Court Opinion

ID: 4360595
Source: CourtListenerOpinion
Date Created: 2019-01-22 16:02:03.514422+00
Date Added: 2024-06-11T14:46:43.570426
License: Public Domain

NOTICE: NOT FOR OFFICIAL PUBLICATION.
  UNDER ARIZONA RULE OF THE SUPREME COURT 111(c), THIS DECISION IS NOT PRECEDENTIAL
                  AND MAY BE CITED ONLY AS AUTHORIZED BY RULE.

                                     IN THE
              ARIZONA COURT OF APPEALS
                                 DIVISION ONE

                   LINDA ANN ISGRO, Plaintiff/Appellant,

                                         v.

         WELLS FARGO BANK, N.A., et al., Defendants/Appellees.

                              No. 1 CA-CV 18-0156
                                FILED 1-22-2019

            Appeal from the Superior Court in Maricopa County
                           No. CV2015-008317
                The Honorable Roger E. Brodman, Judge

                                   AFFIRMED

                                    COUNSEL

Hymson Goldstein Pantiliat & Lohr, PLLC, Scottsdale
By Eddie A. Pantiliat, Evan B. Schechter
Counsel for Plaintiff/Appellant

Curley & Allison, LLP, Phoenix
By Roger D. Curley, Kiernan S. Curley
Counsel for Defendant/Appellee Wells Fargo Bank, N.A.

Gust Rosenfeld P.L.C., Phoenix
By Scott A. Malm, Mina C. O’Boyle
Counsel for Defendant/Appellee First American Title Insurance Company

Fidelity National Law Group, Phoenix
By Patrick J. Davis, David M. LaSpaluto
Counsel for Defendant/Appellee Security Title Agency, Inc.
                      ISGRO v. WELLS FARGO, et al.
                          Decision of the Court

                      MEMORANDUM DECISION

Presiding Judge Lawrence F. Winthrop delivered the decision of the Court,
in which Judge Maria Elena Cruz and Judge Kenton D. Jones joined.

W I N T H R O P, Judge:

¶1            Appellant Linda Ann Isgro challenges the trial court’s rulings
denying leave to amend her complaint to add four new plaintiffs and
granting summary judgment to Wells Fargo Bank, N.A. (“Wells Fargo”),
First American Title Insurance Company (“First American”), and Security
Title Agency, Inc. (“Security Title”) (collectively “Appellees”) on statute of
limitations and laches grounds. We affirm.

                 FACTS AND PROCEDURAL HISTORY

¶2            This appeal arises out of the administration of the estate of
Goldie Brown (the “Estate”), which opened in probate in the late 1970s.
Brown’s will (the “Will”) left one fifth of the Estate’s assets to Ron Porter
and Oma Lee Bergman, her niece and nephew, and divided the remaining
assets into four equal shares, one of which was held in trust for Vada
Chrisman Roberts (“Trust B”). Vada Chrisman Roberts passed away in
1991, leaving Trust B payable to her four children, including John Roberts,
Isgro’s father. John Roberts predeceased Vada Chrisman Roberts, leaving
his share payable to Isgro and her two siblings.

¶3           In this lawsuit, Isgro alleges Appellees acted improperly
while administering either the Estate or its related trusts many years ago.
We set forth the undisputed facts regarding the Appellees’ involvement
below.

       I.     Wells Fargo, the Estate, and Trust B

¶4             First Interstate Bank of Arizona, N.A. (“First Interstate”), now
owned by Wells Fargo, served as personal representative for the Estate and
as trustee of Trust B. First Interstate wrote Isgro in 1992 to inform her that
it was ready to make cash distributions of her Trust B share, but that it was
not possible to liquidate the land contracts Trust B held at that time. First
Interstate wrote that Isgro and the other beneficiaries “would receive the
contracts outright as . . . interest beneficiar[ies]” and asked how she would

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                      ISGRO v. WELLS FARGO, et al.
                          Decision of the Court

like the property to be titled. She responded that she would accept title as
joint tenants with her husband, Carmelo P. Isgro.

