Court Opinion

ID: 3144131
Source: CourtListenerOpinion
Date Created: 2015-10-22 18:02:01.039103+00
Date Added: 2024-06-11T11:54:59.679460
License: Public Domain

ILLINOIS OFFICIAL REPORTS
                                        Appellate Court

                     In re Estate of Blickenstaff, 2012 IL App (4th) 120480

Appellate Court            In re: the Estate of WYVERNE BLICKENSTAFF, Deceased, SCOTT E.
Caption                    BLICKENSTAFF, and KIM D. BLICKENSTAFF, Petitioners-Appellees,
                           and TODD A. BLICKENSTAFF, Petitioner, v. JON M.
                           BLICKENSTAFF, as Executor of the Estate of WYVERNE
                           BLICKENSTAFF; and WILLIAM R. KOHLHASE, Respondents-
                           Appellants.

District & No.             Fourth District
                           Docket No. 4-12-0480

Filed                      December 18, 2012

Held                       In a dispute arising from petitioners’ challenge of their father’s will and
(Note: This syllabus       their attempt to remove their brother from his position as executor, the
constitutes no part of     portion of the trial court’s order requiring the executor to turn over the
the opinion of the court   billing statements related to attorney fees he paid from estate assets
but has been prepared      without court approval was upheld, but the portion of the order requiring
by the Reporter of         the executor to turn over his personal financial documents was reversed,
Decisions for the          since those documents were not relevant to any issues in the case.
convenience of the
reader.)

Decision Under             Appeal from the Circuit Court of Woodford County, No. 06-P-26; the
Review                     Hon. Charles M. Feeney, Judge, presiding.
Judgment                   Affirmed in part and reversed in part.

Counsel on                 William R. Kohlhase (argued), of Miller, Hall & Triggs, of Peoria, for
Appeal                     appellants.

                           Jeffrey Alan Ryva (argued), of Husch Blackwell LLP, of Peoria, and
                           Dean R. Essig, of Washington, for appellees.

Panel                      JUSTICE APPLETON delivered the judgment of the court, with opinion.
                           Presiding Justice Steigmann and Justice Turner concurred in the
                           judgment and opinion.

                                              OPINION

¶1          Petitioners, Scott E. Blickenstaff and Kim D. Blickenstaff, are challenging the will of
        their deceased father, Wyverne A. Blickenstaff. They also have petitioned the trial court to
        remove their brother, Jon M. Blickenstaff, from the position of executor. During pretrial
        discovery in this litigation, petitioners requested the executor’s personal financial documents
        as well as the billing statements corresponding to attorney fees he paid, without prior court
        approval, from the assets of the estate. The executor refused these requests. Later, the
        executor and his attorney, William R. Kohlhase, refused to comply with a court order to turn
        over the documents in question. They adhered to their position that, under the law, the
        documents were exempt from discovery. Consequently, the court found them to be in
        contempt of court and fined them $100. Respondents, the executor and Kohlhase, appeal.
¶2          We find an abuse of discretion in requiring the executor to turn over his personal
        financial documents (e.g., his individual tax returns, private bank statements, and cancelled
        checks), because we do not see how those documents are relevant to the issues framed by the
        pleadings; nor do we see how those documents could reasonably be expected to lead to
        admissible evidence. We agree, however, that respondents should have to produce the
        unredacted billing statements corresponding to the attorney fees paid with estate assets. By
        paying the attorney fees out of the estate, the executor voluntarily injected into this case the
        issue of whether these attorney fees were reasonable and were for services beneficial to the
        estate. Production of the unredacted billing statements is necessary to the fair and truthful
        resolution of that issue, and insomuch as the billing statements come within the attorney-
        client privilege, that privilege is impliedly waived. Therefore, we affirm the trial court’s
        judgment in part and reverse it in part.

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¶3                                    I. BACKGROUND
¶4                    A. Wyverne A. Blickenstaff’s Surviving Offspring
¶5         Wyverne A. Blickenstaff (decedent) died in January 2006. A daughter and four sons
       survived him: Gaylene J. Evans, Todd A. Blickenstaff, the two petitioners, and the executor.

