Court Opinion

ID: 9931245
Source: CourtListenerOpinion
Date Created: 2024-02-08 18:02:56.753177+00
Date Added: 2024-06-11T12:16:33.166213
License: Public Domain

Filed 2/8/24 Wu v. Crestview Dr Laguna Beach CA4/3

                      NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
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or ordered published for purposes of rule 8.1115.

                IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                 DIVISION THREE

 NA WU et al.,

      Plaintiffs and Respondents,                                      G062041

           v.                                                          (Super. Ct. No. 30-2022-01243056)

 CRESTVIEW DR LAGUNA BEACH,                                            OPINION
 LLC, et al.,

      Defendants and Appellants.

                   Appeal from an order of the Superior Court of Orange County, Nick A.
Dourbetas, Judge. Affirmed in part and reversed in part.
                   McCormick, Barstow, Sheppard, Wayte & Carruth and Scott M. Reddie for
Defendants and Appellants.
                   Zweiback, Fiset & Zalduendo, Rachel Fiset, Jeanine Zalduendo and
William Odem for Plaintiffs and Respondents.
                                             *               *               *
                   Plaintiffs Na Wu, Yi Shang, Guowen Liu, and Xiofang Yi filed this action
alleging they were swindled out of more than $50 million and three parcels of real
property worth over $12 million in a years-long fraudulent investment scheme. As to the
parcels, plaintiffs claim the investment schemers forged the signatures of Wu, Shang, and
Yi on quitclaim deeds, which allowed record title to be transferred to entities controlled
by defendants Mohamed Shaaban and Doaa Fathallah.
              Plaintiffs obtained a temporary restraining order (TRO) and were later
granted a preliminary injunction covering two of the three properties: (1) real property
commonly known as 2361 Crestview Drive, Laguna Beach, California 92651 (the
Crestview property); and (2) real property commonly known as 77 Chianti, Irvine,
California 92618 (the Chianti property). The preliminary injunction order prohibited
Shaaban, Fathallah, defendant Crestview Dr Laguna Beach, LLC (Crestview LLC), and
defendant 77 Chianti, LLC (Chianti LLC) “from transferring any ownership interest,
including title thereto and any accompanying rights to use (including leasing), possess,
and/or occupy,” in the Crestview or Chianti property.
              Crestview LLC, Chianti LLC, and defendant 58 Berkshire Wood, LLC
appeal from the preliminary injunction order.1 Although the alleged fraudulent scheme is
intricate, the issue on appeal is narrow and limited. Crestview LLC and Chianti LLC
challenge only the order’s prohibition on leasing the properties and argue the trial court
abused its discretion in finding the balance of harms tilts in plaintiffs’ favor.
              On the Crestview property, we disagree. We conclude substantial evidence
supports the court’s determination of the balance of harms. But on the Chianti property,
we agree with Chianti LLC that the record does not support a finding the balance of harm

1              Plaintiffs unsuccessfully sought a TRO—and ultimately did not seek a
preliminary injunction—for the third property, 58 Berkshire Wood, Irvine, California
92618. Despite this fact, 58 Berkshire Wood, LLC, the record title owner of the third
property, is listed as an appellant in the notice of appeal and opening brief.

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tips in plaintiffs’ favor. We therefore reverse the order as to the portion that prohibits
leasing of the Chianti property. In all other respects, the order is affirmed.
                                          FACTS

               Because of the narrow issue on appeal, we provide a basic outline of the
alleged fraudulent scheme and recite facts relevant only to the disputed leasing
prohibition.
I.     The Alleged Fraudulent Scheme