¶5            Isgro also received assignments of her beneficial interest in
three other trusts, referred to as “Trust No. 6588,” “Trust No. 6369,” and
“CSC Trust No. 9950” in 1992. Isgro received approximately $122,000 in
distributions in 1992, with the last distribution occurring in December.
Shortly after receiving her last distribution, Isgro contacted First Interstate
to inquire about a parcel, and she was reassured the bank “would defend
and send a representative to protect the best interests of the Estate.”

       II.    First American and Trust No. 6588

¶6            The Estate conveyed certain property to Trust No. 6588 in
1978. Isgro received payments from Trust No. 6588 through First American,
its then-administrator, until 1993. First American closed Trust No. 6588 in
1995.

¶7            Isgro communicated with First American in 1996 expressing
concern that certain payments owed to her had become delinquent. Nearly
twenty years later, she alleged that “from 1993 up until the present time
certain parcels of real estate whereby Isgro held recorded interests . . . have
been acquired . . . for values that total more than $900,000,000.” She also
alleged she is entitled to “financial benefits” from these “subsequent
transactions.”

       III.   Security Title and Trust No. 6369

¶8            In 1992, Security Title became trustee of Trust No. 6369, which
had been established to hold certain real property and land grazing rights.
Prior to Security Title’s involvement, the original Trust No. 6369’s “Second
Beneficiary,” Goldie Brown Homestead, reached an agreement with the
original “first beneficiaries” under which it agreed to pay four million
dollars over time for the trust property. Isgro, as a subsequent “first
beneficiary,” received annual payments from Trust No. 6369 from 1993 to
1997 stemming from these transactions.

¶9             Isgro expected to receive another payment in 1998 and
contacted Security Title when it did not arrive. According to Isgro, a
Security Title employee told her (1) the 1997 payment was her last payment;
(2) she had received her full share of payments; and (3) Trust No. 6369 had
no more assets. Isgro did not follow-up on this conversation.

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                      ISGRO v. WELLS FARGO, et al.
                          Decision of the Court

¶10         In 1998, Security Title conveyed the Trust No. 6369 property
to Goldie Brown Ranch Limited Partnership (“GBRLP”) and closed the
trust. GBRLP sold the property to the City of Scottsdale in 1999.

       IV.    The Current Dispute

¶11           In early 2015, Isgro wrote Appellees on behalf of “the first
beneficiaries of the Goldie C. Brown Estate” alleging each had breached its
fiduciary duties in the transactions described above and demanding
compensation. She then sued in September 2015 alleging breach of contract,
breach of the implied covenant of good faith and fair dealing, breach of
fiduciary duty, fraud, and negligence.

¶12           As against Wells Fargo, Isgro alleged having been told
“[s]ubsequent to 1993 . . . that any real estate that remained with the Estate
was worthless, mountainous with steep slopes, and unable to be
developed.” She also alleged that Wells Fargo “executed a Final Plat” on
land she had “recorded interests on” in 2000 and that she “never received
notice or financial compensation” relating to the “Final Plat.” She further
alleged that Wells Fargo, as the personal representative of the Estate, was
responsible for the alleged misconduct of First American and Security Title.

¶13           As for First American, Isgro alleged that, after receiving the
last payment from Trust No. 6588 in 1993, First American told her that “ten
land contracts were delinquent.” She further alleged having provided First
American with “documentation” regarding the contracts in 1995 and 1996,
but First American “failed to protect the assets of the Estate.”

¶14           As for Security Title, Isgro alleged she was entitled to a “1.67
percent” share of the purchase funds GBRLP received from the City of
Scottsdale in 1999. She also contends Security Title failed to pay her share
of a reimbursement Trust No. 6369 received from the state relating to
grazing leases.

¶15            First American moved for summary judgment in April 2017,
contending, among other things, that Isgro’s claims were time-barred under
the applicable statutes of limitations and the doctrine of laches. Shortly
thereafter, Isgro moved for leave to amend her complaint to add four new
plaintiffs—Porter, Bergman, and her siblings Gail Leonard Turner and
Robert Leonard.       Each Appellee opposed the proposed amended
complaint. Wells Fargo and Security Title also moved for summary
judgment on statute of limitations and laches grounds.

