Chavez v. Deutsche Bank National Trust Company et al
Filing
32
ORDER Granting In Part and Denying In Part Motion to Dismiss for Failure to State a Claim re: 5 . "On the basis of the foregoing, Defendants' Motion to Dismiss, filed September 13, 2017, is HEREBY GRANTED IN PART AND DENIED IN PART . The Motion is GRANTED insofar as: Plaintiff's First Amended Complaint, filed on July 6, 2017 in state court, is DISMISSED, in its entirety; and the dismissal of Count IV Plaintiff's claim for punitive damages is WITH PREJUDICE. The Moti on is DENIED insofar as the dismissal of all of Plaintiff's other claims is WITHOUT PREJUDICE. Plaintiff must file his second amended complaint by September 21, 2018, and it must comply with the rulings in this Order. This Court EMPHASIZE S that the filing of any motion for reconsideration of this Order does not affect the deadline for Plaintiff to file his second amended complaint." Signed by JUDGE LESLIE E. KOBAYASHI on 6/27/2018.(cib, )COURTS CERTIFICATE of Service - Non-Registered CM/ECF Participants have been served by First Class Mail to the addresses of record listed on the Notice of Electronic Filing (NEF)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
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Plaintiffs,
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vs.
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DEUTSCHE BANK NATIONAL TRUST )
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COMPANY, OCWEN LOAN
SERVICING, LLC; American Home )
Mortgage Servicing, Inc., and )
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John does 1-10; doe
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corporations 1-10; doe
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partnerships 1-10; doe
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entities 1-10; DOE
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GOVERNMENTAL UNITS 1-10,
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Defendants.
_____________________________ )
LUIS C. CHAVEZ, Individually
and as Special Administrator
of the Estate of Marcario
Araujo Chavez,
CIVIL 17-00446 LEK-KSC
ORDER GRANTING IN PART AND DENYING
IN PART DEFENDANTS’ MOTION TO DISMISS
On September 13, 2017, Defendants Deutsche Bank
National Trust Company, as Trustee for American Home Mortgage
Assets Trust 2007-3, Mortgage-Backed Pass-Through Certificates
Series 2007 (“Deutsche Bank as Trustee”); Ocwen Loan Servicing,
LLC (“Ocwen”); and Homeward Residential, Inc., formerly known as
American Home Mortgage Servicing, Inc. (“AHMSI,” collectively,
“Defendants”), filed their Motion to Dismiss (“Motion”).
no. 5.]
[Dkt.
Pro se Plaintiff Luis C. Chavez, Individually and as
Special Administrator of the Estate of Marcario Araujo Chavez
(“Plaintiff”), filed his memorandum in opposition on January 29,
2018, and Defendants filed their reply on February 5, 2018.
[Dkt. nos. 17, 20.]
The Court finds this matter suitable for
disposition without a hearing pursuant to Rule LR7.2(d) of the
Local Rules of Practice of the United States District Court for
the District of Hawai`i (“Local Rules”).
Defendants’ Motion is
hereby granted in part and denied in part for the reasons set
forth below.
The Motion is granted insofar as Plaintiff’s First
Amended Complaint is dismissed without prejudice, with the
exception of his claim for punitive damages, which is dismissed
with prejudice.
BACKGROUND
Plaintiff alleges he is the owner of certain real
property in Makawao, Hawai`i (“the Property”), and Defendants
wrongfully attempted to foreclose upon the Property in a state
court action, Deutsche Bank v. Chavez, Civil No. 11-1-0849
(“Foreclosure Action”).
[Notice of Removal of Civil Action
(“Notice of Removal”), filed 9/6/17 (dkt. no. 1), Decl. of
J. Blaine Rogers (“Rogers Removal Decl.”), Exh. C at 5-21 (First
Amended Complaint, filed 7/6/17 in state court),1 at ¶¶ 1, 7.]
1
Exhibit C consists of three documents that are not
consecutively paginated. All citations to Exhibit C refer to the
page numbers assigned in the district court’s electronic case
filing system.
