Fletcher et al v. Lupo et al
Filing
117
MEMORANDUM OPINION. Signed by Judge R David Proctor on 9/20/2017. (KAM, )
FILED
2017 Sep-20 AM 09:43
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
MAJOR GENERAL PAUL FLETCHER,
et al.,
Plaintiffs,
v.
ROBERT PARK WILSON, et al.
Defendants.
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Case No.: 2:08-cv-01844-RDP
MEMORANDUM OPINION
This case is before the court on Defendant Robert Park Wilson’s Motion for Relief From
Final Judgment Pursuant to Fed. R. Civ. P. 60(b)(4) and Motion to Quash Service by Publication.
(Doc. # 100). The parties have fully briefed the motion. (See Docs. # 101, 102). Following a
status conference, and pursuant to the court’s order, the parties submitted a Joint Report
discussing the undisputed facts, alongside their respective proposed findings of fact. (See Docs.
# 112, 112-1, 112-2, & 112-3). The court held oral argument on the motion on September 6,
2017, and the parties have agreed that an evidentiary hearing is unnecessary. (Doc. # 112 at 4).
After careful review of the motion and evidentiary submissions, and with the benefit of oral
argument, the court concludes that Defendant’s Motion for Relief From Final Judgment (Doc. #
100) is due to be granted.
I.
Background
A.
Procedural History of This Action
In September 2008, Plaintiffs filed this suit in the Circuit Court of Jefferson County,
Alabama. (See Doc. # 1-1 at 2-22).
Plaintiffs identified Defendant Wilson as a real estate
investor, a managing member of DPG Watts, LLC, and the secretary for Denali Investment
Group, Inc. (Id. at 2). They alleged that Wilson conducted business in Alabama. (Id.). They
asserted in the initial complaint that Wilson could be served at the offices of Denali Investment
Group. (Id. at 22).
After suit was filed, the Circuit Court’s clerk stated in an affidavit that Wilson had
refused to accept service on September 12, 2008. (Id. at 28). The clerk sent a copy of the
summons and complaint to Wilson at Denali Investment Group’s offices in Birmingham. (Id.).
Accordingly, the clerk deemed Wilson to be served in September 2008. (Id.). In October 2008,
Defendant Dan Pena removed this case to this court. (Doc. # 1).
In February 2011, Plaintiffs moved for the court to enter default against Defendants
Wilson, DPG Watts, and Denali Investment Group. (Doc. # 50). The Clerk of Court entered
default against Wilson on February 28, 2011. (Doc. # 52). In March 2011, Plaintiffs then moved
for default judgment against Wilson, DPG Watts, and Denali Investment Group. (Doc. # 53).
On March 24, 2011, the Magistrate Judge (who was then presiding over this action) held a
hearing on the default judgment motion. (Doc. # 57 at 1). During the hearing, he found that
Plaintiffs had failed to properly serve DPG Watts. (Id.).
Following the hearing, the Magistrate Judge reviewed the record and questioned the
service effectuated on Defendants Wilson and Denali Investment Group.
(Id.).
He
acknowledged the Circuit Court clerk’s affidavit, but questioned whether Wilson could be served
in his individual capacity at Denali Investment Group. (Id. at 1 n. 1). The Magistrate Judge
ordered Plaintiffs within 20 days to either prove that they had completed service on Wilson or
attempt service. (Id. at 1).
2
In response, Plaintiffs moved to serve Wilson and three other Defendants by publication.
(Doc. # 59 at 1). Plaintiffs claimed that service of Wilson had already been completed pursuant
to Alabama Rule of Civil Procedure 4(e) by mailing the summons and complaint to his thencurrent address after he had refused service. (Id. at 4). They argued that this method of service
complied Federal Rule of Civil Procedure 4(e)(1). (Id. at 4-5). They further explained that their
attorney had attempted to send documents to Wilson at the “address provided on the Secretary of
State of Alabama’s website,” but the documents were returned to sender because Wilson was not
at the address and no forwarding address was available. (Id. at 5).
Furthermore, Plaintiffs averred that, in April 2011, Plaintiffs’ counsel conducted a search
of public records on Lexis and sent a process server to the most recent address discovered in that
search. (Id.). Plaintiffs’ process server discovered a mailbox and a vacant lot at that address.