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                       ISGRO v. WELLS FARGO, et al.
                           Decision of the Court

¶16           The trial court denied leave to amend and granted summary
judgment on Isgro’s contract claims. In denying leave to amend, the court
found that adding the new plaintiffs would “substantially change the size
of the claimed damages” and “raise[] new issues requiring preparation for
factual discovery which would not otherwise have been necessitated nor
expected.” The court also noted that the discovery cutoff was less than forty
days away and that Isgro “present[ed] no persuasive reason for her delay
in filing an amendment.” The court also determined that the proposed
amendments were futile because “[t]here is a two-year statute of limitations
for breach of trust” and “[t]he four new plaintiffs have known about this
cause of action for more than two years.”

¶17           The court later granted summary judgment to all three
Appellees, finding the applicable statutes of limitations and laches barred
Isgro’s tort claims. The court entered final judgment and awarded
attorneys’ fees to Appellees pursuant to Arizona Revised Statutes
(“A.R.S.”) sections 12-341.01(A) and 14-11004. Isgro timely appealed the
judgment and the denial of her motion for leave to amend the complaint.
We have jurisdiction pursuant to A.R.S. § 12-2101(A)(1).

                                  ANALYSIS

       I.     The Court Did Not Err in Granting Summary Judgment

¶18           On review of a grant of summary judgment, we determine de
novo whether any genuine issues of material fact exist and whether the trial
court properly applied the law. Sign Here Petitions LLC v. Chavez, 243 Ariz.
99, 104, ¶ 13 (App. 2017). We view the facts and reasonable inferences in
the light most favorable to Isgro as the non-prevailing party. Id. Summary
judgment should be granted only “if the facts produced in support of [a]
claim . . . have so little probative value, given the quantum of evidence
required, that reasonable people could not agree with the conclusion
advanced by the proponent of the claim.” Orme Sch. v. Reeves, 166 Ariz. 301,
309 (1990).

              A.      Statute of Limitations

¶19           Each of Isgro’s tort claims is subject to a two- or three-year
limitations period.1 See A.R.S. § 14-11005(C)(2) (“[A] judicial proceeding by

1       The trial court granted summary judgment on Isgro’s contract claims
based on its conclusion that “’[a] trustee who fails to perform his duties . . .
is not liable to the beneficiary for breach of contract.’” In re Naarden Tr., 195

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                       ISGRO v. WELLS FARGO, et al.
                           Decision of the Court

a beneficiary against a trustee for breach of trust must be commenced
within two years after the . . . termination of the beneficiary’s interest in the
trust.”); A.R.S. § 12-543(3) (setting a three-year limitations period for fraud
claims); Coulter v. Grant Thornton, LLP, 241 Ariz. 440, 444, ¶ 9 (App. 2017)
(explaining the two-year limitations period of A.R.S. § 12-542 applies to
breach of fiduciary duty, professional negligence, and negligent
misrepresentation claims). “Given our preference to resolve claims on their
merits, the statute of limitations defense is not favored.” Coulter, 241 Ariz.
at 444, ¶ 7 (internal quotation omitted). “Nevertheless, claims that are
clearly brought outside the relevant limitations period are conclusively
barred.” Id.

¶20          Generally, a cause of action accrues, and the limitations
period begins to run when the plaintiff becomes aware of information that
would put a reasonable person on notice to investigate whether a claim
exists. Walk v. Ring, 202 Ariz. 310, 316, ¶¶ 22-23 (2002). Accrual thus
normally presents a question of fact for the jury. Doe v. Roe, 191 Ariz. 313,
323, ¶ 32 (1998). Here, however, the Appellees presented undisputed
evidence showing Isgro had sufficient knowledge to investigate the alleged
wrongdoing many years before she sued in 2015.

¶21           Wells Fargo established that Isgro understood her last
distribution would arrive in December 1992, having already received
approximately $122,000, and that she received assignments of her beneficial
interest in Trust No. 6588, Trust No. 6369, and CSC Trust No. 9950 during
that same timeframe. It also established that she contacted First Interstate
to request that it foreclose on an unidentified parcel shortly after receiving
her last distribution but did nothing thereafter until she sent her 2015
demand letter.