               Plaintiffs’ verified second amended complaint includes claims for quiet title
of the Crestview and Chianti properties. The following summary of the alleged fraud is
drawn from this complaint.
               Plaintiffs are Chinese citizens. In 2017, Wu and her then-husband Shang
bought the Crestview property. They split their time between China and the United
States, using the Crestview property as their primary U.S. residence. Wu later married
her business partner Liu, and the new couple continued to split their time between the two
countries and live in the Crestview property while in the United States. Yi, who lives in
China and is a friend of Wu and Liu, bought the Chianti property in 2017.
               Plaintiffs contend they were defrauded by a group of conmen–defendants
Remington Chase, Kevin Robl, Joseph Tang, and Daniel Petta–into investing with
defendants Production Capital, LLC (Production Capital), operated by Robl, and
Knightsbridge Entertainment, Inc. (Knightsbridge), operated by Chase. Tang worked for
Chase and Robl. Tang spoke Mandarin and targeted Chinese investors, like plaintiffs, to
put money into Chase’s and Robl’s various companies. Petta notarized forged deeds for
these companies on properties owned by plaintiffs, including the Crestview and Chianti
properties.
               In late 2021, Wu and Liu learned about these fraudulent transfers when they
returned from China and found themselves locked out of the Crestview property. In

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February 2022, Wu and Liu, who were overseeing Yi’s property, discovered the locks to
the Chianti property had been changed.
II.     The Crestview Property

               Exhibits submitted by the parties show the title history of the Crestview
property. In 2017, Liu sold the Crestview property to Wu and Shang. A 2018 quitclaim
deed indicates Wu and Shang conveyed the property to Production Capital. Wu and
Shang, however, contend their signatures were forged. Months later, Production Capital
quitclaimed its interest to 2361 Crestview Dr Laguna Beach, LLC, an entity controlled by
Robl.
               In mid-2019, 2361 Crestview Dr Laguna Beach, LLC executed a grant deed
conveying the Crestview property to Crestview LLC, an entity controlled by Shaaban.
Shaaban and Fathallah, who are husband and wife, bought the Crestview property for
$3.575 million and immediately rented it back to Production Capital for $20,000 a month.
According to Shaaban, Robl wanted to use the money from the sale to fund Production
Capital’s business while continuing to host visiting business associates at the Crestview
property.
               On October 21, 2021, Production Capital terminated its lease and
surrendered the Crestview property. Robl signed a document on behalf of Production
Capital authorizing Shaaban and Fathallah to “remove or dispose of” its personal
property left at the premises, which included furniture, household goods, two Bentleys,
and a Tesla.
III.    The Chianti Property

               Exhibits submitted by the parties show a similar title history for the Chianti
property. In 2017, Yi bought the Chianti property. A 2018 quitclaim deed shows Yi
conveyed the Chianti property to Knightsbridge. Yi claims her signature was forged.
Months later, Knightsbridge executed a grant deed conveying its interest to Production
Capital.

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              In mid-2019, Production Capital executed a grant deed conveying the
Chianti property to Chianti LLC, an entity controlled by Shaaban. Chianti LLC bought
the Chianti property for $1.424 million and immediately rented it back to Production
Capital for $10,000 a month.
              On October 21, 2021, Production Capital terminated its lease and
surrendered the Chianti property. Robl signed a document on behalf of Production
Capital authorizing Chianti LLC to “remove or dispose of” its personal property left at
the premises, which included furniture and household goods.
IV.    The TRO, Preliminary Injunction Motion, and Leasing of the Chianti Property

              In February 2022, the trial court (Judge Slaughter) issued a TRO covering
the Crestview and Chianti properties. The TRO enjoined defendants “from transferring
title” of those properties, selling or advertising them for sale, and removing personal
property left there.
              The parties submitted briefs and evidence on the motion for preliminary
injunction.2 At the hearing on March 30, plaintiffs’ counsel represented to the court
(Judge Salter) that the TRO “has put everything at a status quo. So [plaintiffs] are not
allowed to remove the property from the home, and [defendants] are not allowed to sell
or transfer either home.” When the court asked about plaintiffs’ personal items in the
homes, plaintiffs’ counsel replied, “I feel like it’s not the appropriate place to request that
they be able to retrieve their property. This is an injunction hearing based on the T.R.O.
that was issued last month. And so just simply based on the fact that this is an injunction
hearing, we are requesting that the court issue a preliminary injunction in the same exact
fashion it issued the T.R.O. last month.” Ultimately, the court continued the hearing to
permit the parties to “sort things out,” conduct discovery, and potentially come to realize

2             The notice of motion and memorandum of points and authorities, however,
were not included in the appellate record.

