Court Opinion

ID: 4683619
Source: CourtListenerOpinion
Date Created: 2021-05-04 11:19:34.703726+00
Date Added: 2024-06-11T09:02:14.311278
License: Public Domain

Fourth Court of Appeals
                                        San Antonio, Texas
                                 MEMORANDUM OPINION

                                          No. 04-20-00106-CV

 SINKIN & BARRETTO, P.L.L.C. and Stephanie Bandoske as Personal Representative of the
                 Estate of Arthur Gregory Augustine, Deceased,
                                   Appellants

                                                  v.

                                 COHESION PROPERTIES, LTD.,
                                          Appellee

                      From the 45th Judicial District Court, Bexar County, Texas
                                   Trial Court No. 2016-CI-00637
                          Honorable Cathleen M. Stryker, Judge Presiding

Opinion by:       Irene Rios, Justice

Sitting:          Rebeca C. Martinez, Chief Justice
                  Patricia O. Alvarez, Justice
                  Irene Rios, Justice

Delivered and Filed: April 28, 2021

REVERSED AND REMANDED

           In this interlocutory appeal, Sinkin & Barretto, P.L.L.C. and Stephanie Bandoske, the

personal representative of the estate of Arthur Gregory Augustine (collectively, “S&B”), challenge

the denial of their motion to dismiss under the Texas Citizens Participation Act (“TCPA”). See

TEX. CIV. PRAC. & REM. CODE ANN. § 51.014(a)(12). We reverse and remand for proceedings

consistent with this opinion.
                                                                                     04-20-00106-CV

                                                    BACKGROUND

            In the underlying case, S&B sued Martha McCracken and Cohesion Properties, Ltd., for

breach of contract, fraud, and other claims. S&B had represented McCracken in a divorce

proceeding and Cohesion was awarded to McCracken as part of the property division in the

divorce. S&B claimed McCracken and Cohesion were former clients who had failed to pay the

Sinkin law firm and Augustine for their legal services.

            McCracken and Cohesion filed a joint answer to the suit, denying S&B’s allegations, and

asserting counterclaims for legal malpractice, breach of fiduciary duty, breach of contract, and

violations of the Texas Deceptive Trade Practices Act (“DTPA”). 1 Cohesion amended its answer

twice. Cohesion’s amended pleadings dropped its counterclaims for legal malpractice, breach of

fiduciary duty, breach of contract, and violations of the DTPA, and added counterclaims for

wrongful garnishment and theft under the Texas Theft Liability Act (“TLA”). The counterclaims

were premised on allegations that S&B had wrongfully induced McCracken to pledge the proceeds

from the sale of property owned by Cohesion to pay the fees she owed them.

            S&B eventually moved for summary judgment on Cohesion’s wrongful garnishment

counterclaim. The trial court signed an interlocutory order granting S&B’s summary judgment

motion on Cohesion’s wrongful garnishment counterclaim.

            S&B subsequently moved for dismissal of Cohesion’s wrongful garnishment and theft

counterclaims pursuant to the TCPA. Additionally, S&B moved for summary judgment on

Cohesion’s theft counterclaim.

            The trial court considered S&B’s second summary judgment motion and their TCPA

motion to dismiss at the same hearing. After the hearing, the trial court signed an interlocutory

1
    McCracken also asserted a counterclaim for statutory fraud.

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order granting S&B’s summary judgment motion as to Cohesion’s theft counterclaim. Because the

trial court did not timely rule on S&B’s TCPA motion, it was denied by operation of law. See TEX.

CIV. PRAC. & REM. CODE ANN. § 27.008(a) (providing that when the trial court does not timely

rule on a TCPA motion to dismiss, it is denied by operation of law and may be appealed); id.

§ 27.005(a) (providing that a court must rule on a TCPA motion to dismiss not later than the

thirtieth day following the date the hearing on the motion concludes).

        S&B appealed the denial of their TCPA motion to dismiss.

