Branch Banking and Trust Company v. Morgan
Filing
33
ORDER granting 24 Plaintiff's Motion for Summary Judgment. Judgment is hereby ENTERED against Defendant in the sum of $371,681.23 plus $34,837.23 in attorney's fees. The Clerk is DIRECTED to close the case. Signed by Judge Richard W. Story on 2/15/2017. (bdb)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
BRANCH BANKING AND
TRUST COMPANY,
Plaintiff,
v.
JULIUS T. MORGAN,
Defendant.
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CIVIL ACTION NO.
1:15-CV-02034-RWS
ORDER
This case comes before the Court on Plaintiff’S Motion for Summary
Judgment [24]. After a review of the record, the Court enters the following
Order.
Background
This case arises out of a loan made by Branch Banking and Trust
Company (“BB&T” or “Plaintiff”) to Julius T. Morgan (“Plaintiff”) on March
11, 2008, with an original principal amount of $1,643,624.83. (Pl.’s Statement
of Undisputed Material Facts (“SOMF”), Dkt. [24-1] ¶ 1.) Defendant signed a
promissory note and executed a security deed and security agreement granting
Plaintiff a security interest in certain real property. (Id. ¶ 2.) Under the terms
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of the promissory note, Defendant was to make 35 monthly payments of
$11,857.69 with a final payment due of all remaining principal and accrued
interest on March 10, 2011. (Aff. of Trisha Wixson (“Aff.”), Ex. A, Dkt. [27],
at 5.) Defendant made these payments through December 16, 2010. (Aff., Ex.
G, Dkt. [24-2], at 92.)
On January 10, 2011, Defendant executed the Forbearance Agreement.
(Aff., Ex. C, Dkt. [27], at 19–26.) Under its terms, Defendant was to make
current the interest due and then continue to make monthly interest-only
payments with a final payment of all principal, accrued interest, bank fees,
costs, and expenses due by June 10, 2011. (Id. ¶¶ 5(a)–5(d), at 20–21.) On
July 7, 2011, Plaintiff and Defendant executed the First Amendment to
Forbearance Agreement extending the final payment date to September 10,
2011. (Aff., Ex. D, Dkt. [27], at 28–29.) Defendant made monthly interestonly payments through August 8, 2011. (Aff., Ex. G., Dkt. [24-2], at 87.) He
failed to make the final payment of all outstanding balances by the September
10, 2011 final payment date. (Id. at 86.)
Plaintiff sent to Defendant a letter, dated November 7, 2011, informing
Defendant that due to his failure to make the final payment, Plaintiff intended
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to hold a foreclosure proceeding to sell the property for which Plaintiff held a
security deed. (Aff., Ex. E, Dkt. [27], at 31–34.) A foreclosure sale was held
on at the Bibb County Courthouse on December 6, 2011. (SOMF, Dkt. [24-1]
¶ 18.) A Final Order Confirming Foreclosure Sale was entered by the Superior
Court of Bibb County on July 10, 2013, confirming the sale for $1,300,000.00.
(Aff., Ex. F, Dkt. [27], at 36–38)
Plaintiff filed a deficiency action against Defendant in the Superior
Court of Newton County. (SOMF, Dkt. [24-1] ¶ 26.) The Superior Court
denied summary judgment on all issues. (Id. ¶ 27.) Plaintiff subsequently
voluntarily dismissed the previous litigation and filed this suit. (Id. ¶ 28.)
Discussion
I.
Legal Standard
Federal Rule of Civil Procedure 56 requires that summary judgment be
granted “if the movant shows that there is no genuine dispute as to any material
fact and the movant is entitled to judgment as a matter of law.” “The moving
party bears ‘the initial responsibility of informing the . . . court of the basis for
its motion, and identifying those portions of the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits,
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if any, which it believes demonstrate the absence of a genuine issue of material
fact.’” Hickson Corp. v. N. Crossarm Co., 357 F.3d 1256, 1259 (11th Cir.