¶22            First American established that it made its last payment to
Isgro in 1993 and closed Trust No. 6588 in 1995. It also established that Isgro
communicated with First American demanding it act upon allegedly
delinquent accounts in 1996. Despite believing First American did not meet
that demand, she did not take further action until 2012.

¶23        Security Title established that Isgro knew her Trust No. 6369
payments would start in 1993. When those payments ended in 1998, she

Ariz. 526, 529, ¶ 12 (App. 1999) (quoting Restatement (Second) of Trusts
§ 197 cmt. b (1959)). Isgro does not challenge that ruling on appeal.

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                       ISGRO v. WELLS FARGO, et al.
                           Decision of the Court

contacted Security Title and was told she would not receive any further
payments. She took no further action for approximately fourteen years.

                      1.     Discovery Rule

¶24          While Isgro does not dispute these facts, she contends the
discovery rule tolled the applicable limitations periods because she
“believed the Appellees when they indicated everything was satisfactory”
and had “no reason to question anything.” We disagree.

¶25              It is the plaintiff’s burden to show the discovery rule applies.
Wyckoff v. Mogollon Health All., 232 Ariz. 588, 591, ¶ 9 (App. 2013). The
statements Isgro claims to have “believed”—and apparently chose not to
investigate—were made in the 1990s. She contends she was not “led to
question whether Appellees had concealed anything in the early/mid
1990s” until she purportedly “discovered numerous documents regarding
the Estate and Trusts that she had never received or seen before,” but offers
only her own conclusory testimony in support. This self-serving testimony
is, by itself, insufficient to overcome summary judgment. See e.g., Florez v.
Sargeant, 185 Ariz. 521, 526 (1996). Moreover, the discovery rule does not
allow Isgro to profess longstanding ignorance when a reasonable
investigation—which ostensibly would have included searching for and
reviewing the Estate and trust documents she claims to have first
discovered in 2014—would have alerted her to what she now alleges to
have been Appellees’ misconduct many years earlier. Gust, Rosenfeld &
Henderson v. Prudential Ins. Co. of Am., 182 Ariz. 586, 589 (1995) (The
discovery rule generally applies only where “[t]he injury or the act causing
the injury, or both, have been difficult for the plaintiff to detect.”) (internal
quotation omitted).

                      2.     Fraudulent Concealment

¶26            Citing Walk, Isgro also contends actual knowledge is required
to trigger the statute of limitations for claims alleging a breach of the
fiduciary duty of disclosure. There, our supreme court held “if fraudulent
concealment is established, the [plaintiff] is relieved of the duty of diligent
investigation required by the discovery rule and the statute of limitations is
tolled until such concealment is discovered, or reasonably should have been
discovered.” Walk, 202 Ariz. at 319, ¶ 35 (internal quotation omitted)
(emphasis added).

¶27          Fraudulent concealment requires clear and convincing
evidence. Wells Fargo Bank v. Ariz. Laborers, Teamsters & Cement Masons Local
No. 395 Pension Tr. Fund, 201 Ariz. 474, 498 n.24, ¶ 98 (2002). The only

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                      ISGRO v. WELLS FARGO, et al.
                          Decision of the Court

evidence Isgro offered to show fraudulent concealment was her own
conclusory testimony. Bald accusations of fraudulent concealment do not
constitute clear and convincing evidence. See KCI Rest. Mgmt. LLC v. Holm
Wright Hyde & Hays PLC, 236 Ariz. 485, 489, ¶ 14 (App. 2014). Isgro thus
failed to show that Appellees did anything to prevent her from inquiring
into or investigating her rights well before 2014. See Anson v. Am. Motors
Corp., 155 Ariz. 420, 427 (App. 1987) (“In general, to toll the statute of
limitations the fraud must prevent inquiry, elude investigation or mislead
the party who claims the cause of action.”). And the trial court did not err
in finding that her claims were time-barred based upon the undisputed
evidence discussed above.