(Id.). Based upon these events, Plaintiffs argued that Wilson both “refused to accept service and
attempted to dodge service by providing multiple fictitious or erroneous addresses.” (Id.). They
asked this court to either find that Wilson had been served in 2008 or grant them leave to serve
him by publication. (Id. at 5-6). Among other exhibits, Plaintiffs filed an affidavit from their
process server. (See Doc. # 59-4).
On April 15, 2011, the Magistrate Judge denied Plaintiffs’ initial motion for service by
publication. (See Doc. # 60). With regard to Defendant Wilson, he found that the affidavit
proffered by Plaintiffs failed to meet the requirements of Alabama Rule of Civil Procedure 4.3(d)
because neither Plaintiffs nor their counsel issued the affidavit. (Id. at 2). Moreover, he found
that Plaintiffs had failed to attempt service on Wilson properly in his individual capacity. (Id. at
2-3 n. 2). The Magistrate Judge directed Plaintiffs to attempt to serve Wilson properly in his
individual capacity. (Id. at 3).
3
On March 31, 2011, the court issued Plaintiffs a summons for Wilson. (See Doc. # 63).
The summons stated that Wilson resided at 8610 Eastern Hills Drive, # D, Cottondale, Alabama
35453. (Id. at 1). Carl Robinson returned the summons unexecuted in April 2011 because no
residence existed at the address listed on the summons. (Id. at 2; Doc. # 66).
In May 2011, Plaintiffs again requested leave to serve Wilson by publication. (Doc. #
67). They incorporated by reference their earlier motion for leave to serve by publication. (Id. at
1). In support of this renewed motion, Plaintiffs’ attorney filed a supporting affidavit, in which
he described his attempts to serve Wilson via mail and process server in 2008 and 2011. (See
Doc. # 67-1 at 5-6). Specifically, Plaintiffs’ counsel discussed the refused service in September
2008, the Circuit Court’s mailing to Wilson in September 2008, his attempts to send documents
to Wilson, and the process server’s attempt to serve Wilson in April 2011. (See id.). After
describing the failed attempts to serve Wilson, Plaintiffs’ counsel averred that Wilson had
refused to accept service and attempted to dodge service. (Id. at 6). The attorney stated that
Wilson’s current address was unknown and could not be ascertained through reasonable
diligence. (Id.). Plaintiffs’ counsel never mentioned in his affidavit to the court that Wilson had
relocated to Central America. (See generally Doc. # 67-1).
The Magistrate Judge reviewed the affidavit from Plaintiffs’ counsel and found that (1)
four defendants, including Wilson, had avoided service and (2) those Defendants could not be
located. (Doc. # 74 at 2). He recounted the standard for authorizing service by publication under
Alabama law (id. at 1), and found that Plaintiffs had met their burden to justify service by
publication.
(Id. at 2).
Thus, the Magistrate Judge granted Plaintiffs leave to serve four
Defendants, including Wilson, by publication pursuant to Alabama Rule of Civil Procedure 4.3.
(Id.).
4
In October 2011, the Clerk of Court issued a notice for service by publication. (Doc. #
76). The Clerk directed Plaintiffs to publish the notice in The Birmingham News, a newspaper
published in Jefferson County. (Id.). In November 2011, Plaintiffs notified the court that service
by publication on Defendants Wilson, Denali Investment Group, and DPG Watts had been
completed on November 21, 2011. (Doc. # 82). The Clerk of Court entered default against
Defendant Wilson in December 2011. (Doc. # 88).
On December 19, 2011, the Magistrate Judge issued a report and recommendation on
Plaintiffs’ motion for default judgment. (Doc. # 89). He recounted that Plaintiffs had attempted
“repeated unsuccessful attempts of service on Wilson” and that the court had authorized service
by publication. (Id. at 1-2). He described the damages Plaintiffs sought for fraud and case
expenses. (Id. at 2). And, he explained that Plaintiff Kathy Fletcher had testified in support of
Plaintiffs’ claims and accounting during a March 2011 hearing. (Id.). After reviewing the
complaint and the evidence presented during an evidentiary hearing, the Magistrate Judge
concluded that Wilson, Denali Investment Group and DPG Watts were liable for breach of
fiduciary duty, breach of contract, fraud, and unjust enrichment. (Id. at 3). He concluded that
these Defendants were not liable for intentional infliction of emotional distress, civil conspiracy,
or violating the Alabama Securities Act. (Id. at 3 n. 1). The Magistrate Judge recommended
granting Plaintiffs default judgment in the amount of $402,064.24. (Id.). Obviously, Plaintiffs
did not object to the Magistrate Judge’s Report and Recommendation.