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their “interests are better served by working together to go after the individuals -- if in
fact there was a fraud -- to go after those individuals and protect everybody’s interest.”
              On May 25, Chianti LLC leased the Chianti property in exchange for
tenants paying an entire year of rent up front, for a total of $90,000. An addendum to the
lease disclosed this lawsuit against Chianti LLC, stated tenants received a copy of the
TRO, advised that Chianti LLC could not “guarantee against or prevent plaintiffs . . .
from taking further action against the Premises,” and included an acknowledgement by
tenants that their leasehold rights may be impacted by such actions.
V.     The Updated Preliminary Injunction Motion and Resulting Order

              Before the continued hearing on July 20, the parties submitted updated
briefs and later supplemental briefs. In addition to the prohibitions listed in the TRO,
plaintiffs’ updated notice of motion sought to enjoin “leasing” of the Crestview and
Chianti properties.
              The tentative ruling was to grant the motion “to the extent it seeks a
preliminary injunction enjoining” Shaaban, Fathallah, Crestview LLC, and Chianti LLC,
and their respective agents “from transferring any ownership interest, including title
thereto and any accompanying rights to use, possess, and/or occupy,” in the Crestview or
Chianti property, and to deny it “to the extent it seeks a preliminary injunction enjoining
the Shaaban defendants from removing plaintiffs’ personal property” from the properties.
              At the continued hearing, defense counsel argued: “But just one more time
if we could beg the court, just so we don’t have to come back again, we would request
that the final language of the order track what was requested in the original notice of
motion and in the TRO that precludes transfer of title and sale. And that’s fine. I just
don’t want to come back here with someone claiming that this lease we already have
turns us into a mandatory injunction, modifies it.”
              The court then asked plaintiffs’ counsel if she had any issue with the
continued leasing of the Chianti property. Plaintiffs’ counsel responded, “We do, your

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Honor. We do not want there to be tenants in the property. We do have an issue. That is
an absolute point of clarification that I think we were very clear in our notice of motion
that we do not believe this property should be leased.”

              After taking the matter under submission, the trial court issued a minute
order on September 30 confirming the tentative ruling, with two modifications. First, the
court granted the motion “to the extent it seeks a preliminary injunction enjoining”
Shaaban, Fathallah, Crestview LLC, and Chianti LLC, and their respective agents “from
transferring any ownership interest, including title thereto and any accompanying rights
to use (including leasing), possess, and/or occupy,” in the Crestview or Chianti property.
The court did not specifically indicate whether the new parenthetical phrase “(including
leasing)” (hereinafter, the leasing prohibition) would require Chianti LLC to remove the
existing tenants from the Chianti property. Second, the court set a bond of $200,000 to
be paid by plaintiffs. Plaintiffs posted the bond. This appeal followed.
                                      DISCUSSION
I.     Standard of Review

              “Our review of a preliminary injunction ‘may trigger any or all of the three
standards of appellate review.’ [Citation.] The trial court’s evaluation and weighing of
the parties’ likelihood of success on the merits and the balance of harm is reviewed for
abuse of discretion. [Citation.] We review de novo the trial court’s application of legal
principles and we review its findings of fact under the substantial evidence standard.”
(Anderson v. County of Santa Barbara (2023) 94 Cal.App.5th 554, 568.)
              Under the abuse of discretion standard, “[t]he trial court’s determination
must be guided by a ‘mix’ of the potential-merit and interim-harm factors; the greater the
plaintiff’s showing on one, the less must be shown on the other to support an injunction.”
(Butt v. State of California (1992) 4 Cal.4th 668, 678.) “‘A trial court will be found to
have abused its discretion only when it has “‘exceeded the bounds of reason or
contravened the uncontradicted evidence.’”’” (Ryland Mews Homeowners Assn. v.