                                   ARGUMENTS PRESENTED ON APPEAL

        On appeal, S&B argue the trial court should have granted their TCPA motion, dismissed

Cohesion’s counterclaims under the TCPA, and awarded them attorney’s fees, court costs, and

sanctions. S&B further argue that their TCPA motion was timely, that they established that the

TCPA applied to Cohesion’s counterclaims, and that they established their affirmative defenses.

S&B also argue that Cohesion failed to establish by clear and specific evidence a prima facie case

for each essential element of its theft counterclaim. 2

        Cohesion counters the trial court properly denied the TCPA motion because: (1) the TCPA

motion was mooted by the trial court’s summary judgment rulings, (2) the TCPA motion was

untimely, (3) the TCPA did not apply to Cohesion’s counterclaims, and (4) even if the TCPA

applied, Cohesion established a prima facie case for its theft counterclaim, and S&B did not

establish their affirmative defense of res judicata and collateral estoppel.

                                                   MOOTNESS

        We first address Cohesion’s arguments regarding the mootness of this appeal and the

timeliness of S&B’s TCPA motion.

2
 S&B does not argue Cohesion failed to establish by clear and specific evidence a prima facie case for each essential
element of its wrongful garnishment counterclaim.

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       Appellate courts are not permitted to decide moot controversies. Klein v. Hernandez, 315

S.W.3d 1, 3 (Tex. 2010). A case or an issue becomes moot when a controversy ceases to exist

between the parties, or when the parties cease to have a legally cognizable interest in the outcome.

State ex rel. Best v. Harper, 562 S.W.3d 1, 6 (Tex. 2018); Exxon Mobil Corp. v. Rincones, 520

S.W.3d 572, 586 (Tex. 2017). “Mootness occurs when events make it impossible for the court to

grant the relief requested or otherwise affect the parties’ rights or interests.” Harper, 562 S.W.3d

at *6 (internal quotation omitted). Mootness can occur at any stage in the proceedings, even on

appeal. Exxon Mobil, 520 S.W.3d at 586.

       Cohesion argues this appeal is moot because the trial court has already granted S&B’s

summary judgment motions on Cohesion’s wrongful garnishment and theft counterclaims. For

support, Cohesion cites Kennedy v. Harber, No. 05-17-001217-CV, 2018 WL 3738091, at *2 (Tex.

App.—Dallas Aug. 7, 2018, no pet.). In Kennedy, the trial court granted the Harbers’ summary

judgment motion on Kennedy’s claims, and Kennedy’s summary judgment motions on the

Harbers’ counterclaims. Id., at *1-2. It also denied Kennedy’s TCPA motion. Id., at *1. The trial

court combined these rulings in a final judgment. Id., at *2. On appeal, Kennedy challenged the

trial court’s denial of his TCPA motion and its grant of the Harbers’ summary judgment motion,

which dismissed Kennedy’s affirmative claims. Id., at *2-3. The Harbers did not appeal, meaning

that the order granting summary judgment and dismissing the Harbers’ counterclaims was final.

See id., at *2. Under these circumstances, the court of appeals concluded that a controversy ceased

to exist between the parties and the issues concerning the denial of the TCPA motion to dismiss

were moot. Id.

       Kennedy is distinguishable from the present case. In Kennedy, the counterclaims had been

finally resolved in a final judgment. Here, unlike the situation presented in Kennedy, there is no

final judgment; only interlocutory summary judgment rulings, which the trial court could change

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before it renders a final judgment. See In re Panchakarla, 602 S.W.3d 536, 539-40 (Tex. 2020)

(orig. proceeding) (noting the trial court retains continuing control over its interlocutory orders

and has the power to set those orders aside any time before final judgment is rendered).

Additionally, once the trial court signs a final judgment, Cohesion could file an appeal challenging

the propriety of the summary judgment rulings on its counterclaims. We conclude that a

controversy still exists between the parties and they still have a legally cognizable interest in the

outcome of this case. Therefore, this appeal is not moot.

                                      TIMELINESS OF THE TCPA MOTION

           Next, we address Cohesion’s argument that the denial of the TCPA motion was proper

because it was untimely filed.