              B.     Laches

¶28            Laches generally will bar a claim when a plaintiff
unreasonably delays filing suit and the delay prejudices the opposing
parties. See League of Ariz. Cities & Towns v. Martin, 219 Ariz. 556, 558, ¶ 6
(2009); In re Indenture of Tr. Dated January 13, 1964, 235 Ariz. 40, 48, ¶ 22
(App. 2014). Because we affirm the trial court on the limitations issue, we
need not reach its ruling on laches.2

       II.    The Trial Court Did Not Abuse Its Discretion in Denying Leave to
              Amend the Complaint

¶29             Isgro also contends the trial court erred in denying leave to
amend her complaint to add the four new plaintiffs. When a party seeks
leave to amend before trial, it should be “freely given when justice
requires.” Ariz. R. Civ. P. 15(a)(2). A court may deny leave to amend,
however, if it finds “undue delay, bad faith, dilatory motive, repeated
failure to cure deficiencies by previous amendments or undue prejudice to
the opposing party.” Carranza v. Madrigal, 237 Ariz. 512, 515, ¶ 13 (2015)
(internal quotation omitted). We review the denial of a motion for leave to
amend the complaint for an abuse of discretion. Timmons v. Ross Dress For
Less, Inc., 234 Ariz. 569, 572, ¶ 17 (App. 2014). “In determining whether the

2       We do note, however, that the record in this case adequately
supports the trial court’s findings concerning unreasonable delay on the
part of Isgro, the prejudice to Appellees and to the administration of the
Estate as a result of such delay, and the inequity that would result if Isgro
were allowed to pursue her stale claims. See Prutch v. Town of Quartzsite,
231 Ariz. 431, 435, ¶ 13 (App. 2013) (“[L]aches bars a claim when, under the
totality of circumstances, the delay in prosecuting the claim would produce
an unjust result.”) (internal quotation omitted).

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                      ISGRO v. WELLS FARGO, et al.
                          Decision of the Court

court abused its discretion, we presume that the facts alleged in the
[proposed amended] complaint are true.” Id. (internal quotation omitted).

              A.     Undue Delay

¶30            The proposed new plaintiffs are Isgro’s siblings and cousins
who allegedly “had a share in the same land/Estate assets.” Isgro
acknowledged having “discovered the basis for these claims . . . after her
mother passed away in late 2012” and having written demand letters on
their behalf in 2015. She characterizes her two-year delay in seeking leave
to amend the complaint as an “understandable and honest mistake”
because she, as a pro per litigant, “mistakenly thought they could come in at
any time.” We note Isgro retained her current counsel in December 2015
yet still chose not to seek leave to amend until May 2017. On this record,
the trial court did not abuse its discretion in finding undue delay.

              B.     Undue Prejudice

¶31             Undue prejudice for purposes of denying leave to amend can
be found in “the inconvenience and delay suffered when the amendment
. . . inserts new parties into the litigation.” Carranza, 237 Ariz. at 515, ¶ 13
(internal quotation omitted). Isgro contends only minimal additional
discovery would have been needed because the new plaintiffs’ claims are
“identical” to hers. This assertion conflicts with her admission that
Bergman and Porter not only were beneficiaries of a different trust but were
entitled to different percentages of that trust. Bergman and Porter also
directly received one fifth of the Estate under the Will.

¶32            Isgro attempts to dismiss these differences by arguing her
claims were “for damage to the Estate as a whole,” but neither she nor any
of the proposed new plaintiffs purported to represent the Estate. We thus
conclude the trial court did not abuse its discretion in denying leave to
amend the complaint based upon undue prejudice.3 See Haynes v. Syntek
Fin. Corp., 184 Ariz. 332, 336 (App. 1995).

       III.   The Trial Court Did Not Abuse Its Discretion in Awarding
              Appellees Attorneys’ Fees

¶33           The Appellees requested, and the trial court awarded,
attorneys’ fees pursuant to A.R.S. § 14-11004 and § 12-341.01(A). We note,

3      Because we conclude the trial court did not abuse its discretion in
finding undue delay and prejudice, we need not decide whether the
proposed new plaintiffs’ claims were futile.