Plaintiff filed his original complaint on April 6, 2016, in
state court. There is no indication in the state court docket
that Plaintiff served his original complaint. See Rogers Removal
Decl., Exh. A (state court docket sheet). Plaintiff also filed a
(continued...)
2
On April 8, 2015, the state court dismissed the Foreclosure
Action, without prejudice, for lack of prosecution.
¶ 7.]
[Id. at
According to the First Amended Complaint, Plaintiff’s
mortgage loan on the Property was not in default at the time the
Foreclosure Action commenced, but appeared that way because
Defendants had misdirected Plaintiff’s funds.
Plaintiff alleges
that, as of October 4, 2010, the loan was current.
[Id. at
¶¶ 8-10.]
Macario Araujo Chavez (“M.A. Chavez”) was Plaintiff’s
father, and Plaintiff became the administrator of the estate
after M.A. Chavez’s death on November 30, 2010.
Until
M.A. Chavez’s death, he and Plaintiff worked with AHMSI to make
sure that payments were being credited to the proper account.
After M.A. Chavez’s death, Plaintiff continued to work with
AHMSI.
According to Plaintiff, beginning in March 2010,
Plaintiff began receiving significant payments on insurance
claims, and these payments were made through AHMSI and
M.A. Chavez.
However, in spite of repeated instructions from
Plaintiff, AHMSI did not properly credit the insurance payments
to the mortgage loan on the Property.
1
[Id. at ¶¶ 11-13.]
(...continued)
“Correction of Errata of Plaintiff’s First Amended Complaint”
(“Errata”) on July 11, 2017. [Rogers Removal Decl., Exh. C at
2-4.]
3
According to Plaintiff, the November 2013 accounting
for the mortgage loan was not correct and, by January 2014, Ocwen
still had $1,656.84 from a September 2010 insurance claim that it
had been holding in a different loan account instead of applying
it to the mortgage loan account.
[Id. at ¶ 14.]
In addition,
Plaintiff alleges that, in 2010 and 2011, the escrow account “was
consistently over-funded by $4,000.00 or more (over $280 per
month)” because of AHMSI’s repeated failure to collect the
correct property tax amounts.
[Id. at ¶ 15.]
Plaintiff
repeatedly contacted AHMSI to address the over-collection
problem, but the overages persisted for a two-year period.
at ¶ 19.]
Plaintiff alleges he “received promises that were
broken as to payment amounts and applications of funds.”
¶ 32.]
[Id.
[Id. at
Further, although Defendants asserted Plaintiff defaulted
on the January 2011 payment for the mortgage loan, there was
almost a $900 surplus in the escrow account at that time.
at ¶ 16.]
[Id.
The First Amended Complaint includes various other
examples of alleged over-collection and misapplication of funds.
[Id. at ¶¶ 16-18, 20-22, 24-28.]
Plaintiff alleges Ocwen “fabricated a misrepresentation
to intentional [sic] hide funds that should have been applied to
Plaintiffs [sic] loan, prior to bringing a foreclosure,” while
“AHMSI engaged in a pattern of negligent actions upon Plaintiff
on how the funds would be applied.”
4
[Id. at ¶ 14.]
He also
alleges “Defendants continually engaged in a willful
misapplication and non-application of funds and improper time of
when funds were applied, or not even applied.”
[Id. at ¶ 20.]
Plaintiff believes AHMSI held sufficient funds that
should have been credited to the mortgage loan and that
foreclosure was not warranted.
[Id. at ¶ 29.]
Further, a
$4,400.00 payment was sent to AHMSI on April 21, 2011, which
should have covered the amounts that were due on April 1, 2011,
but AHMSI refused the payment, which Plaintiff alleges “made it
impossible to perform from that point forward.”
[Id. at ¶ 30.]
Plaintiff believes his mortgage loan was reinstated on August 7,
2013, but the payments still were not properly credited (assuming
they were accepted at all), and he was still faced with
improperly imposed interest and fees.
[Id. at ¶ 38.]
According to Plaintiff, in October and December 2013,
Ocwen’s counsel sent Plaintiff letters, even though the
foreclosure case was still active and Plaintiff was represented
by counsel.