           A TCPA motion to dismiss must be filed not later than the sixtieth day after the date of

service of the legal action. 3 See TEX. CIV. PRAC. & REM. CODE ANN. § 27.003(b). This sixty-day

deadline is reset when a party files amended pleadings asserting new claims based on new factual

allegations. Maldonado v. Franklin, No. 04-18-00819-CV, 2019 WL 4739438, at *4 (Tex. App.—

San Antonio Sept. 30, 2019, no pet.) (mem. op.). However, the sixty-day deadline is not reset when

a party files an amended pleading that adds no new counterclaims and relies upon the same factual

allegations as in its original pleadings. Jordan v. Hall, 510 S.W.3d 194, 198 (Tex. App.—Houston

[1st Dist.] 2016, no pet.).

           To determine if S&B’s TCPA motion was untimely, we must compare Cohesion’s original

counterclaims with its first and second amended counterclaims. In its original counterclaims,

which Cohesion filed jointly with McCracken, Cohesion denied that Sinkin and Augustine had

ever represented it. Alternatively, Cohesion alleged that if Sinkin and Augustine did represent it,

3
    We apply the version of the Texas Citizens Participation Act (“TCPA”) that took effect on September 1, 2019.

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then Sinkin and Augustine breached their legal duties to it. Together with McCracken, Cohesion

asserted counterclaims against Sinkin and Augustine for legal malpractice, breach of fiduciary

duty, breach of contract, and violations of the DTPA.

        By contrast, Cohesion’s amended pleadings were not premised on allegations that Sinkin

and Augustine provided legal representation to Cohesion and breached their legal duties to it. In

its first amended pleading and counterclaim, Cohesion dropped its counterclaims for legal

malpractice, breach of fiduciary duty, breach of contract, and violations of the DTPA, and asserted

a single counterclaim for wrongful garnishment. In support of this counterclaim, Cohesion alleged:

(1) that “[b]ased on [] Sinkin’s false representation that he was in possession of a written agreement

by [Cohesion] to pay him, the [c]ourt signed two writs of garnishment which resulted [in] $200,000

that was ultimately garnished;” (2) that a statement made by Sinkin showed he “was acting with

conscious disregard of the truth at the time he presented the ex parte[] writ of garnishment;” (3)

that “[a]fter serving the writs[] and freezing [Cohesion’s] bank accounts, [] Sinkin began to use

[Cohesion’s] inability to access its money to extort a settlement;” (4) that “[b]y virtue of [] Sinkin’s

malicious actions, [Cohesion] has lost the use of the garnished funds and paid over $20,000.00” in

attorney’s fees to the garnishees; and (5) that Sinkin’s actions “were taken with malice and with

the intent to injure [Cohesion.]” These were new factual allegations that were not made in

Cohesion’s original pleadings.

        In its second amended counterclaims, Cohesion retained its counterclaim for wrongful

garnishment and the factual allegations supporting it and added a counterclaim for theft under the

TLA. Cohesion’s second amended pleading contained the following allegations: (1) that S&B

“wrongfully appropriated [Cohesion’s] property by acquiring money belonging to [Cohesion]”;

(2) that S&B “induced [McCracken] to consent to the appropriation of [Cohesion’s] money

through deception;” (3) that this deception included “failing to correct a false impression of law”

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that affected McCracken’s judgment; (4) that S&B knew McCracken “did not have authority to

give consent;” and (5) that “the wrongful appropriation was made with the intent to deprive

[Cohesion] of its property.” These were new factual allegations that were not made in Cohesion’s

previous pleadings.

        We conclude that Cohesion’s live pleading—its second amended counterclaims—contains

new causes of action based on allegations of new and substantively different conduct than the

counterclaims asserted in Cohesion’s original pleadings. Therefore, S&B’s sixty-day deadline to

file a TCPA motion to dismiss was reset as to the wrongful garnishment and theft counterclaims.

See Franklin, 2019 WL 4739438, at *5 (concluding the time for filing a TCPA motion was reset

as to a slander claim added to the plaintiff’s pleadings because it was a new cause of action based

on a new factual allegation of substantively different conduct than was previously alleged).

        Cohesion’s first amended answer and counterclaim was served on S&B on September 19,

2019, and its second amended answer and counterclaim was served on S&B on November 1, 2019.