¶6                                    B. The Decedent’s Will
¶7         The decedent left a will, dated October 21, 2004. In his will, the decedent named Jon M.
       Blickenstaff to be the executor and also bequeathed to him, individually, enough stock in
       Blickenstaff Farming Corporation to make him the owner of 67% of the voting shares. The
       decedent bequeathed the remaining shares and the residue of his estate equally to all five
       children.
¶8         In March 2006, the trial court admitted the will to probate and, in accordance with the
       will, appointed Jon M. Blickenstaff as executor.

¶9                              C. The Petition Contesting the Will
¶ 10       In September 2006, petitioners as well as Todd A. Blickenstaff filed a petition contesting
       the will. The petition alleged, on information and belief, that the decedent had lacked the
       requisite mental capacity to make the will and that Jon M. Blickenstaff had exerted undue
       influence over him.

¶ 11                               D. The Subpoena Duces Tecum
¶ 12       In March 2010, petitioners obtained the issuance of a subpoena duces tecum, which they
       caused to be served on the executor, Jon M. Blickenstaff. The subpoena sought documents
       “pertaining to the Estate of Wyverne A. Blickenstaff,” including the following:
               “3. Copies of all checks, bank statements, records of accounts, bills paid and bills due
           from the opening of the Estate to date.
               4. All records relating to the Blickenstaff Farm [sic] Corporation including checks,
           receipts, bank statements, paid bills and any other financial information.”
¶ 13       In April 2010, the executor moved to quash this subpoena. He offered two reasons for
       quashing the subpoena: (1) discovery in the will contest had closed; and (2) the
       documentation that the subpoena sought was irrelevant to the issue of whether the will was
       valid–which, at the time, was the only issue framed by the pleadings.
¶ 14       Petitioners explained, however, that, instead of seeking the documentation for purposes
       of the will contest, they were merely exercising their statutory right to inspect the books of
       account of the decedent. See 755 ILCS 5/19-3 (West 2010).
¶ 15       In May 2010, the trial court denied the executor’s motion to quash the subpoena duces
       tecum.

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¶ 16         E. The Petition To Remove Jon M. Blickenstaff From the Executorship
¶ 17       In May 2011, petitioners filed a petition to remove Jon M. Blickenstaff from the position
       of executor of the decedent’s will. In their petition, they allege essentially four grounds for
       removal.

¶ 18                  1. As Executor, Using the Estate’s Majority Ownership
                      of the Corporation To Cast Votes, and Make Decisions,
                             Unfairly Beneficial to Himself Personally
¶ 19                 a. Compensation for the President and the Other Director
¶ 20       Although article III of the will bequeaths enough shares to Jon M. Blickenstaff to give
       him the majority vote, the will is contested, and those shares have not yet been distributed
       to him. Therefore, petitioners allege the estate still has majority ownership of the corporation.
¶ 21       According to petitioners, Jon M. Blickenstaff, as executor, used the majority voting
       power of the estate to reduce the corporation’s board of directors from three members to two
       members, electing himself and their sister, Gaylene J. Evans, as the two board members. In
       addition to being one of the two board members, Jon M. Blickenstaff is the president of the
       corporation, a position he has held for several years. Previously, the president and the board
       members were uncompensated because the farmland was rented out to a tenant farmer, Ron
       Hastings, who did all the farming work and made all the farming decisions. After the
       reduction of the board of directors, however, from three members to two members and after
       the election of Gaylene J. Evans and Jon M. Blickenstaff to those two director positions,
       they, as directors, voted to pay Jon M. Blickenstaff a salary of $39,600 and a bonus of
       $12,000 for his services as president–55% of the net income of the corporation for
       2010–even though total revenue for the corporation declined 9% from 2009 to 2010. The two
       directors further resolved that the president’s salary would increase in 2011 to $40,800.
¶ 22       In addition, Jon M. Blickenstaff and Gaylene J. Evans, as directors, voted to pay Gaylene
       J. Evans a director’s fee of $5,000. Petitioners regard this fee as excessive relative to the
       minimal work a director has to do, just as they regard the president’s compensation as
       excessive.

