Cooper

Development, Inc. and the denial of its own cross-motion for summary judgment. We reverse

the trial court’s judgment insofar as it grants summary judgment for J.G. Cooper Development,

Inc. on its claims of conversion, bailment, and money had and received; we remand those claims

for further proceedings. In all other respects, we affirm the trial court’s judgment.

                                                           BACKGROUND

           J.G. Cooper Development. Inc. is a real estate investment and development company

owned by Gary Cooper, who is the sole shareholder, officer, and director of the corporation.2

      The Honorable Mary L. NI urphy. Retired Justice. was a inetither oh he panel at the civic this case was suhtuived. hut due to her n2signatinn
from this Court on June 7, 2013. sIte did not participate in deciding this ease. She was replaced on ‘lie panel by Justice Ada E. Brown in
accordance will, the appellate rules. See Trx. R. Al’t’. P. 41.1(a).
Cooper’s primary business is real estate investing.                           In April 2009, Ty Howerton approached

Cooper regarding a transaction involving the purchase of real property                                   at   515 Houston Street in

Fort Worth, Texas (the “Houston Street Property”).                                Howerton and Cooper were business

associates and previously had done some real estate transactions together. Howerton told Cooper

that the Houston Street Property was a tax foreclosure, and Howerton knew an IRS agent through

whom he and Cooper could purchase the property for approximateLy $3.6 million even though he

estimated the property was worth between $5 and $6 million. Howerton advised Cooper that

they needed to have $1.8 million in an escrow account so the sellers couLd see “there were funds

available” and that Cooper and Howerton were serious buyers.                                       Howerton further advised

Cooper that they had to use appellant Lawyers Title, a title insurance company formerly known

as LandAmerica American Title Company. because the IRS had dealt with that company in the

past.

           Howerton sent Cooper an e-mail reiterating the terms of the deal; he also forwarded an e

mail from Jason Chumley with attached wire instructions and an escrow agreement.                                              Gary

Cooper testified that Chumley identified himself as a “Closer” and “Escrow Agent” for Lawyers

Title. In fact, Chumley was an independent contractor working for Phillip Michael Hawk, Jr., a

fee attorney for Lawyers Title. The written agreement by which Hawk worked for Lawyers Title

specified that Hawk had an attorney-client relationship with Lawyers Title, but he was not an

agent of Lawyers Title except for the limited purpose of closing real estate transactions.

           Cooper, Howenon, and Chumley executed the escrow agreement on April 24. 2009.

Chumley purported to sign for Lawyers Title. The escrow agreement anticipates “Buyer entering

into a contract with Escrow Agent establishing an escrow agreement to convey Buyer’s intention

and ability to purchase the [Houston Street Property).” Although the escrow agreement is not

    —   Unless noted ollienvise. ‘Cooper will rdèr In both Gary Cooper and iC Cooper Development, Inc.

                                                                  —2—
entirely clear, “Buyer” appears to refer to Cooper and Southwest Rain-Maker, Inc., a company

associated with Howerton. The “Escrow Agent” appears to refer to Lawyers Title and Chumley.

The “Escrow Agent” acknowledged receipt of $1.8 million and agreed to “hold the same in

escrow only in accordance with the terms of this Agreement.”                                                       The “Escrow Agent” was

required by the escrow agreement to hold the $1.8 million in escrow “until such time that a

contract is issued for the referenced property or at such place and time when [Cooper] may

designate in writing the cancelation of this agreement.”

           Cooper and Howerton came to a separate agreement concerning the escrow funds.

Cooper would deposit the entire $1.8 million in the escrow account. In return, Howenon would

pay Cooper $6,300 per week. Cooper agreed to credit these payments back to Howenon once

the contract for the Houston Street Property was finalized. Cooper wired the $1.8 million to an

escrow account in accordance with the wire-transfer instructions and e-mail correspondence.