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Munoz (2015) 234 Cal.App.4th 705, 711 (Ryland).) “If the trial court abused its
discretion on either factor, we must reverse.” (Shoemaker v. County of Los Angeles
(1995) 37 Cal.App.4th 618, 625.) “‘Further, the burden rests with the party challenging
the injunction to make a clear showing of an abuse of discretion.’” (Ryland, at p. 711.)
              Under the substantial evidence standard, “‘“we must interpret the facts in
the light most favorable to the prevailing party and indulge in all reasonable inferences in
support of the trial court’s order.”’” (Costa Mesa City Employees Assn. v. City of Costa
Mesa (2012) 209 Cal.App.4th 298, 306.) The appellant bears the “‘daunting’” burden of
“identify[ing] and establish[ing] deficiencies in the evidence.” (Huong Que, Inc. v. Luu
(2007) 150 Cal.App.4th 400, 409.)
II.    Prohibitory and Mandatory Injunctions

              An injunction can be mandatory, prohibitory, or both. (Ironridge Global
IV, Ltd. v. ScripsAmerica, Inc. (2015) 238 Cal.App.4th 259, 265, fn. 4.) “Like many
distinctions in the law, the distinction between a mandatory and a prohibitory injunction
sometimes proves easier to state than to apply.” (Daly v. San Bernardino County Bd. of
Supervisors (2021) 11 Cal.5th 1030, 1041 (Daly).) A prohibitory injunction is one that
“that requires no action and merely preserves the status quo.” (Id. at p. 1035.) A
mandatory injunction “requir[es] the defendant to take affirmative action.” (Ibid.)
              To determine whether an injunction preserves or upsets the status quo, we
first must identify the status quo. “Should courts measure the status quo from the time
the order is entered, . . . or instead from the ‘“last actual peaceable, uncontested status
which preceded the pending controversy . . . ?”’” (Daly, supra, 11 Cal.5th at pp. 1045–
1046.) On the one hand, “an injunction preventing the defendant from committing
additional violations of the law may not be recharacterized as mandatory merely because
it requires the defendant to abandon a course of repeated conduct as to which the
defendant asserts a right of some sort. In such cases, the essentially prohibitory character
of the order can be seen more clearly by measuring the status quo from the time before

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the contested conduct began.” (Id. at p. 1046.) On the other hand, if “the injunctive
order aims not to prevent injury from future conduct but instead offers a remedy for a
past violation,” the order is mandatory to the extent it “calls for the performance of an
affirmative act.” (Ibid.)
                 “‘“‘“A preliminary mandatory injunction is rarely granted, and is subject to
stricter review on appeal.”’ [Citation.] The granting of a mandatory injunction pending
trial ‘“is not permitted except in extreme cases where the right thereto is clearly
established.”’ [Citations.]” [Citation.]’” (City of Corona v. AMG Outdoor Advertising,
Inc. (2016) 244 Cal.App.4th 291, 299 (Corona).) Nonetheless, “‘[t]he principles upon
which mandatory and prohibitory injunctions are granted do not materially differ. The
courts are perhaps more reluctant to interpose the mandatory writ, but in a proper case it
is never denied.’” (Ryland, supra, 234 Cal.App.4th at p. 712, fn. 4.)
III.   The Crestview Property
                 On the Crestview property, we conclude the leasing prohibition is
prohibitory and there was ample support in the record for the trial court’s finding of harm
tilting in favor of Wu and Liu.
                 The leasing prohibition was couched in prohibitory terms; it enjoined
Crestview LLC from leasing the Crestview property. Here, the status quo is properly
measured from the time the preliminary injunction order was granted on September 30,
2022. (Daly, supra, 11 Cal.5th at p. 1045.) There is no dispute that on that day
Crestview LLC had not leased the Crestview property. Thus, to refrain from leasing the
Crestview property, Crestview LLC did not have to do anything. (See Daly, supra, 11
Cal.5th at p. 1035 [prohibitory injunction “requires no action and merely preserves the
status quo”].)
                 The interim harm factor “involves consideration of such things as the
inadequacy of other remedies, the degree of irreparable harm, and the necessity of
preserving the status quo.” (Abrams v. St. John’s Hospital & Health Center (1994) 25