2004) (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). Where the
moving party makes such a showing, the burden shifts to the non-movant, who
must go beyond the pleadings and present affirmative evidence to show that a
genuine issue of material fact does exist. Anderson v. Liberty Lobby, Inc., 477
U.S. 242, 257 (1986).
The applicable substantive law identifies which facts are material. Id. at
248. A fact is not material if a dispute over that fact will not affect the outcome
of the suit under the governing law. Id. An issue is genuine when the evidence
is such that a reasonable jury could return a verdict for the non-moving party.
Id. at 249–50.
Finally, in resolving a motion for summary judgment, the court must
view all evidence and draw all reasonable inferences in the light most favorable
to the non-moving party. Patton v. Triad Guar. Ins. Corp., 277 F.3d 1294, 1296
(11th Cir. 2002). But, the court is bound only to draw those inferences that are
reasonable. “Where the record taken as a whole could not lead a rational trier
of fact to find for the non-moving party, there is no genuine issue for trial.”
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Allen v. Tyson Foods, Inc., 121 F.3d 642, 646 (11th Cir. 1997) (quoting
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986)).
“If the evidence is merely colorable, or is not significantly probative, summary
judgment may be granted.” Anderson, 477 U.S. at 249–50 (internal citations
omitted); see also Matsushita, 475 U.S. at 586 (once the moving party has met
its burden under Rule 56(a), the nonmoving party “must do more than simply
show there is some metaphysical doubt as to the material facts”).
II.
Discussion
Plaintiff seeks to recover the outstanding principal balance of
$221,633.78, interest of $113,405.94, and costs and fees of $23,558.96. It also
seeks to recover ongoing interest of $52.330198 per day for each day after June
10, 2016, through the date of judgment. Finally, Plaintiff seeks to recover
statutory attorney’s fees pursuant to O.C.G.A. § 13-1-11.
A.
Liability
“[A] plaintiff seeking to enforce a promissory note establishes a prima
facie case by producing the note and showing it was executed. Once that prima
facie case has been made, the plaintiff is entitled to judgment as a matter of law
unless the defendant can establish a defense.” Shropshire v. Alostar Bank of
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Commerce, 724 S.E.2d 33, 38–39 (Ga. Ct. App. 2012) (quoting Core LaVista,
LLC v. Cumming, 709 S.E.2d 336, 340 (Ga. Ct. App. 2011)). Plaintiff has here
produced the note at issue, which bears the signature of Defendant. (Aff., Ex.
A, Dkt. [27], at 5–8.) Defendant has admitted that he signed the note. (Dep. of
Julius T. Morgan, Dkt. [28], at 14 ln.1–12.) Defendant has also admitted that
he stopped paying the note (id. at 26 ln.16–21), which also satisfies Plaintiff’s
burden of proving its prima facie case. See FAS Capital, LLC v. Carr, 7 F.
Supp. 3d 1259, 1262 (N.D. Ga. 2014) (“A debtor’s admission of default
establishes his creditor’s prima facie case for recovery.”) Since Plaintiff has
provided evidence to prove its prima facie case, the burden now shifts to
Defendant to establish a defense.
Defendant raises the defense of waiver in his brief. (Br. in Opp’n to Pl.’s
Mot. for Summ. J., Dkt. [29], at 10–12.) This affirmative defense, however,
was not raised prior to this brief. It does not appear in Defendant’s Affirmative
Defense and Answer [10]. Defendant has therefore waived this defense.
Pensacola Motor Sales, Inc. v. E. Shore Toyota, LLC 684 F.3d 1211, 1221–22
(11th Cir. 2012); see also Keybank Nat’l Ass’n v. Hamrick, 576 F. App’x 884,
888 (11th Cir. 2014) (holding defendant waived its affirmative defense by
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failing to raise it prior to the summary judgment motion). Since Defendant
argues no other defense to Plaintiff’s prima facie case, Defendant has failed to
meet his burden. Plaintiff’s Motion for Summary Judgment [24] is therefore
GRANTED.
