Phoenix Insurance Company, The et al v. Trinity Universal Insurance Company of Kansas et al
Filing
175
ORDER granting 152 Motion to Strike Exhibit C to the Motion for Summary Judgment of Trinity Universal Insurance Company of Kansas, Trinity Universal Insurance of Kansas, and Trinity Universal Insurance Company and all Reference Thereto by Magistrate Judge Kristen L. Mix on 8/29/13.(dkals, )
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO
Civil Action No. 12-cv-01553-REB-KLM
THE PHOENIX INSURANCE COMPANY, a Connecticut insurance company, and
ST. PAUL SURPLUS LINES INSURANCE COMPANY, a Minnesota insurance company,
Plaintiffs,
v.
TRINITY UNIVERSAL INSURANCE COMPANY OF KANSAS, a Kansas insurance
company,
TRINITY UNIVERSAL INSURANCE OF KANSAS, a Kansas insurance company,
TRINITY UNIVERSAL INSURANCE COMPANY, a Texas insurance company, and
MOUNTAIN STATES MUTUAL CASUALTY COMPANY, a New Mexico insurance
company,
Defendants.
_____________________________________________________________________
ORDER
_____________________________________________________________________
ENTERED BY MAGISTRATE JUDGE KRISTEN L. MIX
This matter is before the Court on Plaintiffs’ Motion to Strike Exhibit C to the
Motion for Summary Judgment of Trinity Universal Insurance Company of Kansas,
Trinity Universal Insurance of Kansas, and Trinity Universal Insurance Company and
all Reference Thereto [Docket No. 152; Filed July 26, 2013] (the “Motion”). On August 15,
2013, Defendants Trinity Universal Insurance Company of Kansas, Trinity Universal
Insurance of Kansas, and Trinity Universal Insurance Company (the “Trinity Defendants”)
filed a Response to the Motion [#172]. Plaintiffs have not filed a reply.1 Pursuant to 28
U.S.C. § 636 (b)(1)(A) and D.C.COLO.LCivR 72.1C., the Motion has been referred to this
1
The Court may rule on a pending motion at any time. D.C.COLO.LCivR 7.1 C.
1
Court for disposition. The Court has reviewed the Motion, the Response, the entire case
file, and the applicable law, and is sufficiently advised in the premises. For the reasons set
forth below, the Motion [#152] is GRANTED.
I. Factual Background
This case is brought by a general contractor’s insurer against the insurers of various
subcontractors seeking contribution for the defense costs associated with a lawsuit brought
against the general contractor. In motions for summary judgment [##126, 128] pending
before the Court, Plaintiffs and Defendants argue about the relative primacy of insurance
policies with regard to the defense of the general contractor and the allocation of defense
costs amongst Defendants.
More specifically, Okland Construction Company, Inc. (“Okland”) served as the
general contractor for the construction of the Rivergate Loft Condominiums (the “Project”).
Amended Complaint [#11] at ¶¶ 21-22. Plaintiffs Phoenix Insurance Company and St. Paul
Surplus Lines Insurance Company (collectively, “Travelers” or “Plaintiffs”) insured Okland
as the general contractor for the Project. Id. at ¶ 24. The Trinity Defendants insured Beaty
Construction Company (“Beaty”), a subcontractor who worked on the Project. See Trinity
Defendants Motion for Summary Judgment [#128] at 2.
On January 13, 2010, Rivergate Loft Condominium Owners Association (“RLCOA”)
filed a lawsuit against Okland and others (the “Underlying Action”), alleging construction
defects and property damage in connection with the Project. See Amended Complaint
[#11] at ¶ 21. On June 15, 2011, Plaintiffs commenced the present action, seeking to
recover amounts that they allege various subcontractors’ insurers were obligated to
2
contribute toward Okland’s defense. See generally Compl. [#1]. On July 31, 2011,
Plaintiffs filed their Amended Complaint [#11], which states three claims for relief against
all Defendants. First, pursuant to their right of equitable subrogation, Plaintiffs assert a
claim for reimbursement of fees and costs incurred in defending Okland in the Underlying
Action. See Amended Complaint [#11] at 7-8.