Further, Plaintiff alleges Defendants acted in bad
faith and with malicious intent so that they could foreclose on
the Property.
[Id. at ¶¶ 39-40.]
Plaintiff alleges the following claims: unfair and
deceptive acts and practices (“UDAP”), under Haw. Rev. Stat.
Chapters 480 and 481A (“Count I”); [id. at ¶¶ 41-53;] breach of
the implied covenant of good faith and fair dealing (“Count II”);
5
[id. at ¶¶ 54-56;] promissory estoppel (“Count III”); [id. at
¶¶ 57-62;] and a claim for punitive damages (“Count IV”), [id. at
¶¶ 63-64].
Plaintiff prays for: actual, treble, and punitive
damages; a ruling that, if Defendants hold a valid mortgage, they
must properly apply Plaintiff’s funds; an order eliminating all
of Plaintiff’s interest, late fees, and other changes that
resulted from Defendants’ failure to determine the correct loan
balance, if any; reasonable attorney’s fees and costs; and any
other appropriate relief.
[Id. at pg. 15.]
The Errata adds allegations that Ocwen has violated the
Fair Debt Collection Practices Act (“FDCPA”), 15 U.S.C. § 1692,
et seq., in particular, 15 U.S.C. §§ 1692(e) and 1692(f).
[Rogers Removal Decl., Exh. C at 2-3.]
The Errata also adds a
prayer for relief stating that, if the Court concludes Deutsche
Bank as Trustee held a valid assignment, this Court should
either: issue an order requiring Deutsche Bank as Trustee to
properly apply his funds and to eliminate his interest, late
fees, and other charges caused by the wrongful assessments; or
enter judgment in Plaintiff’s favor for wrongful foreclosure.
[Id. at 3.]
Defendants were served with and/or received a copy of
the First Amended Complaint on or around August 7, 2017.
of Removal at ¶ 6 (citing Rogers Removal Decl. at ¶ 10).]
[Notice
The
case was removed based on diversity jurisdiction and federal
6
question jurisdiction, based on the claims under the FDCPA.
[Id.
at ¶¶ 7, 24-26.]
While Plaintiff’s original complaint was pending in the
state court, Plaintiff, through counsel, filed Chavez v. Deutsche
Bank National Trust Co., et al., CV 17-00141 DKW-RLP, in this
district court (“First Federal Action”).
The Complaint in the
First Federal Action was based upon substantially the same
factual allegations and theories as in the instant case.
See
Rogers Removal Decl., Exh. B (Complaint in First Federal Action).
The First Federal Action alleged the following claims: UDAP
violations; a claim for declaratory judgment; wrongful
foreclosure; FDCPA violations; and promissory estoppel.
¶¶ 40-56.]
Action.
[Id. at
Plaintiff voluntarily dismissed the First Federal
[CV 17-141, Notice of Dismissal Without Prejudice
Pursuant to Rule 41(a)(1)(A)(i), filed 8/4/17 (dkt. no. 10).]
In the instant Motion, Defendants ask this Court to
dismiss all of Plaintiff’s claims in the First Amended Complaint
and the Errata with prejudice because they fail to state a claim
upon which relief can be granted.
[Motion at 2.]
DISCUSSION
I.
Standing
Defendants state that, on March 7, 2007, M.A. Chavez
executed a promissory note for a $650,000 loan from American Home
Mortgage (“AHM” and “the Note”).
[Mem. in Supp. of Motion at 2
7
(citing First Amended Complaint, Exh. 38, ¶ 7).2]
The Note was
secured by a Mortgage between M.A. Chavez, as borrower, and AHM
as the lender, and the Mortgage encumbered the Property.
The
Mortgage was recorded with the State of Hawai`i Bureau of
Conveyances as document number 2007-046460.
[Motion, Decl. of
J. Blaine Rogers (“Rogers Motion Decl.”), Exh. A (Mortgage).3]
The Mortgage does not list Plaintiff as a borrower, and it does
not reflect that Plaintiff signed the Note.
and Page 2 of 15.]
