James Poag v. Kathy McCormick Flories ( 2010 )

COURT OF APPEALS
SECOND DISTRICT OF TEXAS
FORT WORTH
NO. 2-08-170-CV
JAMES POAG APPELLANT AND
APPELLEE
V.
KATHY MCCORMICK FLORIES APPELLEE AND
APPELLANT
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FROM THE 342ND DISTRICT COURT OF TARRANT COUNTY
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OPINION
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I. Introduction
Appellant James Poag appeals the trial court’s final judgment granting
summary judgment in favor of Appellee Kathy McCormick Flories and dismissing his
claims with prejudice. Flories cross-appeals, arguing that the trial court abused its
discretion by failing to award attorneys’ fees to her. W e affirm.
II. Factual and Procedural History
In February 1984, Flories’s husband B.R. deeded 214.9 acres of land to
Ranchoaks Joint Venture by general warranty deed. That land subsequently
became Ranchoaks Addition, a development of individual residential lots that were
marketed under a common scheme for mobile homes. As of January 1987, B.R.
owned all of Ranchoaks Addition’s mineral estate.
In May 1987, B.R. and several of his business associates, in an unrelated
matter, signed a promissory note payable to the Texas American Bank/Fort W orth,
N.A., a portion of which B.R. was personally liable. The note was subsequently
assigned to Mike Ferguson, trustee and president of Anson Financial (Anson).
In June and October 1987, B.R. conveyed three lots in the Ranchoaks
Addition to Poag by general warranty deed. All three deeds provided that they
conveyed the “surface estate only.”
In November 1991, B.R. died, and his will was admitted for probate. Pursuant
to his will, the probate court appointed Flories as dependent administratrix and
authorized her to operate B.R.’s business.
After B.R.’s death, Ferguson filed suit on behalf of Anson against B.R.’s estate
and eventually obtained a judgment against the estate. Anson’s claim was
subsequently settled, and as consideration for the settlement, Anson agreed to
purchase from B.R.’s estate several parcels of land in the Ranchoaks Addition. The
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terms of the settlement agreement were set forth in a document, which did not
contain the phrase “surface estate only.”
After Anson’s claim against B.R.’s estate was settled, Flories filed an
application for sale of real property and real assets with the probate court to fulfill the
terms of the settlement agreement. The probate court granted the application and
ordered that the agreed upon parcels be sold at a private sale for cash. Neither the
application nor the probate court’s order included the phrase “surface estate only.”
The property sold, and on May 15, 1996, Flories filed a report of sale of real property
with the probate court, which described the property sold as “surface estate only.”
The probate court approved and confirmed the sale of the “surface estate only”
property and entered a written decree confirming the sale, which was later attached
to and made a part of the administrator’s deed. The administrator’s deed, dated
June 10, 1996, conveyed the “surface estate only” in four parcels of land to Anson
and was recorded in the Tarrant County deed records on June 11, 1996.
On June 21, 1996, Anson conveyed two of the four parcels of land to Poag by
“W arranty Deed with Vendor’s Lien.” The deed provided that the conveyance was
subject to “any and all . . . reservations . . . affecting the herein described property.”
To secure part of the $110,000 purchase price, Poag signed and delivered a deed
of trust to Anson in which Poag expressly provided that “all presently recorded . . .
reservations[,] . . . oil and gas leases, [and] mineral severance[s]” were exceptions
to the conveyance and warranty.
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In August 1996, the probate court signed an order approving the first amended
account for final settlement and declaring that all property remaining on hand after
payment of the various settlements be delivered to Flories, “the person entitled to
receive such property.” Subsequently, the probate court closed B.R.’s estate and
discharged Flories as administratrix.
In June 2005, Flories executed a mineral lease agreement, granting Antero
Resources, LLP the right to develop the mineral estate on the two tracts of land
conveyed to Poag by Anson in June 1996.