Second, pursuant to their rights of
contribution and equitable contribution, Plaintiffs assert a claim to recover various
subcontractors’ insurers’ proportionate shares of fees and costs incurred in defending
Okland in the Underlying Action. Id. at 8-9. Third, Plaintiffs assert a claim for declaratory
relief stating that the subcontractors’ insurance policies provided for Okland’s defense on
a primary basis and the Travelers Policy provided for Okland’s defense on an excess basis.
Id. at 9-10.
On July 25, 2013, the Trinity Defendants filed their Motion for Summary Judgment
[#128] which attached a variety of documents, including the document at issue in the
instant Motion (“Exhibit C”). Exhibit C is a spreadsheet which appears to allocate liability
in the Underlying Action among various subcontractors, including Beaty. In addition,
Exhibit C is referenced three times in the Trinity Defendants’ Motion for Summary
Judgment. See Trinity Motion for Summary Judgment [#128] at 4, 12, 13. In their Motion
for Summary Judgment, the Trinity Defendants rely on Exhibit C for the proposition that
Beaty “was responsible for less than one percent (0.77%) of the total cost of repair
asserted” by RLCOA in the Underlying Action. Id. at 4. Thus, the Trinity Defendants argue
that “[t]he defense costs in this case should [be] allocated in an equitable manner” which
results in a “pro rata division of any defense costs based upon the allocation of liability in
the [U]nderlying [Action].” Id. at 10.
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In the Motion,2 Plaintiffs argue that Exhibit C should be stricken because: (1) Exhibit
C is inadmissible pursuant to Fed. R. Evid. 701 as an expression of an expert opinion by
a lay witness; and (2) Exhibit C is inadmissable pursuant to Fed. R. Evid. 702 because the
Trinity Defendants have not established that Exhibit C is based on sufficient facts or data,
is the product of reliable principles and methods, or that the expert offering the opinion
reliably applied those principles and methods in forming the opinion. Motion [#152] at 4-7.
In their Response, the Trinity Defendants argue that Plaintiffs’ asserted lack of
knowledge of the author of Exhibit C is disingenuous because: (1) it was authored by
Okland’s Rule 30(b)(6) witness in the Underlying Action; (2) in the instant action, Plaintiffs
are standing in the shoes of Okland; and (3) Plaintiffs disclosed Exhibit C as part of their
initial disclosures in this case. Response [#172] at 1, 5, 7. The Trinity Defendants further
argue that “Plaintiffs are charged with Okland’s knowledge and there is no prejudice,
surprise, or harm relating to the disclosure [of] Mr. McEntire’s3 opinions.” Id. at 7.
Notably, the Trinity Defendants do not argue that Mr. McEntire has been disclosed
as an expert in this case, that he has been deposed in this case, or that Exhibit C has been
offered as an expert report in this case. In contrast, Plaintiffs submitted a declaration
stating that the Trinity Defendants “never disclosed Exhibit C to its Motion for Summary
Judgment (Dkt. 128-3) as an expert report and never disclosed the author of Exhibit C as
an expert.” McLafferty Decl. [#148] at ¶ 3.
2
The Court summarizes only those arguments contained in the Motion, Response, and
Reply which merit analysis.
3
Mr. McEntire was Okland’s Rule 30(b)(6) witness in the Underlying Action and is allegedly
the author of Exhibit C. Response [#172] at 2.
4
II. Standard of Review
As an initial matter, the Court reminds the parties that D.C.Colo.LCivR 7.1 C requires
that motions, responses, and replies include “a recitation of legal authority incorporated into
the” document. Here, the Response cites to legal authority solely for the proposition that
Plaintiffs stand in Okland’s shoes in this case. While the Response mentions the rules
included in Plaintiffs’ Motion (Fed. R. Evid. 701, 702, and 802, and Fed. R. Civ. P. 26), the
Trinity Defendants offer no legal authority interpreting those rules. Every other argument
put forward by the Trinity Defendants fails to include citation to any legal authority. While
the Motion does not suffer from the same glaring deficiencies as the Response, there are
sections of argument, such as Sections A and B, which provide no case law supporting
Plaintiffs’ interpretation of the rules cited therein. It is not the Court’s responsibility to
conduct legal research in order to understand a party’s argument, nor is the Court obligated
to piece together support for an argument offered in a pleading.