S&B filed their TCPA motion to dismiss on November 18, 2019, which was within sixty days of

being served with the first and the second amended pleadings asserting the new counterclaims.

Therefore, we hold that the TCPA motion to dismiss was timely as to the wrongful garnishment

and theft counterclaims.

                                   DISMISSAL UNDER THE TCPA

        The TCPA authorizes a party to move for expedited dismissal of a legal action against it

that “is based on” or “in response to” a party’s exercise of the right of free speech, right to petition,

or right of association. TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(b). The purpose of the statute

“is to encourage and safeguard the constitutional rights of persons to petition, speak freely,

associate freely, and otherwise participate in government to the maximum extent permitted by law,

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and, at the same time, protect the rights of a person to file meritorious lawsuits for demonstrable

injury.” Id. § 27.002.

       “Reviewing a TCPA motion to dismiss requires a three-step analysis.” Youngkin v. Hines,

546 S.W.3d 675, 679 (Tex. 2018). First, the moving party must demonstrate that the TCPA

properly applies to the legal action against it. See id.; TEX. CIV. PRAC. & REM. CODE ANN.

§ 27.005(b). Second, if the moving party satisfies its burden to demonstrate the applicability of the

TCPA, then the nonmoving party must establish by clear and specific evidence a prima facie case

for each essential element of its claim. See Youngkin, 546 S.W.3d at 679; TEX. CIV. PRAC. & REM.

CODE ANN. § 27.005(c). Finally, if the nonmoving party satisfies the second step, then the burden

shifts back to the moving party to establish an affirmative defense or other valid defense on which

it is entitled to judgment as a matter of law. See Youngkin, 546 S.W.3d at 679-80; TEX. CIV. PRAC.

& REM. CODE ANN. § 27.005(d).

       We review the trial court’s denial of a motion to dismiss under the TCPA de novo. Adams

v. Starside Custom Builders, LLC, 547 S.W.3d 890, 897 (Tex. 2018); Robert B. James, DDS, Inc.

v. Elkins, 553 S.W.3d 596, 603 (Tex. App.—San Antonio 2018, pet. denied).

Applicability of the TCPA

       We now consider whether S&B met their burden to demonstrate the applicability of the

TCPA. In their TCPA motion, S&B argued that the TCPA applied because Cohesion’s

counterclaims were based on or in response to their applications for prejudgment garnishment and

supporting affidavits, which were documents filed in and pursuant to a judicial proceeding.

       The TCPA provides that the trial court “shall dismiss a legal action against the moving

party if [it] demonstrates that the legal action is based on or is in response to the party’s exercise

of the right to petition.” TEX. CIV. PRAC. & REM. CODE ANN. 27.005(b)(1)(B). A “legal action”

“means a lawsuit, cause of action, petition, complaint, cross-claim, or counterclaim or any other

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judicial pleading or filing that requests legal, declaratory, or equitable relief.” See id. § 27.001(6).

“‘Exercise of the right to petition’ means” “a communication in or pertaining to” “a judicial

proceeding.” See id. § 27.001(4)(A)(i). “‘Communication’ includes the making or submitting of a

statement or document in any form or medium, including … written.” See id. § 27.001(1).

        Under the TCPA’s definition, Cohesion’s counterclaims qualify as “legal actions.” See id.

§ 27.001(6). Cohesion’s live pleading—its second amended answer and counterclaim—

demonstrates that its counterclaims are “based on” or “in response to” the “exercise of the right to

petition.” See id. § 27.001(b)(1)(5). According to this pleading, Cohesion’s counterclaims involve

“a statement or document” in “a judicial proceeding”—specifically, the garnishment applications

and supporting affidavits filed by S&B. See id. §§ 27.001(4)(A)(i), 27.001(1). Cohesion’s second

amended counterclaim alleges that S&B filed a garnishment action in which they represented to

the court that Cohesion was indebted to them based on an agreement with McCracken; that S&B

presented a false affidavit to the court in the garnishment action; that based on these filings,