            The $1.8 million, however, was never used to pay for the Houston Street Property, and no

real estate purchase contract was drafted or signed related to that property. Instead, Chumley,

Howerton, and one of Howerton’s associates, Rick Payne, used the funds on a separate real

estate transaction for property located at 3207 McKinney Avenue in Dallas, Texas (the

“McKinney Property”).                       Specifically, approximately $1.7 million was transferred from the

escrow account to Lochlan Steele. Inc., a company affiliated with Payne. as a payoff of four liens

on the McKinney Property. Chumley. Howerton, and Payne were indicted on federal wire fraud

charges based in part on this transaction.3

            Cooper’s relationship with the McKinney Property transaction is disputed by the parties.

Lawyers Title argues that the wiring instructions provided by Chumley for the $1.8 million

       3Lswyers Title uttered the tdcral intlicttiieni against Chtnttley as suittrttary-judgntent evidence. Cooper oh jected to and itioved to strike the
indict nient arguing it had not heen properly authenticated and constituted hearsay. The trial cottil sustained (he ohjecuon. There was other
evidence in (lie record, however, of lie i ttd ic in eitt For exatiiple. Cooper adttii ted in his deposit ion I lint he WitS nan ted as it VI Clint of a en nh nal
                                                        .

scheti te in Chu titley’ s indict it tettt.

                                                                             —3—
contained the “guaranty file number” for the McKinney Property transaction, and the file for the

McKinney Property transaction contained what Lawyers Title contends were closing instructions

from Cooper on the McKinney Property.4 Cooper acknowledges it received a SI.2 million deed

of trust on the McKinney Property, but this deed was recorded twenty-seven days before Cooper

wired the $1.8 million to Lawyers Title, and “Lawyers Title admitted that the Deed of Trust

would not have been recorded unless it had already received the Sl.2 million (separate from the

$1.8 million) prior to” the date the deed was recorded. Thus, Cooper argues it received nothing

of value in return for the $1.8 million deposit. Cooper also argues that at no time did it ever

authorize the removal of the $1.8 million from the escrow account, and its authorization was a

condition precedent for the removal of the funds.

            Cooper filed suit against numerous parties, including Howerton, Rain-Maker, Payne,

Chumley, Hawk, and Lawyers Title. It brought multiple claims against Lawyers Title, including

breach of contract, breach of fiduciary duty, conversion, negligence, breach of bailment

agreement, fraud, vicarious liability, money had and received, and unjust enrichment.                                                                           The

parties tiled cross-motions for summary judgment.                                               The trial court denied Lawyers Title’s

motion and granted summary judgment on Cooper’s claims against Lawyers Title for bailment,

conversion, and money had and received; it awarded Cooper Sl.8 million in damages against

Lawyers Title. The trial court then severed those claims from the remainder of the suit, and this

appeal followed.

     1Liw ye rs Til Ic Ii rI I tiade his argu nient in iii   aol ion   for new In aT ii did ma raise I his ssue in i Is response in Cooper’s   11101   rn lw so n’rnary
udg Hen I
                                         DISCUSSION

       In three issues, Lawyers Title argues the trial court erred in (1) partially granting

Cooper’s motion for summary judgment and denying Lawyers Title’s own motion for summary

judgment; (2) granting summary judgment on damages and awarding full, undiminished

damages without credits or apportionment; and (3) denying Lawyers Title’s motion for new trial

and motions for leave to supplement the trial court record with new and unforeseeable evidence

that would have resulted in a different outcome.

                                      Standard of Review

       We review the trial court’s summary judgment de novo.         HCBeck, Ltd. v. Rice, 284
S.W.3d 349, 352 (Tex. 2009). When both parties move for summary judgment and the trial

court grants one and denies the other, we will review the summary-judgment evidence presented

by both parties, consider all questions presented, and render the judgment that the trial court

should have rendered. Id.; Dallas Cent. Appraisal Dist. v. Mission Aire IV, L.P., 279 S.W.3d
471, 473—74 (Tex. App.—Dallas 2009, pet. denied).