A.
Judicial Estoppel
While the Trinity Defendants do not directly assert an estoppel argument, the Court
understands the thrust of the Motion to be an argument that Plaintiffs, who now stand in the
shoes of Okland, should be required to maintain the position regarding Exhibit C that
Okland asserted in the Underlying Action. See, e.g., Response [#172] at 7 (“Exhibit C was
offered by Okland . . . in the [Underlying Action] and advanced by Okland as a component
of Okland’s claimed damages against the subcontractors. [ ] Plaintiffs stand in Okland’s
shoes and cannot now claim that the opinions that Okland proffered in the [Underlying
Action] as a basis for its damages are improper testimony.”). Accordingly, the Court briefly
addresses judicial estoppel.
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“[J]udicial estoppel is an equitable doctrine invoked by a court at its discretion” which
may be based on three factors. Queen v. TA Operating, LLC, --- F.3d ---, 2013 WL
419322, at *4 (10th Cir. Aug. 20, 2012). These three factors are:
First, a party’s subsequent position must be clearly inconsistent with its
former position. Next, a court should inquire whether the [ ] party succeeded
in persuading the court to accept that party’s former position, so that judicial
acceptance of an inconsistent position in a later proceeding would create the
perception that either the first or the second court was misled. Finally, the
court should inquire whether the party seeking to assert an inconsistent
position would gain an unfair advantage in the litigation if not estopped.
Id. (quotation and internal modifications omitted). These factors are not “an exhaustive
formula for determining the applicability of judicial estoppel.” New Hampshire v. Maine, 532
U.S. 742, 751 (2001). “Additional considerations may inform the doctrine’s application in
specific factual contexts.” Id.
Here, the Court will address the second factor first. In considering this factor, the
Court does not focus on whether Okland “acted with some nefarious motive.” Queen, 2013
WL 4419322, at *7 (quotation omitted). Instead, the Court considers “whether [its] actions
led [a court] to accept [its] position, so that judicial acceptance of an inconsistent position
in a later proceeding would introduce the risk of inconsistent court determinations and thus
pose a threat to judicial integrity.” Id. The Trinity Defendants allege that they relied on
Exhibit C to determine their insured’s liability in the Underlying Action. Response [#172]
at 2 (Exhibit C “was proffered by Okland and relied upon by Trinity in the settlement of the
claims of Okland against Trinity’s insured”). However, it is clear from the pleadings that the
Underlying Action settled before trial. The Trinity Defendants do not allege, nor do they
offer proof, that the state court was persuaded to accept any arguments or positions offered
by Okland regarding Exhibit C in the Underlying Action. As a result, the Trinity Defendants
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have not shown that the state court relied on Okland’s position regarding Exhibit C. See
G & C Holdings, LLC v. Rexam Beverage Can Co., 2013 WL 2321611, at *4 (10th Cir. May
29, 2013) (“To be entitled to judicial estoppel, [plaintiff] had to prove that the district court
relied upon [defendant’s] representation”).
In addition, regarding the first factor, the Trinity Defendants have not met their
burden of showing that Plaintiffs’ position in the instant case is “clearly inconsistent” with
the position taken by Okland in the Underlying Action. See New Hampshire, 532 U.S. at
750. In their Motion, Plaintiffs challenge Exhibit C on procedural, not substantive grounds.
For example, Plaintiffs argue that Exhibit C is inadmissible pursuant to Fed. R. Civ. P. 701
and 702. Such a position is not “clearly inconsistent” with Okland’s use of Exhibit C in the
Underlying Action.
Based on the above, the Court declines to invoke the equitable doctrine of judicial
estoppel. The Trinity Defendants cite to no authority, and the Court has found none, which
suggests that Plaintiffs are precluded from challenging the admissibility of a document
authored by the insured’s witness simply because the Plaintiffs are standing in the shoes
of the insured in subsequent litigation. Because the scope of the documents use in the
Underlying Action appears to have been limited, and because Okland appears not to have
persuaded the court of anything by using it, Plaintiffs may challenge it here.