[Id. at Page 1 of 15
Defendants state the Note was transferred,
and the Mortgage was assigned, to Deutsche Bank as Trustee.
[Mem. in Supp. of Motion at 3 (citing First Amended Complaint,
Exh. 38 at ¶ 9).]
Although Plaintiff is neither a party to nor a
beneficiary of the Mortgage, his claims are premised upon the
position that he was improperly deemed to be in default on the
Mortgage.
[Id. at 3-4.]
Defendants argue Plaintiff lacks
standing to pursue the instant case because: he cannot represent
2
Defendants argue this Court may consider the fifty
exhibits to the First Amended Complaint in ruling on the Motion.
[Mem. in Supp. of Motion at 2-3 n.2 (citing Amfac Mortgage Corp.
v. Arizona Mall of Tempe, Inc., 583 F.2d 426, 429-30 (9th Cir.
1978)).] The version of the First Amended Complaint attached to
the Notice of Removal does not include the attachments. However,
Plaintiff filed a version of the First Amended Complaint with the
exhibits. [Notice of Case Assignment, filed 6/7/18 (dkt. no.
29), Exh. 4 (First Amended Complaint).]
3
Defendants ask this Court to take judicial notice of the
Mortgage pursuant to Fed. R. Evid. 201. That request is granted
because the Mortgage is a public record and its recording and
contents “can be accurately and readily determined from sources
whose accuracy cannot reasonably be questioned.” Rule 201(b)(2).
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himself pro se in his capacity as the Special Administrator of
M.A. Chavez’s estate; and, in his individual capacity, he has not
suffered an actionable injury.
A.
Plaintiff as Special Administrator
There is no indication that Plaintiff is an attorney
licensed to practice in this district.
He therefore is limited
to represent himself, in his individual capacity, pro se.
See
Simon v. Hartford Life, Inc., 546 F.3d 661, 664 (9th Cir. 2008)
(stating “the privilege to represent oneself pro se provided by
[28 U.S.C.] § 1654 is personal to the litigant and does not
extend to other parties or entities”); C.E. Pope Equity Tr. v.
United States, 818 F.2d 696 (9th Cir. 1987) (holding that a
non-attorney cannot appear pro se on behalf of a trust).
Defendants’ Motion must be granted as to the claims Plaintiff
attempts to assert on behalf of M.A. Chavez’s estate because this
Court cannot grant Plaintiff the relief he seeks in those claims.
See Fed. R. Civ. P. 12(b)(6) (stating that the defense of
“failure to state a claim upon which relief can be granted” can
be asserted by motion).
All of Plaintiff’s claims alleged on
behalf of M.A. Chavez’s estate are dismissed.
B.
Plaintiff’s Individual Capacity
In order to establish constitutional standing to pursue
claims in his individual capacity, Plaintiff
must show (1) [he] has suffered an “injury in
fact” that is (a) concrete and particularized and
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(b) actual or imminent, not conjectural or
hypothetical; (2) the injury is fairly traceable
to the challenged action of the defendant; and
(3) it is likely, as opposed to merely
speculative, that the injury will be redressed by
a favorable decision. . . .
See Friends of the Earth, Inc. v. Laidlaw Envt’l Servs. (TOC),
Inc., 528 U.S. 167, 180-81 (2000).
In ruling on Defendants’ Motion, this Court must assume
all of the factual allegations in the First Amended Complaint are
true.
See Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009) (stating
for “the purposes of a motion to dismiss we must take all of the
factual allegations in the complaint as true”).
Even with that
assumption, Plaintiff has not alleged that he, in his individual
capacity, has suffered a concrete, particularized, actual injury
or that he is imminently facing such an injury.
The Foreclosure
Action was dismissed and, moreover, Plaintiff is not a party to
either the Note or the Mortgage.
Because the First Amended
Complaint and Errata fail to plead a plausible basis for
Plaintiff’s standing to pursue the claims in this case, the
Motion must be granted as to Plaintiff’s claims brought in his
individual capacity.