Cohesion lost the use of funds on deposit and had to pay attorney’s fees in the garnishment action;

and that these same actions constituted the wrongful appropriation of Cohesion’s property. We

conclude that S&B demonstrated the applicability of the TCPA. See Youngkin, 546 S.W.3d at 680-

81 (concluding a movant established the applicability of the TCPA when the nonmovant’s alleged

claim stemmed from the dictation of a Rule 11 agreement during trial); Collins v. Collins, No. 01-

17-00817-CV, 2018 WL 1320841, at *4 (Tex. App.—Houston [1st Dist.] Mar. 15, 2018, pet.

denied) (concluding that claims based on an inventory and discovery responses served in a divorce

action were based on or in response to the right to petition and, therefore, the TCPA applied).

        Because S&B demonstrated that the TCPA applies, the burden shifted to Cohesion to

establish by clear and specific evidence a prima facie case for each essential element of its

counterclaims. See TEX. CIV. PRAC. & REM. CODE ANN. § 27.005(c). However, because we

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ultimately conclude that S&B established affirmative defenses as to each of Cohesion’s

counterclaims, we need not address this step in the TCPA analysis. See id. § 27.005(d); Youngkin,

546 S.W.3d at 681 (assuming without deciding that the nonmovant met his burden to establish a

prima facie case for each essential element of his claims when the movant was entitled to dismissal

under the TCPA because he established an affirmative defense).

Affirmative Defenses

       In their TCPA motion, S&B argued Cohesion’s counterclaims were barred by res judicata,

collateral estoppel, limitations, attorney immunity, and judicial privilege. On appeal, S&B

maintain that they established each of these affirmative defenses, and therefore, they were entitled

to a dismissal of Cohesion’s counterclaims under the TCPA. Our analysis focuses on two of S&B’s

affirmative defenses, res judicata and limitations.

Res Judicata and Wrongful Garnishment

       On appeal, S&B argues the trial court should have granted their TCPA motion because

they established the affirmative defense of res judicata. Cohesion counters that S&B did not

establish the affirmative defense of res judicata because the dismissal order in the garnishment

action was not a final judgment on the merits.

       “Res judicata, or claims preclusion, prevents the relitigation of a claim or cause of action

that has been finally adjudicated, as well as related matters that, with the use of diligence, should

have been litigated in the prior suit.” Barr v. Resolution Trust Corp., 837 S.W.2d 627, 628 (Tex.

1992). The elements of res judicata are (1) a prior final judgment on the merits by a court of

competent jurisdiction, (2) the same parties or privity of the parties, and (3) a second action

involving the same claims or claims that could have been raised in the first action. Citizens Ins.

Co. of Am. v. Daccach, 217 S.W.3d 430, 449 (Tex. 2007). Generally, a dismissal with prejudice

constitutes an adjudication on the merits and operates as if the case had been fully tried and

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decided. Ritchey v. Vasquez, 986 S.W.2d 611, 612 (Tex. 1999); Jedkins v. Varghese, No. 14-08-

00895-CV, 2009 WL 5149877, at *3 (Tex. App.—Houston [14th Dist.] Dec. 31, 2009, no pet.)

(mem. op.). Thus, an order dismissing a case with prejudice has full res judicata effect, barring

subsequent relitigation of the same claims between the same parties. Jedkins, 2009 WL 5149877,

at *3.

         We conclude that S&B established the elements of res judicata as to Cohesion’s wrongful

garnishment counterclaim.

         First, in a prior action, the garnishment action, Cohesion moved to dissolve the writ of

garnishment and expressly pled and sought damages for wrongful garnishment on the ground that

the affidavits supporting the garnishment application were false. Thereafter, McCracken,

Cohesion, and S&B reached an agreement regarding the garnished funds and filed a joint motion

asking the trial court to dismiss with prejudice all counterclaims and causes of action that were

made or that could have been made against S&B. The trial court granted the parties’ joint motion

to dismiss and signed a dismissal order, stating “all relief requested in the Joint Motion for

Dismissal is GRANTED” and “all claims and causes of action made or that could have been made

by any party against any other party up to the date of the entry of the order in this cause are hereby

DISMISSED with prejudice.”