B.
Damages
Since Defendant’s liability has been established, the Court must now
decide whether Plaintiff has presented sufficient evidence from which the
amount of damages owed may be determined on a motion for summary
judgment. Plaintiff relies on three main sources of evidence in its calculation
of damages: the affidavit of Trisha Wixson (“Wixson Affidavit”), a loan
history, and a loan calculator. Defendant contests the admissibility of all three
as well as arguing that they do not prove substantively the amount of damages
owed. The Court first addresses the admissibility of Plaintiff’s evidence before
turning to the amount of damages owed.
1.
Admissibility of Evidence
Defendant first argues that the Wixson Affidavit is inadmissible because
it is not based on the affiviant’s personal knowledge as required by Rule
56(c)(4). The Wixson Affidavit states that it is based on “facts that are
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personally known to me to be true and correct.” (Aff., Dkt. [24-2] ¶ 1, at 28.)
As an Asset Manager with the BB&T Business Loan Recovery Department,
she is familiar with the files maintained by Plaintiff. (Id. ¶ 2, at 29.) As the
custodian of BB&T’s records with reference to this case, she has knowledge of
how they were prepared and maintained. (Id.) The Wixson Affidavit is
therefore admissible and may be relied upon by the Court at summary
judgment. See, e.g., Wells Fargo Bank, N.A. v. SFPD II, LLC, No. 1:11-cv04001-JEC, 2013 WL 541410, at *4–5 (N.D. Ga. Feb. 12, 2013) (relying on an
affidavit filed by plaintiff’s senior vice president, along with the attached
documents, to prove damages at summary judgment).
Defendant next contests the admissibility of two of the documents relied
upon by Wixston in her affidavit. As to the loan history, the Court finds that it
is admissible under rule 803(6) and thus may be relied upon in ruling on
Plaintiff’s Motion for Summary Judgment. For a business record to be
admitted into evidence, Rule 803(6) requires:
(A) the record was made at or near the time by—or from
information transmitted by—someone with knowledge; (B) the
record was kept in the course of a regularly conducted activity of a
business, organization, occupation, or calling, whether or not for
profit; (C) making the record was a regular practice of that
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activity; (D) all these conditions are shown by the testimony of the
custodian or another qualified witness . . .; and (E) the opponent
does not show that the source of information or the method or
circumstances of preparation indicate a lack of trustworthiness.
Fed. R. Evid. 803(6). Plaintiff has met all of these requirements for the loan
history. The loan history is “a contemporaneous detail of BB&T’s internal
accounting.” (Aff., Dkt. [24-2] ¶ 29, at 36.) This record, made at the time of
the events recorded in the ordinary course of business, satisfies the
requirements of Rule 803(6) through the affidavit of Wixson, who is “the
custodian/keeper of records for BB&T with respect to this matter.” (Id. ¶ 2, at
29.) It therefore falls to Defendant to show a lack of trustworthiness for the
loan history to be inadmissible.
Defendant first argues that the loan history is untrustworthy because it is
inconsistent with the damages currently claimed by Plaintiff. For example,
according to the loan history, the principal balance on the loan is $0.00, not the
$211,633.78 claimed here. (Aff., Ex. G, Dkt. [24-2], at 86.) These
inconsistencies, however, are explained in the Wixson Affidavit. The loan
history is a document of BB&T’s internal accounting, and it does not
necessarily reflect the amounts actually owed. Following standards set forth by
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the Financial Accounting Standards Board, a private organization designated
by the SEC to set accounting standards for public companies, BB&T charged
off the principal remaining after application of foreclosure proceeds. (Aff.,
Dkt. [24-2] ¶¶ 29.x, 29.xvii, at 40, 43.) Internal accounting procedures
following accounting standards similarly explain why the loan history fails to
show interest accruing after the loan was placed on non-accrual status. (Id. ¶¶
29.ix–29.xiii, at 39–41.)