       To defeat a plaintiffs cause of action on a traditional motion for summary judgment, a

defendant must either conclusively negate an element of the plaintiffs claim or plead and

conclusively establish each essential element of an affirmative defense. Case Corp. v. Hi-Class

Bits. Sys. of Am., Inc., 184 S.W.3d 760, 776 (Tex. App.—Dallas 2005, pet. denied). A matter is

conclusively established for summary-judgment purposes if ordinary minds cannot differ on the

conclusion to be drawn from the evidence.          AN Collision Or. of Addison, Inc. v. Town of

Addison, 310 S.W.3d 191, 193 (Tex. App.—Dallas 2010, no pet.). To win summary judgment

on its own cause of action, a plaintiff must establish each essential element of its claim as a

matter of law. Dallas Cent. Appraisal Dist, 279 S.W.3d at 474. In our review, we take as true

                                               —5—
evidence favorable to the non-movant, indulging every reasonable inference and resolving any

doubts in its favor. NLvon v.   Mr.   Pmp. MgmL Co., 690 S.W.2d 546, 5489 (Tex. 1985).

       Our appellate review of the summary judgment is limited to those issues presented to the

trial court. See TEX. K Civ. P. 166a(c) (stating issues not expressly presented to trial court in

writing shall not be considered on appeal as grounds for reversal); Stiles v. Resolution Trust

Corp., 867 S.W.2d 24, 26 (Tex.1993) (holding summary judgment cannot be affirmed on

grounds not expressly set out in motion or response). When, as here, the trial court’s orders

granting summary judgment do not specify the basis for the ruling, we will affirm the judgment

if any of the theories presented to the trial court and preserved for appellate review are

meritorious. Provident Life & Accident Ins. Co. v. Knot!, 128 S.W.3d 211, 216 (Te. 2003).

                                               Analysis

        In its first issue, Lawyers Title argues the trial court erred (a) in granting summary

judgment on Cooper’s claims for conversion, bailment, and money had and received, and (b) in

denying Lawyers Title’s motion for summary’ judgment on those same three claims. Lawyers

Title contends it disproved one or more elements of each of Coopers claims or—at a

minimum—it raised genuine issues of material fact on all three claims. We will address the

three claims in turn.

                                              Conversion

       Conversion is the “unauthorized and wrongful assumption and exercise of dominion and

control over the personal property of another, to the exclusion of or inconsistent with the owner’s

rights.” Wells Farto Bank Nw.,N.A. v. RPK Capital XVL L.L.C., 360 S.W.3d 691, 699 (Tex.

App.—Dallas 2012, no pet.) (quoting Waisath v. Lack’s Stores, Inc., 474 S.W.2d 44, 447

(Tex. 1971)). To establish a claim for conversion, a plaintiff must prove that (I) the plaintiff

owned or had possession of the properLy or entitlement to possession; (2) the defendant

                                                 —6—
unlawfully and without authorization assumed and exercised control over the property to the

exclusion of, or inconsistent with, the plaintiff’s rights as an owner; (3) the plaintiff demanded

return of the property; and (4) the defendant refused to return the property. Grand Champion

Film Prod., L.L.C. c Cinemark USA, inc., 257 S.W.3d 478, 485 (Tex. App.—Dallas 2008, no

pet.).   The plaintiff also must establish it was injured by the conversion.         United Mobile

Networks, L.P. v. Deaton, 939 S.W.2d 146, 147 (Tex.1994) (per curiam); RPK Capital, 360
S.W.3d at 699.    “[Am   action for conversion of money arises only where the money can be

identified as a specific chattel, meaning it is ‘(I) delivered for safe keeping; (2) intended to be

kept segregated; (3) substantially in the form in which it is received or an intact fund; and (4) not

the subject of a title claim by the keeper.” Entm’t Merch. Tech., L.L.C. v. Houc/tin, 720 F.

Supp. 2d 792, 799 (N.D. Tex. 2010) (Texas law) (quoting In re JXNB Internal Case, 483 F.3d
292, 308 (5th Cir. 2007fl; see also Ed/and v. Bounds, 842 S.W.2d 719, 727 (Tex. App.—Dallas

1992, writ denied).