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Cal.App.4th 628, 636; see Code Civ. Proc., § 526, subd. (a).) Since 2017, the Crestview
property has been Wu’s primary residence in the United States, and since 2019 it has
been Liu’s primary residence when they married. They spend about six months a year
there. If the Crestview property were to be leased, Wu and Liu would suffer harm in
having strangers live in their primary U.S. residence, which contains their personal
belongings. Because the Crestview property is their home and not simply an investment
property, money damages for such a harm would be inadequate or extremely difficult to
calculate. (See Code Civ. Proc., § 526, subd. (a)(4) & (5).)
                  The Crestview property, however, is simply an investment for Crestview
LLC. Before the issuance of the TRO, Shaaban had been making arrangements to sell
the property. Crestview LLC is responsible for monthly mortgage payments of $17,000,
which are easily calculable money damages. Crestview LLC has not argued on appeal or
cited evidence in the record to show it is unable to carry these costs during the pendency
of this action.
IV.    The Chianti Property
                  Unlike with the Crestview property, we conclude the leasing prohibition on
the Chianti property is mandatory and thus subject to stricter scrutiny on appeal. We also
determine the trial court’s balancing of harms is not supported by the record and does not
withstand this heightened scrutiny.
                  Although the leasing prohibition was couched in prohibitory terms (i.e.
enjoining Chianti LLC from leasing), it was nonetheless mandatory in nature. Here, too,
the status quo is properly measured from the time the preliminary injunction order was
granted on September 30, 2022. (Daly, supra, 11 Cal.5th at p. 1045.) By that time,
Chianti LLC had already entered a one-year lease of the Chianti property. Thus, to
refrain from leasing the Chianti property, Chianti LLC would have had to evict or
otherwise remove the current tenants from the premises. The leasing prohibition would
not “prevent injury from future conduct” but instead serve to remedy a past act. (Id. at

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p. 1046.) That affirmative step of removing a tenant would plainly alter the status quo.
As such, the mandatory nature of the leasing prohibition is subject to heightened
appellate scrutiny.
              “‘“The granting of a mandatory injunction pending trial ‘“is not permitted
except in extreme cases where the right thereto is clearly established.”’ [Citations.]”
[Citation.]’” (Corona, supra, 244 Cal.App.4th at p. 299.) “To obtain a preliminary
injunction, a plaintiff ordinarily is required to present evidence of the irreparable injury or
interim harm that it will suffer if an injunction is not issued pending an adjudication of
the merits.” (White v. Davis (2003) 30 Cal.4th 528, 554.) Here, the record on appeal
does not show the facts of this case were so extreme as to clearly establish the right to a
mandatory injunction.
              The trial court found the balance of harms favored the issuance of a
preliminary injunction, citing Glynn v. Marquette (1984) 152 Cal.App.3d 277, 280, and
Fonteno v. Wells Fargo Bank, N.A. (2014) 228 Cal.App.4th 1358, 1380. Those cases,
however, merely stand for the proposition that “[s]pecific performance is given in land
sale contracts because it is assumed every piece of property is unique and that the buyer’s
remedy by way of damages is inadequate. (Civ. Code, § 3387.)” (Glynn, at p. 280;
Fonteno, at p. 1380 [same].) While the unique nature of real property supports the
issuance of a preliminary injunction of that property’s transfer or sale, the same rationale
does not apply categorically to leasing the property, particularly when the property is an
investment property versus a claimed owner’s residence. The act of leasing real property,
in and of itself, does not make the remedy of money damages inadequate to a party who
claims ownership of the property.
              According to Yi, the leasing of the Chianti property “to strangers would
wreak obvious, grievous injury” to her “quiet enjoyment” of her property, and it “would
work genuine prejudice” to her “psychological and legal interests in excluding others”
from her property. Yi contends that “[n]o evidence or testimony is necessary to reach