¶ 23                                b. Failure To Pay Dividends
¶ 24       Petitioners complain that the executor/director, Jon M. Blickenstaff, has not authorized
       any payment of dividends during this litigation even though the corporation has almost
       $600,000 in liquid assets. They suggest that this continued accumulation of earnings further
       highlights the executor’s conflict of interest: refraining from paying dividends serves his own
       personal interest rather than that of all five children.

¶ 25                     2. Buying a New Machine Shed and a Skid-Steer
                  Even Though Equipment Is Solely the Tenant’s Responsibility
¶ 26       Petitioners allege that the executor has used estate assets to pay $145,620 for a new

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       machine shed and $36,000 for a skid-steer. According to petitioners, these purchases are a
       waste of the estate because equipment is solely the tenant farmer’s responsibility and, indeed,
       a primary purpose of renting out the land is to avoid having to buy equipment.

¶ 27        3. Payment of Attorney Fees With Estate Assets, Without Court Approval
¶ 28       Petitioners allege that, as of December 31, 2009, the executor has spent over $115,000
       in estate funds to pay attorney fees in the will contest without ever seeking the trial court’s
       approval of this expenditure.

¶ 29                   4. Failure To File a Claim Against Donna Wernsman
¶ 30       Petitioners also fault the executor for failing to file a claim against Donna Wernsman.
       According to petitioners, Wernsman was the hairdresser of the decedent’s wife, and she was
       not related to the decedent, either by blood or marriage. While Wernsman was in her late 30s
       or early 40s and the decedent was in his mid-80s, Wernsman persuaded him repeatedly to
       give her large gifts of money. Petitioners allege that these gifts, totaling $143,700, were
       tantamount to the financial exploitation of an elderly person, even though Wernsman has
       denied any wrongdoing.
¶ 31       Petitioners also are concerned about the adverse tax consequences the estate might face
       because of these gifts to Wernsman. They criticize the executor for failing to defuse a
       potential dispute with the Internal Revenue Service.

¶ 32                 F. Petitioners’ Motion for a Temporary Restraining Order
¶ 33       In September 2011, petitioners filed a motion for a temporary restraining order, seeking
       to “preserve the status quo pending the evidentiary hearing on the Petition to Remove [Jon
       M. Blickenstaff] as Executor.” Petitioners were concerned that he “[might] be using or
       [would] try to use estate or corporate funds to pay his lawyers to defend him in the Petition
       to Remove proceeding,” as he already, without court approval, had spent over $115,000 in
       estate assets on attorney fees in the will contest. Petitioners also were concerned that, in his
       capacity as a director of the corporation, the executor would make further imprudent
       expenditures of corporate assets. Therefore, petitioners requested the trial court to “place a
       freeze upon all Estate and corporate accounts pending further order of court, in connection
       with the payment of any attorneys’ fees for defense of either petition, the Will contest or the
       Petition to Remove.” Alternatively, petitioners requested an order that, “before any payment
       of attorneys’ fees occurs regarding either aspect of this matter[,] *** approval be sought by
       proper petition to the Court.”
¶ 34       This petition for a temporary restraining order remains pending after being continued by
       agreement of the parties.

¶ 35        G. “First Request To Produce Regarding Petition To Remove Executor”
¶ 36       At some point in time, petitioners served upon the executor a discovery request entitled
       “First Request To Produce Regarding Petition To Remove Executor,” which we will call, for

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       short, “the request for production.” In this request for production, petitioners sought five
       categories of documents:
                “1. Copies of Jon Blickenstaff’s personal Federal Income Tax return forms 1040 and
            W-2’s for the last three years filed.
                2. Copies of Jon Blickenstaff’s personal State of Illinois Income Tax return forms IL-
            1040 for the last three years filed.
                3. In regard to personal bank accounts, money market accounts, savings accounts and
            any investment accounts in the name of Jon Blickenstaff:
                     (a) Copies of any bank statements or memorandums received on any personal
                account within the last twelve months from this date; and
                     (b) All cancelled checks and records of withdrawals from any bank account of
                Jon Blickenstaff within the last twelve months.
                4. Copies of all statements of legal services from Miller, Hall & Triggs, LLC related
            to services provided in regard to the Petition to Remove Executor either billed to the
            Estate of Wyverne Blickenstaff or to Jon Blickenstaff personally.
                5. All evidence of payment on these statements, including copies of cancelled checks
            and bank statements reflecting payments on bills whether paid by Jon Blickenstaff
            personally or as Executor of the Estate of Wyverne Blickenstaff.”
¶ 37        The executor objected to paragraphs 1, 2, and 3 of the request for production on the
       ground that these paragraphs “[sought] documents which [were] not relevant to the claim or
       defense of any party and [the demands in these paragraphs were] no more than an effort to
       harass [him] and invade his privacy.” He objected to paragraph 4 on the ground that “it
       [sought] documents which [were] not relevant to the claim or defense of any party and [it
       was] an improper attempt by Petitioners to discover privileged information from their
       opponent in a claim currently being litigated.” He objected to paragraph 5 on the ground that
       “it [sought] documents that [were] not relevant to the claim or defense of any party.”