         Second, the same parties involved in the present case were also involved in the prior action.

         Finally, in the present case, as in the garnishment action, Cohesion bases its wrongful

garnishment claim on the alleged falsity of the affidavits supporting the garnishment applications.

         Cohesion argues that the dismissal order in the garnishment action was not a final judgment

because even after it was signed, the parties continued to litigate issues related to the garnished

funds in other cases. We disagree. The res judicata inquiry requires us to analyze the garnishment

action. The record before us contains certified copies of numerous documents filed in the

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garnishment action, including the garnishment applications, affidavits, motions, and the dismissal

order. The dismissal order expressly recites that it disposed of all claims and causes of action that

were made or that could have been made in the garnishment action. Based on this record, we

conclude that the dismissal order disposed of all claims and parties and was a final judgment on

the merits in the garnishment action.

       In sum, the record establishes (1) a prior final judgment on the merits by a court of

competent jurisdiction, (2) the same parties, and (3) a second action involving the same claim as

was raised in the first action. Because S&B established the affirmative defense of res judicata as

to Cohesion’s wrongful garnishment counterclaim, we conclude the trial court erred in denying

the TCPA motion as to this counterclaim.

Statute of Limitations and Theft

       Finally, on appeal, S&B argues that the trial court should have granted their TCPA motion

because they established the affirmative defense of limitations. Cohesion does not address this

argument in its appellate brief.

       A two-year limitations period applies to a theft claim under the TLA. See Gonyea v. Scott,

541 S.W.3d 238, 248 (Tex. App.—Houston [1st Dist.] 2017, pet. denied); TEX. CIV. PRAC. & REM.

CODE ANN. § 16.003(a). Generally, a cause of action accrues and the statute of limitations begins

to run when facts come into existence that authorize a party to seek a judicial remedy. Provident

Life & Accident Ins. Co. v. Knott, 128 S.W.3d 211, 221 (Tex. 2003). In most cases, a cause of

action accrues when a wrongful act causes an injury. Moreno v. Sterling Drug, Inc., 787 S.W.2d

348, 351 (Tex. 1990). When a cause of action accrues is usually a question of law. Knott, 128

S.W.3d at 221.

       Here, the alleged wrongful act occurred when S&B caused the funds to be taken from

Cohesion’s accounts. See Gonyea, 541 S.W.3d at 249 (holding that theft claim accrued on the date

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money was wrongfully deposited into attorney’s operating account). The record shows that this

occurred in January 2016. Nevertheless, Cohesion did not file its theft counterclaim until

November 1, 2019, which was more than two years after Cohesion’s theft cause of action accrued.

Because Cohesion failed to file its theft counterclaim within the two-year limitations period, S&B

established their affirmative defense of limitations and they were entitled to dismissal of the theft

counterclaim under the TCPA.

       Because S&B established an affirmative defense as to each of Cohesion’s counterclaims,

the trial court should have granted the TCPA motion and dismissed Cohesion’s counterclaims

under the TCPA.

Court Costs, Attorney’s Fees, and Sanctions

       Finally, S&B argues the trial court erred by not awarding them court costs, attorney’s fees,

and sanctions. The TCPA provides that, generally, when dismissal is ordered under the statute, the

trial court “shall award to the moving part[ies] court costs and reasonable attorney’s fees incurred

in defending against the legal action,” and “may award to the moving part[ies] sanctions.” TEX.

CIV. PRAC. & REM. CODE ANN. § 27.009(a)(1),(2). Thus, under the TCPA’s plain language, the

award of court costs and reasonable attorney’s fees is mandatory, but the award of sanctions is

discretionary. See TEX. GOV’T CODE ANN. § 311.016(1),(2) (providing that “may” “creates

discretionary authority” and “shall” “imposes a duty”). We remand to the trial court for the award

court costs and reasonable attorney’s fees and, if the trial court determines it is appropriate, for the

award of sanctions.

                                            CONCLUSION

       We conclude the trial court erred by allowing S&B’s motion to dismiss to be denied by

operation of law. We reverse and remand to the trial court for proceedings consistent with this

opinion.

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   Irene Rios, Justice

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