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this common-sense conclusion.” But in support of the TRO and preliminary injunction,
Yi declared she purchased the Chianti property as an investment and that, at least as of
July 13, 2022 (the date of her last declaration), she had never been to the United States.
Without having visited the Chianti property at all, it is difficult to imagine the
psychological harm Yi would suffer if the property were to be rented.
              Yi points out that Wu and Liu’s personal possessions remain in the Chianti
property. Tellingly, she does not declare her personal possessions remain there. Indeed,
having never been to the United States, it is unlikely Yi has any personal belongings at
the property. That Wu and Liu have stored belongings there does not tip the balance of
harms in Yi’s favor.
              Yi also argues an injunction is an appropriate remedy for a continuing
trespass. Yi did not bring a claim, however, for trespass. Instead, this case concerns two
parties who claim rightful title to the Chianti property.
              Yi asserts her case “presents a nearly identical fact pattern” to Grey v.
Webb (1979) 97 Cal.App.3d 232 (Grey). We disagree. The plaintiff buyers in Grey were
suing for specific performance of a contract to buy a newly constructed home. (Id. at
p. 236.) The plaintiffs obtained “an ex parte order restraining defendants from
conveying, occupying, or possessing” the home “and ordering them to show cause why a
preliminary injunction to the same effect should not be issued.” (Id. at p. 235.) Days
later, a third party allegedly moved into the home. (Ibid.) The plaintiffs then obtained a
preliminary injunction, which was upheld on appeal. (Id. at p. 236.) The appellate court
reasoned, “Unlike the usual case, the property in question was not occupied by any of the
defendants when the action was commenced and the request for preliminary injunction
was made. In fact, the house had not been occupied at all because it had just been
completed. By preventing occupation of a previously vacant house, the preliminary
injunction had the effect of preserving, rather than disturbing, the status quo.” (Id. at
p. 237.) It further determined that, while it was a “close” case, there was substantial

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evidence of irreparable injury, given that the “difference between a new house and a used
one, as perceived by a buyer of ordinary sensitivity, is a difference of character and not
merely of value.” (Id. at p. 238.)
              Grey is readily distinguishable from this case for two salient reasons. First,
the Grey home was vacant when the TRO was issued. Thus, the preliminary injunction,
which contained the same directives as the TRO, was prohibitory because it preserved the
status quo–a new, vacant home–before issuance of the TRO. In contrast, the TRO here
did not contain language preventing Chianti LLC from occupying, possessing, or leasing
the Chianti property. When the leasing prohibition was ultimately added to the order
granting preliminary injunction, the Chianti property was already under a lease contract,
thereby making the leasing prohibition a mandatory injunction. Second, the Grey home
was new and had never been occupied. The court thus reasoned the Grey plaintiffs would
suffer irreparable harm in losing the ability to live in a brand new home. In this case, the
Chianti property was an investment, there was no evidence it was a new home, and there
was no assertion Yi had lived there or intended to do so in the future.
              Finally, to the extent there is any concern the tenants would cause damage
to the Chianti property or its contents, Yi has an adequate remedy at law: money
damages. (See Pacific Decision Sciences Corp. v. Superior Court (2004) 121
Cal.App.4th 1100, 1110 [“before a court may issue a nonstatutory injunction as a
provisional remedy for breach of contract, it must appear that monetary relief would not
afford adequate relief or that it would be extremely difficult to ascertain the amount of
damages”].)
              For these reasons, we conclude the trial court abused its discretion by
granting a mandatory preliminary injunction prohibiting leasing of the Chianti property,
which had already been leased when the order was made.

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                                       DISPOSITION

              The order dated September 30, 2022, granting preliminary injunction is
reversed in part, as follows: The phrase “and any accompanying rights to use (including
leasing), possess, and/or occupy” shall be stricken as to, and deemed not to apply to, the
Chianti property. In all other respects, the order is affirmed. In the interests of justice,
each side shall bear their own costs on appeal.

                                                   DELANEY, J.

WE CONCUR:

MOORE, ACTING P. J.

SANCHEZ, J.

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