In January 2012, another judge of this court adopted and approved the Magistrate Judge’s
Report and Recommendation. (Doc. # 95 at 2). The district judge independently reviewed the
file and “reached an independent conclusion” that default judgment should be granted. (Id.).
5
The court granted Plaintiffs a default judgment of $402,064.24 against Defendants Wilson,
Denali Investment Group, and DPG Watts. (Doc. # 96).
B.
Facts Regarding Defendant Wilson’s Residency
Defendant Wilson traveled to San Jose, Costa Rica in May 2007 with his wife and son.
(See Doc. # 112-1 at 11). Wilson sold his residence in the United States in June 2007. (Doc. #
112 at 3). According to a memorandum from Defendant Damion Lupo, Wilson resigned from
the Denali Organization in August 2007. (Doc. # 112-1 at 51).
Certain events that occurred before this lawsuit was filed are important to understanding
the service issues in this case. On January 14, 2008, in a separate and earlier filed case,
Richardson Construction Company sued Wilson, DPG Watts, Denali Property, and several other
defendants for breach of contract, enforcement of a lien, and fraudulent misrepresentation. (Doc.
# 101-1). Richardson Construction instructed the Circuit Court of Jefferson County to serve
Wilson at 917 Ridgewood Circle, Birmingham, Alabama 35235. (Id. at 7). The Circuit Court’s
clerk sent service by certified mail to that address. (See Doc. # 101-2). The certified mail was
accepted on January 26, 2008, and Wilson’s name and signature appear on the certified mail
receipt. (Id. at 2). Wilson denies signing the receipt. (Doc. # 112-3 at 3).
Two weeks later, on January 31, 2008, the members of DPG Watts removed Wilson from
its membership. (Id. at 18). Plaintiffs’ son, Cannon Fletcher, participated in the meeting to
remove Wilson from DPG Watts. (Doc. # 112 at 2). Wilson was removed from DPG Watts
“due to his absence from the United States and his relocation to Central America.” (Id.).
Cannon Fletcher actively advised his parents about their investment with DPG Watts and Denali
Investment Group. (Id.). The parties agree that Plaintiffs heard of Wilson’s relocation to Central
America, but Plaintiffs (apparently) contend they did not understand that he had changed
6
residences. (Id.). Thus, “[w]hen process was attempted in September 2008[,] the Plaintiffs were
aware that Robert Park Wilson had relocated to Central America.”1 (Id. at 3).
II.
Standard of Review
Federal Rule of Civil Procedure 60(b) provides parties with a limited avenue for seeking
relief from final judgments. Gonzalez v. Crosby, 545 U.S. 524, 528 (2005). In particular, Rule
60(b)(4) allows parties to seek relief from final judgments that are “void.” Fed. R. Civ. P.
60(b)(4). Such relief is available when a judgment is “so affected by a fundamental infirmity
that the infirmity may be raised even after the judgment becomes final.” United Student Aid
Funds, Inc. v. Espinosa, 559 U.S. 260, 270 (2010). The party challenging a default judgment
due to the insufficiency of service bears the burden of proof to establish insufficiency of service.
Ostane v. Jim Wright Marine Constr., Inc., 2010 WL 3385048, at *2 (S.D. Fla. Aug. 24, 2010).
“A judgment is ‘void’ under Rule 60(b)(4) if it was rendered without jurisdiction of the
subject matter or the parties or in a manner inconsistent with due process of law.” Oakes v.