Defendant next argues that the loan history is untrustworthy because the
fees and charges listed are not supported by the underlying loan documents.
The Wixson Affidavit, however, explains each of these fees and charges. (See,
e.g., id. ¶ 29.iv, at 37–38; see also id. Aff., Ex. A, Dkt. [27], at 7 (discussing
applicable charges and fees under the note)). The Court finds that Defendant
has failed to meet his burden in proving the untrustworthiness of the loan
history. It is therefore admissible and may be relied upon in ruling on this
motion for summary judgment.
Finally, Defendant argues that the loan calculator is inadmissible
because it was generated solely to prove damages in anticipation of litigation
and lacks underlying business records to substantiate the amounts owed that it
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lists. Although there are inconsistencies between the amounts listed on the
loan calculator and the loan history, the Wixson Affidavit, which details the
differences between the internal accounting procedures shown in the loan
history and the actual accounting described in the loan calculator, provides
sufficient explanation for these differences. As to Defendant’s argument that
the loan calculator is inadmissible as a business record due to its preparation
solely for the purpose of litigation, the Court finds that the document is
admissible as a demonstrative exhibit. The underlying loan documents provide
the substantive information, and the loan calculator merely compiles that
information. It may therefore be used in determining damages at summary
judgment.
2.
Calculation of Damages
Once Plaintiff “introduced the Note and established a prima facie right to
judgment on the Note, the burden shifted to [Defendant] to produce evidence
showing a different amount owed and thereby creating a jury issue.”
Hovendick v. Presidential Fin. Corp., 497 S.E.2d 269, 272–73 (Ga. Ct. App.
1998). While Defendant argues that Plaintiff’s evidence is insufficient to prove
damages, he offers no evidence that Plaintiff’s calculations are incorrect or
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should be performed another way. “That argument, without more, is not
enough to defeat summary judgment under Rule 56.” First Citizens Bank & Tr.
Co. v. River Walk Farm, L.P., 620 F. App’x 811, 815 (11th Cir. 2015) (holding
that defendant’s argument that plaintiff’s affidavit was insufficient to prove the
amount owed insufficient to defeat summary judgment). Defendant has failed
to produce any evidence from which a jury could conclude that Plaintiff’s
damages calculation is incorrect. Plaintiff’s calculation of the amounts owed,
as detailed below, will therefore be awarded against Defendant.
Plaintiff is entitled to recover the outstanding principal balance of
$221,633.78. At the point in which Defendant stopped making payments, the
unpaid balance was $1,521,633.78. (Aff., Dkt. [24-2] ¶ 29.vii, at 39; Aff., Ex.
H, Dkt. [24-2], at 86.) Plaintiff foreclosed on the Property on December 6,
2011, in the amount of $1,300,000.00. (Aff., Dkt. [24-2] ¶¶ 20–23, at 34–35.)
Applying the foreclosure proceeds to the principal balance1, Defendant still
owes $221,633.78.
1
Although the loan history shows that only $1,040,000.00 of the foreclosure
proceeds were applied to the principal balance, this was done for internal accounting
purposes only to account for the cost to Plaintiff to carry out the foreclosure sale.
(Aff., Dkt. [24-2] ¶ 29.xvi, at 43.) For calculating actual damages, however, the entire
foreclosure proceeds of $1,300,000.00 have been applied to the principal balance.
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Plaintiff is also entitled to recover $113,405.94 in accrued interest.
When the note was placed on non-accrual status on October 31, 2011, accrued
interest totaled $17,329.72. (Id. ¶ 30.i, at 44; Aff., Ex. H, Dkt. [24-2], at 86.)
Although Plaintiff no longer recorded the accrual of interest for its internal
accounting, interest did continue to accrue. (Aff., Dkt. [24-2] ¶ 29.xiii, at 41.)
On that date, the default interest rate, prime rate plus 5%, went into effect. (Id.