B.
Federal Rule of Evidence 701
Federal Rule of Evidence 701 provides:
If a witness is not testifying as an expert, testimony in the form of an opinion
is limited to one that is: (a) rationally based on the witness’s perception; (b)
helpful to clearly understanding the witness's testimony or to determining a
fact in issue; and (c) not based on scientific, technical, or other specialized
knowledge within the scope of Rule 702.
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Fed. R. Evid. 701. In addition, there is no distinction “between expert and lay witnesses,
but rather between expert and lay testimony.” Fed. R. Evid. 701 (advisory committee
notes). Instead, Rule 701 was amended in 2000 to “make[ ] clear that any part of a
witness’ testimony that is based on scientific, technical, or other specialized knowledge .
. . is governed by the standards of Rule 702 and the corresponding disclosure requirements
of the Civil and Criminal Rules.” Id. The Tenth Circuit, in alignment with the advisory
committee, “has held that testimony provided by a witness is expert testimony if the
testimony is ‘based on technical or specialized knowledge,’ regardless of whether the
witness is designated as an expert or fact witness.” Two Moms and a Toy, LLC v. Int’l
Playthings, LLC, No. 10-cv-02271-PAB-BNB, 2012 WL 5187757, at *1 (D. Colo. Oct. 19,
2012) (quoting James River Ins. Co. v. Rapid Funding, LLC, 658 F.3d 1207, 1214 (10th Cir.
2011)). “Rule 701 ‘does not permit a lay witness to express an opinion as to matters which
are beyond the realm of common experience and which require the special skill and
knowledge of an expert witness.’” James River Ins. Co., 658 F.3d at 1214 (quoting
Randolph v. Collectramatic, Inc., 590 F.2d 844, 846 (10th Cir. 1979)). “When the subject
matter of proffered testimony constitutes ‘scientific, technical, or other specialized
knowledge,’ the witness must be qualified as an expert under Rule 702.” Life Wise Master
Funding v. Telebank, 374 F.3d 917, 929 (10th Cir. 2004). However, Rule 701 “allows lay
witnesses to offer observations that are common enough and require a limited amount of
expertise, if any.” Ryan Dev. Co., L.C. v. Indiana Lumbermans Mut. Ins. Co., 711 F.3d
1165, 1170 (10th Cir. 2013) (quotation omitted).
C.
Federal Rule of Evidence 702
“Rule 702 allows expert testimony only where the ‘witness [is] qualified as an expert
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by knowledge, skill, experience, training, or education’ to offer such opinions.” Life Wise
Master Funding, 374 F.3d at 928. To qualify as an expert, a witness is required to possess
“such skill, experience or knowledge in that particular field as to make it appear that his
opinion would rest on substantial foundation and would tend to aid the trier of fact in his
search for truth.” Graham v. Wyeth Labs., 906 F.2d 1399, 1408 (10th Cir. 1990) (quotation
omitted). In addition, the testimony must be “based on sufficient facts or data,” be “the
product of reliable principles and methods,” and the expert must “reliably appl[y] the
principles and methods to the facts of the case. Fed. R. Evid. 702.
The proponent of expert testimony bears the burden of proving the foundational
requirements of Rule 702 by a preponderance of the evidence. See Cook ex rel. Estate
of Tessier v. Sheriff of Monroe Cnty., 402 F.3d 1092, 1107 (11th Cir. 2005) (citing Daubert
v. Merrill Dow Pharmaceuticals, Inc., 509 U.S. 579, 592 n.10 (1993)). Rule 702 anticipates
that, if challenged, the factual foundation supporting the specific testimony will be provided
by the proponent of the witness. See Dodge, 328 F.3d at 1222. However, the proponent
need not prove that “the expert is undisputably correct or that the expert’s theory is
‘generally accepted’ in the scientific community.” Mitchell v. Gencorp Inc., 165 F.3d 778,
781 (10th Cir. 1999). Instead, the proponent must show that the witness has sufficient
expertise to choose and apply a methodology, that the methodology is reliable, that the
expert relied on sufficient facts and data, and that the methodology was otherwise reliably
applied. Id.; Daubert, 509 U.S. at 595; see also Dodge, 328 F.3d at 1222.