In January 2006, Poag filed suit against Flories, petitioning the court “pursuant
to the Declaratory Judgments Act, Chapter 37 of the Texas Civil Practice and
Remedies Code, for a declaration of the invalidity of a certain document and/or claim
made by . . . Flories, in order to acquire title to property in which [Poag] has an
interest . . . .” Specifically, Poag prayed for a declaration that “the oil and gas lease
executed by [Flories] is invalid and unenforceable, ordering it removed from the title
of the properties made the subject of this litigation, and quieting title in [Poag].”
Poag further alleged slander of title and reformation claims in his petition. Flories’s
answer (1) generally denied Poag’s claims and allegations, (2) asserted various
affirmative defenses, and (3) requested an award of attorneys’ fees under chapters
37 and 38 of the Texas Civil Practice and Remedies Code.
Flories filed a motion for summary judgment, arguing that there was no
evidence to support Poag’s declaratory judgment action or his slander of title and
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reformation claims. Specifically, Flories asserted that the slander of title claim failed
because there was no evidence that: 1) Poag possessed the mineral estate he
alleges was slandered, 2) Flories published a disparaging statement about title to the
property, 3) Flories published any statement with legal malice, or 4) Flories lost a
specific sale of the claimed estate, entitling Poag to special damages. Flories further
asserted that Poag’s reformation claim failed because there was no evidence of any
preexisting oral or written agreement between her and Poag—therefore, no privity.
In the alternative, Flories argued that Poag’s claims were barred by the applicable
statutes of limitations or that the evidence negated at least one essential element of
each of Poag’s reformation and slander of title claims.
Poag filed a response and a first amended original petition, adding an
additional claim for suit to quiet title. Flories thereafter filed a supplemental motion
for summary judgment, claiming that there was no evidence that the administrator’s
deed was invalid or unenforceable, which is the third essential element of Poag’s suit
to quiet title claim. Alternatively, Flories argued that Poag’s claim was barred by the
applicable statute of limitations or that the evidence negated at least one essential
element of Poag’s suit to quiet title claim.
In November 2007, at an evidentiary hearing on the issue of attorneys’ fees,
the trial court found that Flories had reasonable and necessary attorneys’ fees in the
amount of $115,084.07. The trial court also took judicial notice of Flories’s appellate
attorneys’ fees in the amount of $30,000 in the event of an appeal to this court,
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$10,000 in the event of a petition for review to the Texas Supreme Court, and
$25,000 in the event the Texas Supreme Court granted review. The trial court
found, however, that Flories’s pleadings did not support an award of attorneys’ fees,
but “[h]ad there been a counterclaim for declaratory judgment or if it [had been]
appropriate to award attorney[s’] fees,” then the court would have awarded them.
Subsequently, the trial court entered a final judgment granting Flories’s motions for
summary judgment, dismissing all of Poag’s claims with prejudice, and denying
Flories her attorneys’ fees. The trial court did not specify the grounds upon which
it granted Flories’s motions. Poag filed a motion for new trial and a request for
leave to file discovery evidence. The day before the hearing on Poag’s motion for
new trial, Poag filed an amended motion for new trial and a request for leave to
reopen and file additional evidence. Flories subsequently filed an objection to
Poag’s amended motion and a written response. After a hearing, the trial court
denied Poag’s amended motion. Poag thereafter appealed the trial court’s final
judgment as it related to the summary judgment in favor of Flories, and Flories
cross-appealed based on the trial court’s denial of her attorneys’ fees.
In August 2008, Poag filed a notice of bankruptcy, notifying this court that he
had filed for bankruptcy in federal court. This court subsequently stayed the appeal
pursuant to appellate procedure rule 8.2. See Tex. R. App. P. 8.2. In February
2009, the bankruptcy court granted Flories relief from the bankruptcy stay, allowing
her to pursue her appeal relating to attorneys’ fees. Thereafter, both Flories and
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Poag filed motions to reinstate their appeals, which this court reinstated on June 11,
2009.