Horizon Fin., S.A., 259 F.3d 1315, 1319 (11th Cir. 2001). “Federal courts considering Rule
60(b)(4) motions that assert a judgment is void because of a jurisdiction defect generally have
reserved relief only for the exceptional case in which the court that rendered judgment lacked
even an ‘arguable basis’ for jurisdiction.” United Student Aid Funds, 559 U.S. at 271. Indeed,
“it is well-settled that a mere error in the exercise of jurisdiction does not support relief under
Rule 60(b)(4).” Oakes, 259 F.3d at 1319. Rather, a Rule 60(b)(4) motion will only sound in
those instances where there was a “total want of jurisdiction.” United States v. Boch Oldsmobile,
Inc., 909 F.2d 657, 661 (1st Cir. 1990). That being said, the court possesses no discretion to
1
At oral argument, Plaintiffs’ counsel stated that Plaintiffs did not know that Wilson had moved abroad
when they attempted to serve him by publication. But, the undisputed statement of facts, signed by Plaintiffs’
counsel, asserts that Plaintiffs were aware of his relocation to Central America when they attempted to serve him in
2008. (Doc. # 112 at 3). And, Plaintiffs did not dispute that assertion when they responded to Defendant Wilson’s
proposed statement of facts. (See Docs. # 112-1 at 6; 112-2 at 4).
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deny relief to Wilson if the default judgment is void. Rismed Oncology Sys., Inc. v. Baron, 638
F. App’x 800, 805 (11th Cir. 2015).
III.
Analysis
Defendant Wilson argues that the default judgment against him should be set aside
because Plaintiffs should not have been authorized to perform service by publication. (See Doc.
# 100 at 8-10). Wilson asserts that Plaintiffs utilized an inappropriate means of service on an
individual when they tried to serve him through mail to his former business. (Id. at 10).
Additionally, Wilson claims that Plaintiffs offered a conclusory affidavit from counsel to support
their motion to serve Wilson by publication. (Id.). According to Wilson, because Plaintiffs
failed to establish that he had avoided service of process in the motion for service by publication,
this court erred in granting them leave to serve him by publication and lacked in personam
jurisdiction to impose the default judgment. (Id. at 11-12).
After reviewing the parties’ briefs and the record, the court finds two deficiencies in
Plaintiffs’ attempts to serve Defendant Wilson by publication. First, Plaintiffs should have
served Defendant Wilson under Federal Rule of Civil Procedure 4(f), not Rule 4(e). Second,
Plaintiffs failed to make a sufficient showing that Defendant Wilson had avoided service when
they requested leave to serve Wilson by publication, and therefore service by publication under
Alabama Rule of Civil Procedure 4.3 was not proper. The court discusses each of these issues,
in turn.
A.
Plaintiffs Failed to Seek Service by Publication Under the Appropriate
Federal Rule of Civil Procedure
“Generally, where service of process is insufficient, the court has no power to render
judgment and the judgment is void.” In re Worldwide Web Sys., Inc., 328 F.3d 1291, 1299 (11th
Cir. 2003). As this motion concerns a default judgment, and default judgments generally are
8
disfavored, “there must be strict compliance with the legal prerequisites establishing the court’s
power to render the judgment.” Varnes v. Local 91, Glass Bottle Blowers Ass’n of U.S. &
Canada, 674 F.2d 1365, 1369 (11th Cir. 1982).
The Federal Rules of Civil Procedure permit a plaintiff to serve an individual defendant
in a judicial district of the United States by following state law for serving a summons in the
state where the district is located. Fed. R. Civ. P. 4(e)(1). But, the Rules of Civil Procedure
provide for different means of service for individuals in foreign countries. Fed. R. Civ. P. 4(f).
An individual in a foreign country may be served by (1) internationally agreed means, (2)
methods prescribed by the foreign country, (3) methods directed by a foreign authority in
response to a letter rogatory or letter of request, (4) individual delivery or mail that requires a
signed receipt, unless prohibited by the foreign country’s law, or (5) “other means not prohibited
by international agreement, as the court orders.” Id. Significantly, the rule for service of an
individual in a foreign country does not permit service in accordance with state law in the state
where the district court is located. See generally id. Service under Rule 4(e) is only proper
where an individual is a resident within a judicial district of the United States. E.g., Elisan Ent’t,
Inc. v. Suazo, 206 F.R.D. 335, 336 (D.P.R. 2002) (denying leave to serve defendants in the
Dominican Republic by publication under a Puerto Rican rule of procedure); 4B Charles Alan
Wright & Arthur R. Miller, Federal Practice and Procedure Civil § 1133 (4th ed. 2013)
(“[S]ubdivision (f) of Rule 4 represents a comprehensive provision for service of summons and
the complaint on individuals . . . in a foreign country.”).