         Cooper contends the summary-judgment evidence conclusively established that Lawyers

Title converted its property. Specifically, Gary Cooper testified by affidavit that he initiated a

wire transfer in the amount of $1.8 million to an escrow account at Compass Bank.               Bank

documents in the summary-judgment record identify that account as the “LandAmerica

American Title Co. Escrow Account        —   North Lamar” account.     The escrow account was in

Lawyers Title’s name under its federal taxpayer identification number, and a number of Lawyers

Title employees were authorized signers on the account. Therefore, Cooper argues, the escrow

account was owned by Lawyers Title as a matter of law and, when Cooper wired funds into that

account, Lawyers Title “received and accepted Cooper’s deposit, and recorded that deposit on its

internal ‘Receipts and Disbursements Ledger.” Cooper also maintains the summary-judgment

evidence established that Lawyers Title wrongfully exercised dominion and control over its

                                                 —7—
funds by transferring the funds to third parties without its authorization. See Pierson v. GFH

Fin. Sen’s. Corp., 829 S.W.2d 3!], 314 (Tex. App.—Austin 1992, no writ) (active interference

with an owner’s right of property or control as to deprive him of its free use and enjoyment

constitutes an act of conversion); Hoficuid v. Elgbz -Butler Brick Co., 834 S.W.2d 409, 412 (Tex.

App.—Corpus Christi 1992, no writ) (sale of property to third party constituted conversion).

Cooper claims that approximately $1.7 million of its funds in the escrow account were

transferred to Lochlan Steele without its authorization, and this transfer was authorized by Hawk

and Angie Salazar. an escrow agent in Hawk’s office.          It also claims that Sarah Barker. an

employee of Lawyers Title, is noted as the person who “made the entry for the wire-transfer to

Lochlan Steele.”

       The summary-judgment evidence includes a copy of the Closing Services Agreement

between Hawk and Lawyers Title.           The agreement authorized Hawk to “close real estate

transactions representing” Lawyers Title and to charge appropriate fees for such services. The

agreement also required Hawk to “maintain a separate escrow account       ...   with a bank or banks

approved by the Company, for the sole purpose of closing real estate transactions for” Lawyers

Title. The account was required to be styled “LandAmerica American Title Company Escrow

Account.” It is undisputed Cooper’s funds were wired into this escrow account. Hawk filed an

affidavit stating that under the Closing Services Agreement. he “was not an employee of

Lawyers Title, nor an agent of Lawyers Title for any purpose other than the limited purposes set

forth in the [agreementi   —   to close title insurance transactions..” He acknowledged that he was

required to maintain a separate escrow account at Compass Bank, and he “was responsible for

ensuring that funds were wired out of the Escrow Account properly.”

        The summary-judgment evidence also contained the deposition of Merritt Kopson, the

senior vice president of the holding company that owns Lawyers Title.             When asked what

                                                 —8—
controls were in place to make sure that funds in the escrow account were disbursed correctly,

Hopson responded that, “[t]he verification or the controls      rests on the escrow officer and in

this case the fee attorney, Hawk’s office.” When Cooper’s trial attorney described the escrow

account as “Lawyers Title’s escrow account that was assigned to Hawk’s fee attorney office,”

Hopson countered, “I don’t think []by agreement or otherwise it’s Lawyers Title       -   -   Lawyers

Title escrow account. I think its Hawk’s escrow account that we approved.” When asked by

Cooper’s attorney to elaborate, he testitied that the agreement between Hawk and Lawyers Title

required the attorney—in this case, Hawk—to maintain an escrow account; the account “may be

balanced and reconciled by Lawyers Title Company, but it is Hawk’s account that we approved

for him to use.”   Hopson described Hawk’s access to the account as “exclusive,”              Cooper.

however, relies upon evidence indicating Hawk’s office did not receive or have access to the

bank statements for the account. Hopson testified that Hawk’s office did not receive the bank

statements for the escrow account because Lawyers Title is required by the Texas Department of

Insurance to perform reconciliations “to balance the cash on hand to the bank statement to what

the escrow accounts show.”     Hopson also testified that “the [escrow] account belongs in this

instance to the fee attorney, so if the fee attorney took the money in and manages the account, the

fee attorney would be responsible for wiring it out or sending a check out or however they

disbursed it if they disbursed it.” Regarding the entry for the wire-transfer to Lochlan Steele

made by Barker, Hopson stated that Barker did not authorize the transaction, that her entry was

simply “cleanup, that she works in the accounting department      ...   [a]nd this file had a blank

where the person’s name should have been, and she filled in as a curative matter as a favor to the