III. Analysis
As noted above, Rule 701 “allows lay witnesses to offer observations that are
common enough and require a limited amount of expertise, if any.” Ryan Dev. Co., L.C.
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v. Indiana Lumbermans Mut. Ins. Co., 711 F.3d 1165, 1170 (10th Cir. 2013) (quotation
omitted). In contrast, “testimony provided by a witness is expert testimony if the testimony
is ‘based on technical or specialized knowledge,’ regardless of whether the witness is
designated as an expert or fact witness.” Two Moms and a Toy, LLC, 2012 WL 5187757,
at *1 (quoting James River Ins. Co., 658 F.3d at 1214)
On its face, Exhibit C is a chart allocating fault for the construction defects at the
Project amongst the various general contractors and subcontractors who worked on the
Project. See generally Exhibit C [#128-3]. Far from being common observations that could
be offered by a lay witness, the fault allocations are quite specific and are calculated to
thousandths of a percent. This is not proper Rule 701 testimony because such conclusions
constitute “scientific, technical, or other specialized knowledge.” Fed. R. Civ. P. 702.
Therefore, the opinions offered in Exhibit C constitute expert testimony which must be
analyzed pursuant to Rule 702. See Life Wise Master Funding v. Telebank, 374 F.3d 917,
929 (10th Cir. 2004); see also Kumho Tire Co., Ltd. v. Carmichael, 526 U.S. 137, 147-149
(1999) (Rule 702's reliability standard applies to all expert testimony, not just “scientific”
testimony).
Under Rule 702, the Trinity Defendants have the burden of showing that the witness
who expressed the opinions has sufficient expertise to choose and apply a methodology,
that the methodology is reliable, that he relied on sufficient facts and data, and that the
methodology was otherwise reliably applied. Mitchell, 165 F.3d at 781; Daubert, 509 U.S.
at 595; see also Dodge, 328 F.3d at 1222. When evaluating the evidence offered by the
Trinity Defendants, the Court “must determine whether the testimony has a reliable basis
in knowledge and experience of the relevant discipline.” Kumho Tire, 526 U.S. at 149
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(internal quotation marks and citation omitted). In so doing, the Court has “considerable
leeway in deciding in a particular case how to go about determining whether particular
expert testimony is reliable.” Id. at 152.
In assessing reliability, the Court may consider a variety of factors, including, but not
limited to: (1) whether the expert employed the same degree of intellectual rigor in
formulating the opinion as he would be expected to employ in his own professional life, see
Kumho Tire, 526 U.S. at 152; (2) whether the expert has unjustifiably extrapolated from an
accepted premise to an unfounded conclusion (or, whether the gap between the analytical
data and the opinion proffered is too large), see Gen. Elec. Co. v. Joiner, 522 U.S. 136, 146
(1997); and (3) whether the expert adequately accounted for obvious alternative
explanations, see Bitler v. A.O. Snith Corp., 400 F.3d 1227, 1237-38 (10th Cir. 2004).
Courts have routinely excluded expert testimony that was based on nothing more than
speculation. See, e.g., Jetcraft Corp. v. Flight Safety Int’l, 16 F.3d 362, 366 (10th Cir.
1993) (expert testimony excluded as professional speculation); Eastridge Dev. Co. v.
Halpert Assoc., Inc., 853 F.2d 772, 783 (10th Cir. 1988) (exclusion of expert testimony as
“tentative and speculative” was not an abuse of discretion).
At the time of his deposition, Mr. McEntire was the secretary/treasurer of Okland.
McEntire Depo. Trans. [#172-1] at 14:6. Earlier in his career, he served as the Controller
of Okland. Id. at 14:8. Mr. McEntire has never been qualified as an expert with regard to
the allocation of fault among entities. Id. at 16:3-6. Further, although Mr. McEntire’s work
involved reviewing disputes with subcontractors, it is not apparent from his deposition
testimony that he had prior experience allocating damages similar to those at issue here.