¶ 30.ii, at 44; Aff., Ex. A, Dkt. [27], at 6.) Prime rate was 3.25% from this date
until December 16, 2015, resulting in a default interest rate of 8.25%.2 (Aff.,
Dkt. [24-2] ¶¶ 29.vi, 30.ii, at 39, 44. ) An additional accrual of $12,204.77 in
interest occurred between the non-accrual date and the date of the foreclosure
sale. (Id. ¶¶ 30.iii–30.iv, at 44–45.) From the date of the foreclosure sale to
December 17, 2015, when the prime rate increased, additional interest in the
amount of $74,713.67 accrued. (Id. ¶¶ 30.viii–30.ix, at 45–46.) The prime rate
then increased to 3.5%, resulting in a new default interest rate of 8.5%. (Id. ¶
30.x, at 46.) From that date to the date Plaintiff’s Motion for Summary
2
Defendant argues that the Wixson Affidavit is insufficient, on its own, to
prove the prime interest rate at the relevant time. This rate, however, is an internal
number set by Plaintiff. Wixson, as an employee of Plaintiff, is in the best position to
have personal knowledge of Plaintiff’s own internal rate.
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Judgment was filed, June 10, 2016, additional interest of $9,157.78 accrued.
(Id. ¶¶ 30.xi–30.xii, at 46.) Therefore, the total accrued interest through June
10, 2016, which Plaintiff is entitled to recover, is $113,405.94.
Plaintiff is also entitled to recover costs and fees totaling $23,558.96.
Because Defendant failed to pay property taxes on the Property, Plaintiff paid
them on his behalf, which the Security Deed entitled it to do. (Id. ¶ 31, at
47–48; Aff., Ex. B, Dkt. [27], at 11.) The $20,308.96 paid in taxes is therefore
recoverable. (Aff., Dkt. [24-2] ¶ 31, at 47–48; Aff., Ex. I, Dkt. [24-2], at
105–08.) Additionally, Plaintiff is entitled to recover the appraisal fee of
$3,000.00 and the appraisal review fee of $250.00, both of which were costs of
collection required in conjunction with the foreclosure. (Aff., Dkt. [24-2] ¶ 32,
at 48.)
Finally, Plaintiff is entitled to recover additional interest that will accrue
between June 10, 2016, the date in which this motion was filed, and the date of
judgment. (Aff., Ex. A, Dkt. [27], at 6 (providing that after default, interest
accrues at a rate of prime rate plus 5% until judgment).) Thus, Plaintiff is
entitled to recover interest in the amount of $52.330198 per day from June 10,
2016, to February 15, 2017. (See id. ¶ 30.xi, at 46 (calculating per diem
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interest).) This totals to additional interest in the amount of $13,082.55.
Thus, Plaintiff is entitled to recover a total of $371,681.23.
C.
Attorney’s Fees
The Forbearance Agreement states:
Obligor acknowledges and agrees that Lender has the right to
collect statutory attorneys’ fees from Obligor under the Loan and
Collateral Documents to which Obligor is a party. . . . Lender
agrees that if all of the obligations owing to Lender by Obligor are
paid on or before the Final Payment Date, and Obligor timely
complies with all of the terms and conditions of this Agreement,
Lender shall waive its claim to statutory costs and attorneys’ fees,
and shall recover as attorneys’ fees and expenses such fees and
expenses as are actually incurred by Lender.”
(Aff., Ex. C, Dkt. [27] ¶ 20, at 24.) Since Defendant did not pay all his
obligations, Plaintiff is entitled to statutory attorneys’ fees so long as it
complied with O.C.G.A. § 13-1-11.