Hawk office.” When asked by Cooper’s trial attorney whether Lawyers Title was holding the

money as a fiduciary for others, Hopson replied, “I think Michael Hawk is holding the money,

not Lawyers TiLle.”    Hopson also stated that Hawk’s office controlled the escrow account

                                               —9—
pursuant to their service agreement. Cooper’s trial attorney countered that specific employees of

Lawyers Title had authority to sign on the account, and Hopson replied, “they didn’t receive or

disburse any of the funds. This was done by Hawk’s office.” When asked if part of Hawk’s job

as the agent of Lawyers Title is to receive money and to make disbursements, Hopson

responded, “[niot on our behalf. I have to disagree with that. He is authorized to issue title

insurance for Lawyers Title.”

        We conclude that this summary-judgment evidence raises a genuine issue of material

fact regarding whether Lawyers Title exercised control of both the escrow account and the $1.8

million that Cooper wired into the account.      To prevail on summary judgment, Cooper was

required to prove that Lawyers Title unlawfully and without authorization assumed and exercised

control over its property to the exclusion of, or inconsistent with, its right as an owner. See RPK

Capital, 360 S.W.3d at 699. And for Lawyers Title to prevail on its motion, it was required to

prove it had not assumed and exercised such control over Cooper’s property. Because a fact

issue exists on this issue, neither party was entitled to summary judgment on Cooper’s

conversion claim.

                                             Bailment

       Cooper argues that Lawyers Title was a bailee and breached its obligation to protect

Cooper’s money. To create a bailment, there must be (I) delivery of personal property from one

person, the bailor, to another, the bailee, for a specific purpose; (2) acceptance of delivery by the

bailee; (3) an express or implied contract between the parties that the specific purpose will be

realized; and (4) an agreement between the parties that the property will be either returned to the

bailor or dealt with according to the bailor’s direction. State v. $281,420.00 in United States

Currency, 312 S.W.3d 547, 551 (Tex. 2010); Cessna Aircraft Co.       i’.   Aircraft Network, LLC, 213
S.W.3d 455, 462—63 (Tex. App.—Dallas 2006, pet. denied).                    To establish a bailment

                                                —10—
relationship, the evidence must demonstrate that the entity sought to be charged as bailee knew

that it was assuming such relationship and responsibilities before it wiLl be charged with the

duties of bailee. DeLaney   i’.   Asmred Self Storage, 272 S.W.3d 837, 839 (Tex. App.—Dallas

2008, no pet.); Hoye v. Like, 958 S.W.2d 234, 237 (Tex. App.—AmariLlo 1997, no pet.).

       Cooper argues the competent summary-judgment evidence presented to the trial court in

this case establishes that it delivered the funds to Lawyers Title to hold in trust; Lawyers Title

accepted the funds, an express or implied agreement existed between Cooper and Lawyers Title

that the funds would be held and not distributed without Cooper’s permission; and there was an

understanding that the funds would either be returned to Cooper. used in connection with the

purchase of the Houston Street Property, or monitored and not released without proper

documentation.

       Given the genuine issues of material fact discussed above regarding Lawyers Title’s

control over the escrow account and Coopers S1.8 million, we conclude that summary judgment

also was improper—for both parties—on Cooper’s bailment claim. Specifically, because a fact

issue exists regarding whether Lawyers Title controlled the escrow account, similar fact

questions must exist regarding whether Cooper delivered the Sl.8 million to Lawyers Title when

it wired the money to the escrow account and whether Lawyers Title accepted those funds.