III. Poag’s Appeal
In two issues, Poag asserts that the trial court erred by granting Flories’s
motion and supplemental motion for summary judgment because (1) his claims—suit
to quiet title, slander of title, and reformation—are not barred by the applicable
statutes of limitations and (2) there is summary judgment evidence raising a genuine
issue of material fact as to each element of his claims. In his final issue, Poag
argues that the trial court erred by denying his “First Amended Motion for New Trial
and Request for Leave to Reopen and File Additional Evidence” because the
additional evidence was decisive, would not have caused undue delay, and was
necessary to prevent an injustice. We first address whether the trial court erred by
granting Flories’s motions for summary judgment.
A. Summary Judgment
Although when both no-evidence and traditional summary judgment motions
are filed we usually address the no-evidence motion first, see Ford Motor Co. v.
Ridgway, 135 S.W .3d 598, 600 (Tex. 2004), here we will review the propriety of
granting the traditional summary judgment first because it is dispositive. See Tex.
R. App. P. 47.1; Reynolds v. Murphy, 188 S.W .3d 252, 258 (Tex. App.—Fort W orth
2006, pet. denied) (op. on reh’g), cert. denied, 549 U.S. 1281 (2007).
1. Standard of Review
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W e review a summary judgment de novo. Mann Frankfort Stein & Lipp
Advisors, Inc. v. Fielding, 289 S.W .3d 844, 848 (Tex. 2009). A movant is entitled to
summary judgment on an affirmative defense if the movant conclusively proves all
the elements of the affirmative defense. Chau v. Riddle, 254 S.W .3d 453, 455 (Tex.
2008); see Tex. R. Civ. P. 166a(b), (c). Thus, to be entitled to summary judgment
based on the defense of limitations, the movant must conclusively establish the date
the cause of action accrued, negate the applicability of the discovery rule if
applicable in the case, and prove as a matter of law that the non-movant’s claim is
time-barred. See KPMG Peat Marwick v. Harrison County Hous. Fin. Corp., 988
S.W .2d 746, 748 (Tex. 1999); Lerner v. First Commerce Bank, 302 S.W .3d 16, 18
(Tex. App.—Houston [14th Dist.] 2009, no pet.).
2. Applicable Statutes of Limitations
a. Suit to Quiet Title
An equitable suit to quiet title is not subject to limitations if a deed is void.
Ford v. Exxon Mobil Chem. Co., 235 S.W .3d 615, 618 (Tex. 2007). If a deed is
voidable, however, then the four-year statute of limitations controls. See id. (noting
that when a deed is merely voidable, equity will not intervene because claimant has
an adequate remedy at law); see also Slaughter v. Qualls, 139 Tex. 340, 345, 162
S.W .2d 671, 674 (1942) (stating that four-year statute of limitations applies to deeds
that are voidable).
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The question of whether a deed is void or voidable depends on its effect upon
the title at the time it was executed and delivered. Slaughter, 162 S.W .2d at 674.
A void deed is without vitality or legal effect. Id. at 676. A voidable deed on the
other hand “operates to accomplish the thing sought to be accomplished, until the
fatal vice in the transaction has been judicially ascertained and declared.” Id.
Here, Poag alleged that the language in the administrator’s deed, “surface
estate only,” was “not the intent of the document” and “was a fraud on the creditors
of the Estate.” He further alleged that the failure of the administrator’s deed to
evidence the true intent of the parties was due to a mutual mistake or a “unilateral
mistake by one party together with the fraud or other inequitable conduct by
[Flories].” Because deeds obtained by fraud or mutual mistake are voidable rather
than void, and because unilateral mistake does not apply to the facts of this case,
the administrator’s deed at issue here is voidable. Therefore, the four-year statute
of limitations applies. See Nobles v. Marcus, 533 S.W .2d 923, 926 (Tex. 1976)
(holding that deeds obtained by fraud are voidable and remain effective until set
aside); see also Williams v. Glash, 789 S.W .2d 261, 264 (Tex. 1990) (stating that
when parties to an agreement have contracted under a mutual misconception of
material fact, the agreement is voidable under the doctrine of mutual mistake);
Zapatero v. Canales, 730 S.W .2d 111, 114 (Tex. App.—San Antonio 1987, writ ref’d
n.r.e.) (declaring that a party cannot claim unilateral mistake concerning outstanding
mineral interest because interest was fully described in deed records).