¶ 38                             H. Petitioners’ Motion To Compel
¶ 39       In December 2011, petitioners filed a motion to compel the executor to comply with the
       subpoena duces tecum and with all five paragraphs of their request for production.
¶ 40       In his memorandum in opposition to the motion to compel, the executor argued that the
       subpoena duces tecum was issued on March 31, 2010, “roughly fourteen months following
       the close of discovery in the will contest” and that it was “not issued in connection with any
       pleading pending before [the trial] [c]ourt” at that time (it was not until May 3, 2011, that
       petitioners filed their petition to remove him from the executorship).
¶ 41       As for the request for production, the executor argued it was “simply an effort to invade
       [his] privacy and the attorney/client privilege.” He insisted: “There is not a single issue raised
       in the Petition to Remove which renders Jon M. Blickenstaff’s personal tax returns or
       financial records relevant.” As for the request for attorney fee bills, he objected: “That raises
       obvious attorney/client privilege issues *** to the extent that the [billing records], as they
       inevitably do, disclose confidential attorney/client communications.”

                                                  -6-
¶ 42      In February 2012, the trial court overruled the executor’s objections to the subpoena
       duces tecum and the request for production, ordering him to comply with both documents
       and ordering Kohlhase to turn over the billing statements.

¶ 43                               I. The Contempt Proceeding
¶ 44       When the executor did not produce the attorney bills and financial documents that the
       subpoena duces tecum and request for production described, petitioners filed a petition for
       a rule to show cause. In April 2012, after a hearing, the trial court found that the executor and
       his attorney, Kohlhase, had failed to show cause why they should not be held to be in
       contempt of court. Hence, the court found them “to be in contempt of [the] Court’s February
       17, 2012 Order in that they ha[d] not produced the personal financial records of Jon
       Blickenstaff and all of the attorney’s fees billing documents from the various law firms
       involved in this matter as ordered by the Court.” The court sanctioned respondents in the
       amount of $100.
¶ 45       This appeal followed.

¶ 46                                        II. ANALYSIS
¶ 47                     A. The Executor’s Personal Financial Documents
¶ 48       Under the subheading “Scope of Discovery,” Illinois Supreme Court Rule 201(b)(1) (eff.
       July 1, 2002) provides that, unless some other provision of the supreme court rules says
       otherwise, “a party may obtain by discovery full disclosure regarding any matter relevant to
       the subject matter involved in the pending action, whether it relates to the claim or defense
       of the party seeking disclosure or of any other party.” Relevant information, for purposes of
       Rule 201(b)(1), is either “that which is admissible at trial” or “that which leads to admissible
       evidence.” Manns v. Briell, 349 Ill. App. 3d 358, 361 (2004). “[T]he right to discovery is
       limited to disclosure of matters that will be relevant to the case at hand in order to protect
       against abuses and unfairness, and a court should deny a discovery request where there is
       insufficient evidence that the requested discovery is relevant or will lead to such evidence.”
       (Internal quotation marks omitted.) Youle v. Ryan, 349 Ill. App. 3d 377, 380-81 (2004).
¶ 49       The executor argues that, in their request for production, petitioners exceed the
       permissible scope of discovery, because his personal financial documents have nothing to
       do with any of the issues in this case. In their request for production, petitioners seek the
       executor’s personal tax returns from the previous 3 years as well all documentation, from the
       previous 12 months, pertaining to his personal bank accounts and investment accounts,
       including but not limited to bank statements, withdrawal slips, and canceled checks.
¶ 50       Petitioners argue, on the other hand, that this personal financial documentation is relevant
       because they allege that the executor has wasted assets of the estate by casting a vote, as one
       of the two directors of the corporation, to pay himself a salary of $39,600 and a bonus of
       $12,000 for his services as president of the corporation. They reason that the amount he is
       paid in his other job, a full-time job, would be relevant to this issue of waste in that it would
       tend to show the true fair-market value of his services as president of the corporation. Also,