Under Rule 4(f)(3), a court has wide discretion to determine the means for effectuating
service of process. BP Prods. N.A., Inc. v. Dagra, 236 F.R.D. 270, 271 (E.D. Va. 2006). A
court should attempt to “devise a method of communication that is consistent with due process
9
and minimizes offense to foreign law.” Id. at 271-72 (quoting Export-Import Bank of the U.S. v.
Asia Pulp & Paper Co., 2005 WL 1123755, at *4 (S.D.N.Y. May 11, 2005)). A court may
approve service by publication under Rule 4(f)(3), including in situations where a defendant’s
“exact whereabouts are unknown.” Id. at 272 (relying on S.E.C. v. Tome, 833 F.2d 1086 (2d Cir.
1987)). “[S]ervice by publication to a defendant in a foreign country is an acceptable alternative
means under [Rule] 4(f)(3), so long as diligent attempts have been made to locate the defendant
and serve process by traditional means, and the publication is one that likely would reach the
defendant. Additionally, courts in previous cases have noted the importance of the defendant
possessing some knowledge that he might be subject to a suit.” Id.
Plaintiffs’ service by publication on Defendant Wilson is fatally flawed in two respects.
First, Plaintiffs did not ask this court to authorize service by publication against Defendant
Wilson under Federal Rule of Civil Procedure 4(f), even though they knew that Defendant
Wilson had relocated outside of the United States before this suit was filed. (See generally Docs.
# 59, 67, & 67-1). (See also Doc. # 112 at 3). Consequently, counsel’s affidavit did not allow
for a determination as to which publication method was an appropriate means of service under
the circumstances. Nor did counsel’s affidavit show that he and his firm had made diligent
efforts to locate an individual Defendant who had relocated abroad, as the affidavit never
discussed Wilson’s relocation to Central America. Cf. BP Prods., 236 F.R.D. at 272. As
Plaintiffs were aware that Defendant Wilson had relocated from the United States to Central
America (see Doc. # 112 at 3), they should have moved for leave to serve Defendant Wilson
under Rule 4(f), rather than Rule 4(e)(1) and Alabama Rule of Civil Procedure 4.3.
Second, Plaintiffs did not seek to serve Defendant Wilson by publication in a publication
likely to reach him. Cf. BP Prods., 236 F.R.D. at 272. Despite knowing that Defendant Wilson
10
had relocated to Central America, Plaintiffs published the summons in The Birmingham News, a
newspaper printed in Jefferson County, Alabama. (Doc. # 76). They made no attempt to publish
the summons in an internationally-distributed newspaper or magazine. Therefore, even if service
by publication were warranted under Rule 4(f) at the time the Magistrate Judge approved such
service under Alabama Rule of Civil Procedure 4.3 (and, plainly, it was not), the service by
publication performed by Plaintiffs was not an acceptable alternative means for serving
Defendant Wilson in Central America because the notice in the local newspaper was unlikely to
reach him. Accordingly, the default judgment entered against Defendant Wilson is due to be set
aside.
B.
Plaintiffs Failed to Show that Wilson Avoided Service, as is Necessary to
Serve a Defendant by Publication Under Alabama Rule of Civil Procedure
4.3
As explained above, a plaintiff may serve a defendant within a judicial district of the
United States by following state law for serving a summons in the state where the district is
located. Fed. R. Civ. P. 4(e)(1). Alabama law permits an individual defendant to be served by
publication if (1) he or she avoids service, (2) his or her present location or residence is
unknown, and (3) the process server has informed the clerk that a failure of service occurred and
provided the reason why service failed. Ala. R. Civ. P. 4.3(c). To obtain authorization to serve a
defendant by publication, a party or an attorney for a party must file an affidavit describing the
facts supporting a finding of avoidance. Ala. R. Civ. P. 4.3(d)(1). The affiant seeking service by
publication must give specific facts showing the avoidance of service, and the affiant may not
rely on the failure of service alone to show that the defendant has avoided service. Ala. R. Civ.