                                      Monei’ Had and Received

       Cooper argues the summary-judgment evidence conclusively established that Lawyers

Title had and received money that belonged to him. A claim for money had and received seeks

equitable relief. Stonebridge Life his. Co. v. PUts, 236 S.W.3d 201. 203 n.j (Tex. 2007) (per

curiam); Edwards v. Mid-Continent Office Distrths., L.P., 252 S.W.3d 833, 836 (Tex. App.—

Dallas 2008, pet. denied).        The claim “belongs conceptually to the doctrine of unjust

enrichment.”’ Edwards, 252 S.W.3d at 837 (quoting Amoco Prod. Co. v. Smith, 946 S.W.2d

                                               —Il—
162, 164 (Tex. App.—El Paso 1997, no writ)). To prove the claim, a plaintiff must show that a

defendant holds money which in equity and good conscience belongs to him. hi. A cause of

action for money had and received is “less restricted and fettered by technical rules and

formalities than any other form of action. It aims at the abstract justice of the case, and looks

solely to the inquiry, whether the defendant holds money, which    .   .   .   belongs to the plaintifE”

hi. (quoting Stoats v. Miller, 243 S.W.2d 686, 687—88 (Tex. 1951)).               A cause of action for

money had and received is not premised on wrongdoing. MGA Ins. Co. v. Charles R. Chesnutt,

P.C., 358 S.W.3d 808, 813 (Tex. App.—Dallas 2012. no pet.).            In defending against such a

claim, a defendant may present any facts and raise any defenses that would deny a claimant’s

right under this theory. Id. at 814.

       Cooper argues there is no dispute that Lawyers Title received $1.8 million from Cooper.

It contends it is also undisputed that Lawyers Title had no claim of ownership over the $1.8

million held in escrow, Cooper received nothing of value in return for the $1.8 million, and none

of the $1.8 million was returned to Cooper. It maintains that because it presented competent

summary-judgment evidence “conclusively establishing that Lawyers Title received money

which rightfully belonged to Cooper.” the triaL court properly granted summary judgment on its

claim of money had and received.

        We disagree with Cooper’s assertion that there is no dispute regarding whether Lawyers

Title received the $1.8 million from Cooper. To the contrary, we have concluded that genuine

issues of material fact exist regarding which entity or individuals exercised control over the

escrow account into which Cooper wired its funds.         We conclude that such issues render

Cooper’s claim of money had and received improper for summary judgment for both parties.

                                              —12—
                                        CONCLUSION

       We conclude that genuine issues of material fact exist precluding summary judgment on

Cooper’s claims of conversion, bailment, and money had and received, and the trial court erred

in granting summary judgment for Cooper on those claims. Based on the same issues of material

fact, we conclude the trial court did not err in denying Lawyers Title’s motion for summary

judgment on those three claims.     Given this disposition, we do not address Lawyers Title’s

remaining issues in which it argues the trial court erred in granting summary judgment on

damages and erred in denying Lawyer Title’s motion for new trial and motions for leave to

supplement the record with new and unforeseeable evidence that would purportedly have

resulted in a different outcome. See TEX. R. App. P. 47.1. We reverse the trial court’s judgment

insofar as it grants summary judgment for Cooper on its claims of conversion, bailment, and

money had and received; we remand those claims for further proceedings. In all other respects,

we affirm the trial court’s judgment.

                                                  /Ada Brown!
                                                  ADA BROWN
                                                  JUSTICE

Ii 1537F.P05

                                             —13—
                                  Court of Appeals
                         1Fi1t17 District uf cxas at Dallas
                                        JUDGMENT

LAWYERS TITLE COMPANY, Appellant                      On Appeal from the 193rd Judicial District
                                                      Court, Dallas County, Texas
No. 05-1 l-01537-CV         V                         Trial Court Cause No. 10-029 17.
                                                      Opinion delivered by Justice Brown.
J.G. COOPER DEVELOPMENT, INC.,                        Justices Lang-Miers and Fillmore
Appellee                                              participating.

       In accordance with this Court’s opinion of this date, the portion of the trial court’s August
15. 2011 judgment granting appellee J.G. Cooper Development, Inc.’s Motion for Summary
Judgment on appellee’s claims of conversion, bailment, and money had and received is
REVERSED and this cause is REMANDED to the trial court for further proceedings. In all
other respects, the trial court’s judgment is AFFIRMED. It is ORDERED that appellant
Lawyers Title Company recover its costs of this appeal from appellee J.G. Cooper Development,
Inc.

       Judgment entered this 10th day of February, 2014.

                                                    /Ada Brown/
                                                    ADA BROWN
                                                    JUSTICE

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