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       petitioners argue, the more hours the executor spent in performing his full-time job, the less
       time he would have left over to perform the job of president and therefore the less deserving
       he would be of a salary and a bonus in those amounts.
¶ 51        Before addressing these arguments by petitioners, we should acknowledge that, insomuch
       as reasonable minds could differ on the merits of these arguments, we should defer to the
       trial court. “A trial court is given great latitude in determining the scope of discovery, and
       discovery orders will not be disturbed absent an abuse of discretion.” Manns, 349 Ill. App.
3d at 361. A decision is an abuse of discretion only if it is “clearly against logic.” (Internal
       quotation marks omitted.) People v. Covington, 395 Ill. App. 3d 996, 1002-03 (2009). Given
       the issues in this case, we are unable to see any logic in requiring the executor to produce all
       his personal financial documents. What the executor earns in his full-time job would be
       relevant to establishing the fair-market value of his services as president of the corporation
       only if, in his full-time job, he did the same kind of work that he did as president of the
       corporation. Petitioners have cited no evidence of such an equivalency between the two
       positions. In any event, to find out what the executor earns in his full-time job, petitioners
       do not need all his personal financial documents, including his canceled checks. Nor do
       petitioners need all his personal financial documents to learn how many hours he worked
       outside his position as president of the corporation.
¶ 52        Petitioners argue, alternatively, that the executor’s personal financial documents are fair
       game in discovery because he has put his income in issue. Citing our decision in Freehill v.
       DeWitt County Service Co., 125 Ill. App. 2d 306, 320-21 (1970), petitioners maintain that
       “when a litigant has put in issue his income, the privilege from discovery of income tax
       returns is waived; those returns are subject to discovery and available for impeachment of
       other evidence.” Freehill is distinguishable, however, because the plaintiff in that case filed
       an action for wrongful death, thereby putting the decedent’s probable future earnings in issue.
       Id. at 320-21. In an action for wrongful death, the next of kin can recover the pecuniary
       contributions the decedent probably would have made in the future, discounted to present
       value, and the decedent’s past earnings are an important consideration when projecting the
       decedent’s probable future earnings. See Keel v. Compton, 120 Ill. App. 2d 248, 254-55
       (1970); 16 Ill. L. and Prac. Death § 88, at 96-97 (2004). We held: “Where a litigant has put
       in issue his income, the privilege from discovery of his income tax returns is waived.”
       Freehill, 125 Ill. App. 2d at 321. In the present case, by contrast, the executor has filed no
       pleading putting his income in issue. Rather, petitioners have filed a pleading putting only
       part of his income in issue: his income as president of the corporation. So, we are
       unconvinced by the citation of Freehill.
¶ 53        In short, we do not see how petitioners’ sweeping request for all of the executor’s
       personal financial documents, including, for example, the canceled checks he might have
       written to a grocery store or barbershop, was reasonably calculated to lead to the discovery
       of admissible evidence. Therefore, we conclude that the trial court abused its discretion by
       overruling the relevancy objections to paragraphs 1, 2, and 3 of the request for production.