P. 4.3(c).
11
This rule has been interpreted to require “proof of ‘culpability’ or ‘hiding out’ by a
defendant” before service by publication is appropriate. Fed. Deposit Ins. Co. v. Sims, 100
F.R.D. 792, 796 (N.D. Ala. 1984), quoted in Fisher v. Amaraneni, 565 So. 2d 84, 87 (Ala. 1990).
The Alabama Supreme Court has acknowledged that, in some cases, a failure to claim mail may
be construed as an avoidance of service. Marshall v. Mid-State Homes, Inc., 468 So. 2d 131, 132
(Ala. 1985). But, in the context of service on a corporation, a failure to claim certified mail
cannot be construed as an avoidance of service if the individual to whom the mail was sent was
absent from the office and the plaintiff could have asked for other corporate officers or agents
available for service. Id. at 132-33. Moreover, a plaintiff cannot show avoidance of service by a
corporation’s designated agent where the plaintiff’s process server visited the corporation’s place
of business three times, spoke with an employee at the place of business who denied knowing the
registered agent, and failed to locate the registered agent. Volcano Enters., Inc. v. Rush, 155 So.
3d 213, 218-19 (Ala. 2014). In Volcano Enterprises, the Alabama Supreme Court also explained
that the evidence before it did not show culpable avoidance by the agent when (1) the plaintiff
presented no evidence that the agent was physically present at the place of business when the
process server went there, and (2) the plaintiff did not indicate that the employees to whom the
process agent spoke had knowledge about the agent’s whereabouts. Id. at 219.
The court agrees with Defendant Wilson that the affidavit submitted by Plaintiffs’
counsel to justify service by publication fails to demonstrate Wilson’s avoidance of service. In
that affidavit, Plaintiffs’ counsel averred that Wilson had refused to claim the mail containing
service documents in September 2008. (Doc. # 67-1 at 3). But, at that time counsel attempted to
serve Wilson by mail at the offices of Denali Investment Group (see Doc. # 1-1 at 21-22), and
Wilson had resigned from Denali Investment Group before September 2008. (See Doc. # 112-1
12
at 51). And, counsel’s affidavit is silent as to whether his firm had attempted to contact anyone
to discover Wilson’s whereabouts once service by mail was unsuccessful. (See generally Doc. #
67-1). Plaintiffs’ attempts to serve Wilson by mail in 2008 are similar to the attempts described
in Marshall, and, thus, the court cannot say that the refusal to accept this mail demonstrated
Wilson’s avoidance of service. See Marshall, 468 So. 2d at 132.
Likewise, Plaintiffs’ attempt to serve Wilson in April 2011 does not demonstrate
Wilson’s avoidance of service. Plaintiffs performed some degree of diligence by searching a
Lexis public records database to determine Wilson’s most recent address before sending a
process server to locate him. (Doc. # 67-1 at 6). But, counsel’s affidavit to the court describes
no other attempts to locate Wilson after the process server discovered a vacant lot at the last
known address found in Lexis’s records. (Id.). Moreover, Plaintiffs have not discussed any
attempt to locate Wilson between 2008 and 2011, even though the documents they sent to an
address for Wilson on the Alabama Secretary of State’s website were returned to sender. (Id. at
5-6). As in Volcano Enterprises, the failed service attempts described in counsel’s affidavit
merely show that the process server failed to locate Wilson, not that Wilson avoided service. See
Volcano Enters., 155 So. 3d at 218-19. Therefore, Plaintiffs failed to meet their burden to serve
Defendant Wilson by publication under Alabama Rule of Civil Procedure 4.3, and the default
judgment against Wilson is due to be set aside.
IV.
Conclusion
For the reasons explained above, Defendant Wilson has proven that Plaintiffs failed to
serve him in accordance with Rule 4, based on the information known to Plaintiffs at the time
they requested leave to serve Wilson by publication. Therefore, the court must set aside the
default judgment entered against him.
Defendant Wilson’s Motion for Relief From Final
13
Judgment Pursuant to Fed. R. Civ. P. 60(b)(4) (Doc. # 100) is due to be granted. An order
consistent with this memorandum opinion will be entered.
DONE and ORDERED this September 19, 2017.
_________________________________
R. DAVID PROCTOR
UNITED STATES DISTRICT JUDGE
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