See id. (“To survive a motion to dismiss, a
complaint must contain sufficient factual matter, accepted as
true, to ‘state a claim to relief that is plausible on its
face.’” (quoting Bell Atlantic Corp. v. Twombly, 550 U.S. 544,
570 (2007))).
All of Plaintiff’s claims brought on his own
behalf are dismissed.
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C.
With or Without Prejudice
“Unless it is absolutely clear that no amendment can
cure the defect” – in other words, unless amendment would be
futile – “a pro se litigant is entitled to notice of the
complaint’s deficiencies and an opportunity to amend prior to
dismissal of the action.”
248 (9th Cir. 1995).
Lucas v. Dep’t of Corr., 66 F.3d 245,
Plaintiff can pursue claims on behalf of
M.A. Chavez’s estate if he retains counsel.
Further, it is
arguably possible for Plaintiff to amend his claims to allege a
plausible basis for standing by adding allegations showing that
he has personally been injured, or is imminently facing injury,
because of the alleged problems with M.A. Chavez’s mortgage loan
account.
The dismissal of the First Amended Complaint must
therefore be without prejudice.
To the extent Defendants ask
this Court to dismiss all of Plaintiff’s claims with prejudice,
the Motion is denied.
II.
Defendants’ Other Arguments
This Court declines to rule upon the majority of the
other arguments in the Motion at this time because the amendments
Plaintiff may make to address his standing may affect the
analysis of these arguments.
However, this Court does caution
Plaintiff that, insofar as he alleges “the applicable period” for
his claims is 2010 to 2011, [First Amended Complaint at ¶ 17,]
his UDAP claim and his FDCPA claim may be time-barred.
11
See Haw.
Rev. Stat. § 480-24 (“Any action to enforce a cause of action
arising under this chapter shall be barred unless commenced
within four years after the cause of action accrues.”); 15 U.S.C.
§ 1692k(d) (“An action to enforce any liability created by this
subchapter may be brought in any appropriate United States
district court without regard to the amount in controversy, or in
any other court of competent jurisdiction, within one year from
the date on which the violation occurs.”).
Plaintiff may be able
to address the time-bar issue by pleading facts that would
support rulings that, for example, there was a continuing
violation or the applicable limitations period was tolled.
The only claim that must be dismissed with prejudice is
Count IV, Plaintiff’s claim for punitive damages.
Counts I, II,
and III are Hawai`i state law claims, and
Hawaii district courts applying Hawaii state law
have . . . dismissed or granted summary judgment
with respect to independent claims of punitive
damages, noting that punitive damages are a type
of remedy incidental to other causes of action.
See Liberty Mut. Ins. Co. v. Sumo-Nan LLC, 2015 WL
2449480, *6 (D. Hawai`i May 20, 2015) (“A claim
for punitive damages is not an independent tort,
but a remedy that is incidental to another cause
of action.”); Hale v. Haw. Publ’ns., Inc., 468 F.
Supp. 2d 1210, 1233 (D. Haw. 2006) (granting
motion for summary judgment as to independent
claim of punitive damages, but noting that
plaintiff could seek punitive damages as remedy
for other causes of action).
12
Philadelphia Indem. Ins. Co. v. Ohana Control Sys., Inc., 289 F.
Supp. 3d 1141, 1153 (D. Hawai`i 2018).
In addition, this
district court has stated:
Although the Ninth Circuit has not addressed the
issue, several courts in this circuit have held
that “punitive damages are not recoverable under
the FDCPA.” Roundtree v. Atlantic Dev. and Inv.,
No. CV-09-269-PHX-DGC, 2009 WL 2132697, at *2 (D.
Ariz. July 16, 2009) (citing Wood v. Midland
Credit Mgmt., Inc., No. CV 053881 FMCMANX, 2005 WL
3159639, at *5 (C.D. Cal. July 29, 2005);
Catalfamo v. Countrywide Home Loan, No. CV
F 08-117 LJO TAG, 2008 WL 4158432, at *5 (E.D.