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                      ISGRO v. WELLS FARGO, et al.
                          Decision of the Court

however, § 12-341.01(A) only applies to disputes “arising out of a contract,”
and this court has held lawsuits arising out of a trust relationship are not
suits “arising out of a contract” for purposes of awarding attorneys’ fees
under § 12-341.01(A). See e.g., Owner-Operator Indep. Drivers Ass’n v. Pac.
Fin. Ass’n, Inc., 241 Ariz. 406, 416, ¶ 39 (App. 2017). Nevertheless, because
the trial court also based its award on § 14-11004, we will affirm its decision
absent an abuse of discretion. See City of Phoenix v. Geyler, 144 Ariz. 323, 330
(1985) (“We recognize the obligation of appellate courts to affirm where any
reasonable view of the facts and law might support the judgment of the trial
court.”); Peterson v. City of Surprise, 244 Ariz. 247, 253, ¶ 25 (App. 2018).

¶34            Isgro generally challenges the award of “$266,975.30 in
attorney[s’] fees to Defendants,” but she did not oppose Wells Fargo’s or
Security Title’s fee applications. She therefore has waived her challenges to
those awards. See Englert v. Carondelet Health Network, 199 Ariz. 21, 26, ¶ 13
(App. 2000).

¶35           As for the fee award to First American, Isgro contends the trial
court should not have awarded fees because it “never reached the actual
merits of [her] claims.” A.R.S. § 14-11004(A) does not impose such a
limitation. Section 14-11004(A) authorizes a trustee to recover reasonable
fees that “arise out of and that relate to the good faith defense or
prosecution of a judicial . . . proceeding involving the administration of the
trust, regardless of whether the defense or prosecution is successful.” First
American obviously asserted a good faith defense to Isgro’s claims for
purposes of § 14-11004(A) and is therefore entitled to an award of fees for
its defense.

¶36           Isgro next contends the fee award will cause hardship but
only argues First American “is a billion-dollar company.” First American’s
size has no bearing on whether a fee award would cause Isgro to suffer
hardship, and she offered no evidence to show such hardship would arise.
See Rudinsky v. Harris, 231 Ariz. 95, 102, ¶ 32 (App. 2012) (“[T]he party
asserting financial hardship has the burden of coming forward with prima
facie evidence of financial hardship.”).

¶37             Finally, Isgro asserts the trial court should not have awarded
First American any fees it incurred before filing its answer because it did
not request fees in either its joinder in Wells Fargo’s motion to dismiss or
its separate motion to dismiss, both of which predated its answer. Citing
Balestrieri v. Balestrieri, 232 Ariz. 25 (App. 2013), she contends a defendant
who does not request fees in a motion to dismiss forfeits any claim to
attorneys’ fees.

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                      ISGRO v. WELLS FARGO, et al.
                          Decision of the Court

¶38            Arizona Rule of Civil Procedure 54(g)(1), which was revised
to codify Balestrieri, only requires that a fee claim be made “in the pleadings
or in a Rule 12 motion filed before the movant’s responsive pleading.” Ariz.
R. Civ. P. 54(g)(1). First American requested attorneys’ fees in its answer,
thus satisfying Rule 54(g)(1). Moreover, Balestrieri is distinguishable
because the court there granted defendant’s motion to dismiss and the
plaintiff never received notice that fees would be sought. Balestrieri, 232
Ariz. at 28, ¶ 11 (“[W]e hold that such a defendant forfeits his claim for fees
by waiting to ask for fees until after the superior court grants his motion to
dismiss.”). Isgro had ample notice of First American’s fee claim. We thus
affirm it.

       IV.    Appellees May Recover Reasonable Attorneys’ Fees and Costs on
              Appeal

¶39             Appellees request their attorneys’ fees incurred on appeal
pursuant to A.R.S. § 14-11004(A). We may order the attorneys’ fees be paid
by any other party to the action or the trust at issue. A.R.S. § 14-11004(B);
In re Estate of King, 228 Ariz. 565, 572-73, ¶ 29 (App. 2012). Isgro’s claims
arise out of the administration of the Estate and its related trusts, all of
which have been closed for many years and no longer have resources to pay
a fee award. We therefore award Appellees their reasonable attorneys’ fees
and costs, to be paid by Isgro, upon compliance with Arizona Rule of Civil
Appellate Procedure 21.

                               CONCLUSION

¶40           We affirm the trial court’s rulings.

                          AMY M. WOOD • Clerk of the Court
                          FILED: AA

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