Plaintiff was required to send to Defendant, after maturity of the
obligation, notice in writing that it intended to enforce the provisions relative to
payment of principal and interest as well as payment of attorney’s fees but that
Defendant has ten days from receipt of the notice to pay both principal and
interest without attorney’s fees. O.C.G.A. § 13-1-11(a)(3). On November 7,
2011, Plaintiff sent to Defendant an acceleration notice and notice of
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foreclosure sale. (Aff., Ex. E, Dkt. [27], at 31–32.) This letter informed
Defendant that Plaintiff intended to enforce its right to collect statutory
attorney’s fees but that Defendant could avoid paying them by paying the total
principal and interest owed within ten days. (Id. at 31.) Defendant contests the
sufficiency of this notice for failure to properly identify the indebtedness due
for payment. The Court finds that Plaintiff has substantially complied with the
requirements of § 13-1-11(a)(3) and that statutory attorney’s fees are therefore
recoverable.
While compliance with § 13-1-11(a)(3) is a mandatory condition
precedent to the recover of statutory attorney’s fees, “Georgia case law requires
only substantial compliance . . . .” Best v. CB Decatur Court, LLC, 750 S.E.2d
716, 720 (Ga. Ct. App. 2013) (quoting Core LaVista, LLC, 709 S.E.2d at 343)).
“So long as a debtor is informed that he has 10 days from receipt of the notice
within which to pay principal and interest without incurring any liability for
attorney fees, the legislative intent behind the enactment of O.C.G.A. § 13-111(a)(3) has been fulfilled.” Id. The notice must therefore “(1) be in writing,
(2) to the party sought to be held on the obligation, (3) after maturity, and . . .
inform the debtor (4) that the provisions relative to payment of attorney fees in
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addition to principal and interest will be enforced, and (5) that the party has 10
days from the receipt of such notice to pay the principal and interest without
the attorney fees.” Harvey v. Meadows, 626 S.E.2d 92, 95 (Ga. 2006) (internal
quotations omitted).
While Defendant does not contest that all five of these elements of
substantial compliance were met, he claims that the notice failed to identify the
particular indebtedness to which the notice applied. The notice referred to a
“Promissory Note dated March 10, 2011 held by Branch Banking and Trust
Company (“Lender”) made by J T Morgan to Branch Banking and Trust
Company in the original principal amount of $1,643,624.83, as secured by a
Georgia Security Deed and Security Agreement from J T Morgan recorded in
Deed Book 7799, Page 111, Bibb County.” (Aff., Ex. E, Dkt. [27], at 31.) The
note was in actuality signed on March 11, 2008. (Aff., Ex. A, Dkt. [27], at 8.)
Defendant is correct that the notice must sufficiently identify the relevant
debt, but this notice did so. Although the date stated was incorrect, the notice
properly identified the original principal amount and the record location of the
Security Deed securing the debt. This was sufficient to identify the debt to
Defendant. Additionally, after receiving the letter, “Defendant called
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Plaintiff’s counsel and told him ‘that [Defendant] was prepared to keep [the]
[P]roperty’ along terms previously communicated to Plaintiff directly.” (Br. in
Opp’n to Pl.’s Mot. for Summ. J., Dkt. [29], at 6.) This conduct supports the
conclusion that Defendant in fact knew which debt was involved. Notice
therefore substantially complied with § 13-1-11(a)(3).
Under § 13-1-11(a)(2), Plaintiff is entitled to attorney’s fees that amount
to “15 percent of the first $500.00 of principal and interest owing on such note
or other evidence of indebtedness and 10 percent of the amount of principal
and interest owing thereon in excess of $500.00.” As stated above, Defendant
owes $221,633.78 in principal and $126,488.49 in interest. Thus, Plaintiff is
entitled to recover $34,837.23 in attorney’s fees.
Conclusion
In accordance with the foregoing, Plaintiff’s Motion for Summary
Judgment [24] is GRANTED. Judgment is hereby ENTERED against
Defendant in the sum of $371,681.23 plus $34,837.23 in attorney’s fees. The
Clerk is DIRECTED to close the case.
SO ORDERED, this 15th day of February, 2017.
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________________________________
RICHARD W. STORY
United States District Judge
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