According to Mr. McEntire’s testimony, Exhibit C was developed by:
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living this case for two years, being familiar with Okland’s subcontract
agreements and the language in the subcontract agreements, being familiar
with particular subcontract agreements in this project itself, plus being in
depositions, plus reading the expert reports and the other reports that came
through and particularly the knowledge that I have of construction and how
it goes together and how parts and pieces and subcontractors and designers
interface with each other, based on my experience was how I allocated it.
Id. at 44:13-24.
The Trinity Defendants fail to provide any explanation of Mr. McEntire’s experience
or methodologies other than what is provided in the deposition transcript. The Court finds
the deposition testimony insufficient to establish either that Mr. McEntire is a proper expert
witness with regard to the allocation of fault among entities or that his conclusions
regarding the allocation of fault are reliable. First, while an individual can be qualified
based on “knowledge, skill, experience training, or education,” 103 Investors I, L.P. v.
Square D Co., 470 F.3d 985, 990 (10th Cir. 2006), the portion of the deposition transcript
submitted by the Trinity Defendants offers no information about his knowledge base aside
from Mr. McEntire’s employment at Okland and the fact that he dealt with disputes with
subcontractors. The Court finds this insufficient to establish Mr. McEntire to be an expert
in the field of allocating fault for construction defects. Second, here, as in Kumho Tire, the
Trinity Defendants have failed to satisfy the factors outlined in Daubert “or any other set of
reasonable reliability criteria.” Kumho Tire, 526 U.S. at 158; see also Ho v. Michelin N.
Am., Inc., No. 11-3334, 2013 WL 1277023, at *3 (10th Cir. March 29, 2013) (unpublished
decision) (affirming trial court’s exclusion of expert testimony pursuant to Rule 702).
Notably, the portion of Mr. McEntire’s deposition testimony provided by the Trinity
Defendants does not provide any real explanation of the methodology employed by Mr.
McEntire. While it is clear that he reviewed certain documents and came to conclusions
12
regarding the allocation of each company’s liability for the costs of repair, there is no
explanation of the steps taken by Mr. McEntire to reach his conclusions. See Mitchell v.
Gencorp, 165 F.3d 778, 781 (10th Cir. 1999) (“At a minimum, the expert testimony should
include a description of the method used to arrive at the level of exposure and scientific
data supporting the determination. The expert's assurance that the methodology and
supporting data [are] reliable will not suffice.”) (citing Moore v. Ashland Chem., Inc., 151
F.3d 269, 276 (5th Cir. 1998) (en banc)). Because the portion of the deposition transcript
provided does not include any information about the specific documents Mr. McEntire
reviewed in reaching his conclusions, the Court cannot determine if he gathered “sufficient
facts and data” as required by Fed. R. Evid. 702. See United States v. Lauder, 409 F.3d
1254, 1264 n.5 (10th Cir. 2005) (noting that this is a quantitative rather than qualitative
analysis). In addition, the Court is unable to analyze whether Mr. McEntire’s methodology
is reliable. See United States v. Crabbe, 556 F.Supp.2d 1217, 1222 (D. Colo. 2008) (“The
requirement that an opinion be derived from reliable principles or methods . . . involves two
related inquires: (i) what methodology did the witness use to reach the opinion; and (ii) is
that methodology generally deemed ‘reliable’ in the field in which the expert works.”). Of
course, without information regarding Mr. McEntire’s methodology, the Court cannot
determine if he reliably applied that methodology to the facts and data. See Dodge, 328
F.3d at 1222 (noting that the party with the burden must show that “the method employed
by the expert in reaching the conclusion is scientifically sound and that the opinion is based
on facts which satisfy Rule 702's reliability requirements.”) (citation omitted).
Accordingly, Exhibit C must be stricken pursuant to Fed. R. Evid. 702. Because the
Court reaches this conclusion based on its analysis of the requirements of Fed. R. Evid.
13
701 and 702, it does not address the remaining arguments in Plaintiffs’ Motion.
IV. Conclusion
IT IS HEREBY ORDERED that Plaintiffs’ Motion [#152] is GRANTED. Accordingly,
IT IS FURTHER ORDERED that Exhibit C [#128-3] attached to the Trinity
Defendants’ motion for summary judgment [#128] is STRICKEN.
Dated: August 29, 2013
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