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b. Suit for Reformation and Slander of Title
The four-year statute of limitations also governs a suit for reformation. See
Brown v. Havard, 593 S.W .2d 939, 947 (Tex. 1980) (applying four-year statute of
limitations to reformation suit). The two-year statute of limitations governs a claim
for slander of title. Tex. Civ. Prac. & Rem. Code Ann. § 16.003 (Vernon Supp.
2009); see Kidd v. Hoggett, 331 S.W .2d 515, 520 (Tex. Civ. App.—San Antonio
1959, writ ref’d n.r.e.) (applying two-year statute of limitations to claim for slander of
title).
3. Discussion
In general, a cause of action accrues and limitations begin running when a
wrongful act causes a legal injury. See S.V. v. R.V., 933 S.W .2d 1, 4 (Tex. 1996).
Here, Poag claims that the wrongful act occurred in June 1996 when the
administrator’s deed, which conveyed four parcels of land from Flories to Anson, was
recorded in the Tarrant County deed records as a conveyance of “surface estate
only.” Thus, Poag’s slander of title, reformation, and suit to quiet title causes of
actions filed in 2006 are clearly barred by the applicable two- and four-year statutes
of limitations. Poag, however, argues that the discovery rule applies to his claims.
W e disagree.
The discovery rule defers the accrual of a cause of action until the plaintiff
knows, or by exercising reasonable diligence, should know of the facts giving rise
to the claim. Barker v. Eckman, 213 S.W .3d 306, 311–12 (Tex. 2006). For the
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discovery rule to apply, the injury must be inherently undiscoverable and objectively
verifiable. Id. at 312. An injury is inherently undiscoverable if it is the type of injury
that is not generally discoverable by the exercise of reasonable diligence. HECI
Exploration Co. v. Neel, 982 S.W .2d 881, 886 (Tex. 1998).
Here, the conveyance Poag attacks occurred in 1996 between Flories and
Anson. The conveyancing document—the administrator’s deed—was recorded in
the Tarrant County deed records on June 11, 1996, and conveyed the “surface
estate only” in four parcels of land from Flories to Anson. On June 21, 1996, Anson
conveyed two of those four parcels of land to Poag. Poag took the conveyance
subject to “any and all . . . reservations . . . affecting the herein described property.”
Poag also signed and delivered a deed of trust to Anson in which he expressly
provided that “all presently recorded . . . reservations[,] . . . oil and gas leases, [and]
mineral severance[s]” were exceptions to the conveyance and warranty.
The recording of the administrator’s deed on June 11, 1996, charged Poag
with notice that Anson only possessed the surface estate, thereby commencing
Poag’s two- and four-year period of limitations to file an action to set the
administrator’s deed aside. See Mooney v. Harlin, 622 S.W .2d 83, 85 (Tex. 1981)
(stating that a person is charged with constructive knowledge of the actual
knowledge that one could gain by an examination of the public records); see also
Hoerster v. Wilke, 138 Tex 263, 265–67, 158 S.W .2d 288, 289–90 (1942) (holding
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that suit to set aside fraudulent conveyance accrues when the fraud is or could be
discovered by the exercise of reasonable diligence).