Cal. Sept. 4, 2008)). Based on the language of
the statute, the Court finds these opinions
persuasive and finds that Plaintiff is not
entitled to punitive damages.
Slater v. PRA Recovery, Civil No. 12-00290 HG-RLP, 2012 WL
5269400, at *7 (D. Hawai`i Sept. 21, 2012), report and
recommendation adopted, 2012 WL 5269390 (Oct. 22, 2012).
This
Court also finds the above caselaw to be persuasive and concludes
that Plaintiff cannot recover punitive damages for his FDCPA
claim.
The dismissal of Count IV is therefore with prejudice.
This dismissal, however, does not preclude Plaintiff from
including a request for punitive damages in his prayer for relief
for his state law claims, if such relief is appropriate based on
the factual allegations of this case.
III. Summary and Leave to Amend
All of Plaintiff’s claims are dismissed without
prejudice, except Count IV, which is dismissed with prejudice.
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Plaintiff will therefore be allowed to file a second amended
complaint that alleges all of the claims in the First Amended
Complaint and the Errata, except for Count IV.
This Court
reminds Plaintiff that his second amended complaint must address
the defects discussed in this Order, including the retention of
counsel to represent him if he wishes to pursue claims on behalf
of M.A. Chavez’s estate.
The Court orders Plaintiff to file his
second amended complaint by September 21, 2018.
The Court cautions Plaintiff that his second amended
complaint must state all of his remaining claims – i.e., his UDAP
claim, breach of the implied covenant of good faith and fair
dealing claim, his promissory estoppel claim, and his FDCPA claim
– as well as all of the factual allegations, exhibits, and legal
theories that these claims rely upon.
Plaintiff cannot rely upon
or incorporate by reference any portion of his original Complaint
or his First Amended Complaint.
This Court will not consider
Plaintiff’s second amended complaint collectively with his prior
filings in this case.
Further, Plaintiff is not allowed to add
any new claims, parties, or theories of liability in the second
amended complaint.
If he wishes to do, he must file a motion for
leave to amend, and that motion will be considered by the
magistrate judge.4
4
If Plaintiff wishes to file a motion for leave to amend,
he must also move for an amendment of the scheduling order
(continued...)
14
This Court also cautions Plaintiff that, if he fails to
file his second amended complaint by September 21, 2018, his
claims will be dismissed with prejudice.
In other words,
Plaintiff will no longer have any claims remaining in this case,
and the case will be closed.
Further, if any claim in
Plaintiff’s second amended complaint fails to address the defects
identified in this Order, that claim may be dismissed with
prejudice.
CONCLUSION
On the basis of the foregoing, Defendants’ Motion to
Dismiss, filed September 13, 2017, is HEREBY GRANTED IN PART AND
DENIED IN PART.
The Motion is GRANTED insofar as: Plaintiff’s
First Amended Complaint, filed on July 6, 2017 in state court, is
DISMISSED, in its entirety; and the dismissal of Count IV –
Plaintiff’s claim for punitive damages – is WITH PREJUDICE.
The
Motion is DENIED insofar as the dismissal of all of Plaintiff’s
other claims is WITHOUT PREJUDICE.
Plaintiff must file his second amended complaint by
September 21, 2018, and it must comply with the rulings in this
Order.
This Court EMPHASIZES that the filing of any motion for
4
(...continued)
because the deadline to add parties and amend pleadings passed on
June 15, 2018. [Amended Rule 16 Scheduling Order, filed 5/18/18
(dkt. no. 28), at ¶ 5.]
15
reconsideration of this Order does not affect the deadline for
Plaintiff to file his second amended complaint.
IT IS SO ORDERED.
DATED AT HONOLULU, HAWAII, June 27, 2018.
/s/ Leslie E. Kobayashi
Leslie E. Kobayashi
United States District Judge
LUIS C. CHAVEZ, ETC., ET AL. VS. DEUTSCHE BANK NATIONAL TRUST
CO., ET AL; CIVIL 17-00446 LEK-KSC; ORDER GRANTING IN PART AND
DENYING IN PART DEFENDANTS’ MOTION TO DISMISS
16
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