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¶ 54                  B. The Billing Statements From the Executor’s Attorneys
¶ 55        Respondents (the executor and Kohlhase) argue that because the executor has admitted
       using estate assets to pay attorneys to defend him against the petition for removal and
       because he has provided petitioners “all payment documentation, including checks, of
       payment by the Estate of the attorneys defending [against] the Petition to Remove,
       [petitioners] have all the information they need to take any position or make any argument
       regarding payment of such fees.” Respondents insist “[i]t is unnecessary for [petitioners] to
       see the actual bills detailing services provided by [the executor’s] attorneys while the parties
       are still litigating the Petition to Remove,” for disclosure of those bills, with their detailed
       descriptions of the attorney’s services, would violate the attorney-client privilege. See People
       ex rel. Ulrich v. Stukel, 294 Ill. App. 3d 193, 201 (1997).
¶ 56        If, as respondents contend, it is unnecessary for petitioners to see the billing statements
       and if it is enough for them to know merely the amount of attorney fees paid out of the estate,
       why were the billing statements generated in the first place? Why do law firms send billing
       statements to their clients, detailing the services provided, instead of just sending their clients
       a piece of paper saying simply, “Amount Due: X dollars?” The reason is obvious. The
       descriptions of the specific services the attorney provided, along with the amount of time the
       attorney spent on each service, are the explanation and justification for the fee charged. See
       Ill. R. Prof. Conduct R. 1.5 (eff. Jan. 1, 2010).
¶ 57        Such a justification is relevant to the petitioners and the trial court because the executor
       should not have paid any attorney fees whatsoever out of the estate without first obtaining
       the trial court’s approval for each such payment–regardless of whether the attorney fees were
       for defending against petitioners’ challenge of the will or defending against their petition to
       remove him from the executorship. The executor and his attorneys were on notice, from case
       law, that court approval was required before the payment of any attorney fees out of the
       estate. See In re Estate of Thomson, 139 Ill. App. 3d 930, 939 (1986); In re Estate of Devoy,
       231 Ill. App. 3d 883, 888 (1992); Sanni, Inc. v. Fiocchi, 111 Ill. App. 3d 234, 236 (1982).
       Insomuch as the trial court finds these attorney fees to be unreasonable or not beneficial to
       the estate, the executor and possibly his attorneys, too, will have to reimburse the estate. See
       People ex rel. Chicago Bar Ass’n v. Templeman, 363 Ill. 152, 157 (1936); In re Estate of
       Minsky, 59 Ill. App. 3d 974, 980 (1978). Thus, petitioners and the court need the billing
       statements for the same reason a client would need them: to confirm the reasonableness of
       the amount of attorney fees charged. See Ideal Electronic Security Co. v. International
       Fidelity Insurance Co., 129 F.3d 143, 152 (D.C. Cir. 1997) (“Although the reasonableness
       of the [attorney] fee award is ultimately within the District Court’s discretion, [the
       indemnitor] must first be allowed an opportunity to challenge the reasonableness of the fees
       following full disclosure of the billing statements.”).
¶ 58        It might well be, as respondents argue, that the billing statements come within the
       attorney-client privilege (see Stukel, 294 Ill. App. 3d at 201), but in our de novo review of
       this issue (see Mueller Industries, Inc. v. Berkman, 399 Ill. App. 3d 456, 463 (2010)), we
       hold that the executor has impliedly waived the attorney-client privilege with respect to
       billing statements he paid with funds from the estate. A party impliedly waives the attorney-
       client privilege by “voluntarily inject[ing] either a factual or legal issue into the case, the

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       truthful resolution of which requires an examination of the confidential communications.”
       (Internal quotation marks omitted.) Fox Moraine, LLC v. United City of Yorkville, 2011 IL
       App (2d) 100017, ¶ 65. By paying the attorney fees out of the estate, the executor voluntarily
       injected into this case the issue of whether the attorney fees were reasonable and whether
       they were for services beneficial to the estate. See Minsky, 59 Ill. App. 3d at 980. Fair and
       truthful resolution of that issue necessitates the production of the unredacted billing
       statements. See Ideal, 129 F.3d at 152.

¶ 59                                     III. CONCLUSION
¶ 60       We are concerned that the demonstrated ongoing internecine family warfare in this case
       shows no sign of abating. We encourage the trial court to impose upon counsel, for both
       sides, specific deadlines within which to resolve the outstanding issues in the administration
       of this estate and to close the estate with all deliberate speed.
¶ 61       For the foregoing reasons, we affirm the trial court’s judgment in part and reverse it in
       part: we affirm the punishment for contempt with respect to the refusal to produce the
       attorney billing statements paid with estate assets, but we otherwise reverse the judgment.

¶ 62      Affirmed in part and reversed in part.

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