Moreover, although Poag presents some evidence of fraud or mutual mistake
in the conveyance between Flories and Anson, at most this would toll limitations as
to Anson, not as to a third party. See, e.g., Simmons v. Simmons, No. 05-00-00460-
CV, 2001 W L 301472, at *2 (Tex. App.—Dallas Mar. 29, 2001, pet. denied) (not
designated for publication) (concluding appellant, as a third party, was not entitled
to the tolling of limitations on his cause of action because evidence did not support
tolling for a third party). 1 Poag has presented no evidence of any circumstances that
would raise a fact issue concerning the tolling of the statute of limitations as to him
(as opposed to Anson). Id. Thus, Poag’s limitations period on his claims expired in
June 1998 and June 2000. Poag’s suit filed in 2006 is barred by the applicable
statutes of limitations. Consequently, the trial court did not err by granting Flories’s
motions for summary judgment on the affirmative defense of limitations. We
therefore overrule Poag’s first issue. Having determined that summary judgment
was proper on this ground, we need not reach Poag’s second issue, complaining
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 W e note that even Anson would be hard pressed to argue fraud or mutual
mistake ten years after the fact when the recorded deed expressly stated “surface
estate only.” See Veterans Land Bd. v. Lesley, 281 S.W .3d 602, 624–25 (Tex.
App.—Eastland 2009, pet. filed) (concluding alleged mutual mistakes of fact in
grantors’ deeds to grantee were mistakes so plainly evident that limitations on
grantors’ claim to reform such deeds was not tolled under the discovery rule, as the
deeds were not ambiguous and grantors should have known of the alleged mistakes
when the deeds were executed).
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that the trial court erred by granting Flories’s motions for summary judgment on the
basis of no evidence. See Tex. R. App. P. 47.1.
B. Request for Leave to Reopen
In Poag’s third issue, he argues that the trial court erred by denying his
request to reopen the case and file additional evidence. The evidence that Poag
sought to offer was: (1) excerpts from his deposition testimony, (2) an affidavit in
which he discusses both the contract he entered into with Anson and the Title Policy
he received on the two tracts of land at issue, and (3) an actual copy of the Title
Policy.
W e review the denial of a motion to reopen the evidence under an abuse of
discretion standard. Hernandez v. Lautensack, 201 S.W .3d 771, 779 (Tex.
App.—Fort W orth 2006, pet. denied). Texas Rule of Civil Procedure 270 provides
that a trial court may permit additional evidence to be offered at any time when it
clearly appears necessary to the administration of justice. Tex. R. Civ. P. 270. Rule
270 allows, but does not require, a trial court to permit additional evidence. Lopez
v. Lopez, 55 S.W .3d 194, 201 (Tex. App.—Corpus Christi 2001, no pet.). In
determining whether to permit additional evidence, a court should consider whether
(1) the moving party showed due diligence in obtaining the evidence; (2) the
proffered evidence is decisive; (3) reception of such evidence will cause undue
delay; and (4) granting the motion will cause injustice. Hernandez, 201 S.W .3d at
779. The decision to reopen is within the trial court’s sound discretion. Id. “[A] trial
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court does not abuse its discretion by refusing to reopen a case after evidence is
closed if the party seeking to reopen has not shown diligence in attempting to
produce the evidence in a timely fashion.” Lopez, 55 S.W .3d at 201 (citing Estrello
v. Elboar, 965 S.W .2d 754, 759 (Tex. App.—Fort W orth 1998, no pet.)); see
Hernandez, 201 S.W .3d at 779.
Here, Poag does not address the question of diligence in his brief. After an
independent review, we can find nothing in the record showing that Poag was
diligent in attempting to produce the additional evidence in a timely fashion. On the
contrary, the record shows that Poag’s deposition testimony was taken more than
a year before the trial court entered its final judgment. There is also evidence that
Poag provided Flories with a copy of the Title Policy eight months prior to the entry
of final judgment. Finally, Poag’s affidavit is not based on new testimony or newly
discovered evidence. The trial court could have reasonably concluded, on this
record, that Poag’s desire to offer additional evidence was related to the trial court’s
ruling in its final judgment. Under these circumstances, “the interests of justice do
not warrant a second bite at the apple.” Estrello, 965 S.W .2d at 759; see
Hernandez, 201 S.W .3d at 779 (concluding appellant failed to show he was diligent
in attempting to produce evidence when he had opportunity to put on evidence
before trial court closed evidentiary phase of trial). Therefore, the trial court did not
abuse its discretion by denying Poag’s request to reopen and file additional
evidence. Accordingly, we overrule Poag’s third issue.
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IV. Flories’s Cross-Appeal
In her sole issue on cross-appeal, Flories argues that the trial court abused
its discretion by refusing to award her “her attorneys’ fees based upon its mistaken
belief that Flories’s pleadings do not support an award of attorneys’ fees even
though it found that her attorneys’ fees were necessary, reasonable, and just.” In
support of her argument, Flories points out that “Poag invoked the Uniform
Declaratory Judgments Act (the UDJA) in his Original and First Amended Petitions
and sought attorneys’ fees under the UDJA, section 37.009 of the Texas Civil
Practice and Remedies Code.”
In a proceeding under the UDJA, a court may award “reasonable and
necessary attorney[s’] fees as are equitable and just.” Tex. Civ. Prac. & Rem. Code
Ann. § 37.009 (Vernon 2008). A trial court’s award of attorneys’ fees under the
UDJA is reviewed for an abuse of discretion. See Bocquet v. Herring, 972 S.W .2d
19, 20–21 (Tex. 1998).
A declaration under the UDJA is appropriate “to settle and afford relief from
uncertainty and insecurity with respect to rights, status, and other legal relations.”
Tex. Civ. Prac. & Rem. Code Ann. § 37.002(b) (Vernon 2008). However, a party may
not recover attorneys’ fees under the UDJA when the only issues, aside from
attorneys’ fees, concern clearing of title or trespass to try title. AMC Mortg. Servs.,
Inc. v. Watts, 260 S.W .3d 582, 588 (Tex. App.—Dallas 2008, no pet.); Sw. Guar.
Trust Co. v. Hardy Road 13.4 Joint Venture, 981 S.W .2d 951, 956 (Tex.
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App.—Houston [1st Dist.] 1998, pet. denied). “Any suit that involves a dispute over
the title to land is, in effect, an action in trespass to try title, whatever its form.” Hawk
v. E.K. Arledge, Inc., 107 S.W .3d 79, 84 (Tex. App.—Eastland 2003, pet. denied).
Because a claim for declaratory relief is “merely incidental to the title issues,” the
UDJA will not supplant a suit to quiet title by allowing attorneys’ fees under such
circumstances. Id. (quoting John G. & Marie Stella Kenedy Mem’l Found. v.
Dewhurst, 90 S.W .3d 268, 289 (Tex. 2002)); Sw. Guar. Trust, 981 S.W .2d at 957.
Here, Poag brought a declaratory action seeking to “quiet title and/or acquire
title to property.” In his prayer, Poag sought a judgment “[d]eclaring that the oil and
gas lease executed by Defendant [Flories] is invalid and unenforceable, ordering it
removed from the title of the properties made the subject of this litigation, and
quieting title in [Poag]”.
In substance, Poag’s claim for declaratory relief is a claim to quiet title.
Although Poag couches his declaratory action in terms of a request for a declaration,
everything he requests of the court is necessary to, and a component of, the ultimate
relief he seeks, which is to clear the title on the two tracts of land he purchased from
Anson. W hen the essence of the suit is in trespass to try title, attorneys’ fees are not
recoverable. Hawk, 107 S.W .3d at 84; see Sw. Guar., 981 S.W .2d at 957. Thus,
as a matter of law, Flories was not entitled to an award of attorneys’ fees under the
UDJA. See Sani v. Powell, 153 S.W .3d 736, 746 (Tex. App.—Dallas 2005, pet.
denied) (concluding cross-appellant was not entitled to an award of attorney’s fees
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under the UDJA when cross-appellant’s claim for declaratory relief was in substance
a claim to quiet title). Accordingly, the trial court did not abuse its discretion by
refusing to award Flories her attorneys’ fees. W e overrule Flories’s sole issue on
cross-appeal.
V. Conclusion
Having overruled Poag’s dispositive issues and having overruled Flories’s sole
cross-issue, we affirm the trial court’s judgment.
BOB MCCOY
JUSTICE
PANEL: W ALKER, MCCOY, and MEIER, JJ.
DELIVERED: July 1, 2010
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