SER Energy Corp. of America v. Hon. John Lewis Marks, Judge ( 2015 )


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  •         IN THE SUPREME COURT OF APPEALS OF WEST VIRGINIA
    
    
                                    January 2015 Term
                                     _______________                        FILED
                                                                         May 13, 2015
                                                                         released at 3:00 p.m.
                                        No. 14-1168                    RORY L. PERRY II, CLERK
                                                                     SUPREME COURT OF APPEALS
                                      _______________                     OF WEST VIRGINIA
    
    
    
    
                         STATE OF WEST VIRGINIA EX REL.
    
                      ENERGY CORPORATION OF AMERICA and
    
                                JOHN D. SOLLON,
    
                                   Petitioners
    
    
                                             v.
    
        THE HONORABLE JOHN LEWIS MARKS, Judge of the Circuit Court of
    
                           Harrison County;
    
                          ERIN E. GILMORE;
    
                        ERIKA L. GILMORE; and
    
                          RON R. GILMORE,
    
                             Respondents
    
    
           ____________________________________________________________
    
                              Petition for Writ of Prohibition
    
                          WRIT GRANTED AS MOULDED
           ____________________________________________________________
    
                                  Submitted: April 22, 2015
    
                                    Filed: May 13, 2015
    
    
    David J. Romano, Esq.                         Michael P. Markins, Esq.
    Romano Law Office                             Jennifer A. Lynch, Esq.
    Clarksburg, West Virginia                     Mannion & Gray Co., L.P.A.
    Counsel for the Petitioners                   Charleston, West Virginia
                                                  Counsel for the Respondents
    
    
    JUSTICE KETCHUM delivered the Opinion of the Court.
    
    JUSTICE DAVIS dissents and reserves the right to file a dissenting opinion.
                                  SYLLABUS BY THE COURT
    
                  Under West Virginia Rule of Civil Procedure 20(a), persons may be joined
    
    in one action as defendants if: (1) any right to relief is asserted against them with respect
    
    to or arising out of the same transaction, occurrence, or series of transactions or
    
    occurrences; and (2) any question of law or fact common to all of the defendants will
    
    arise in the action. Under Rule 20(a), joinder of defendants is proper only if both of these
    
    requirements are satisfied.
    
    
    
    
                                                  i
    Justice Ketchum:
    
    
                 Petitioners, Energy Corporation of America and John D. Sollon
    
    (collectively, “ECA”) seek a writ of prohibition to halt enforcement of a September 30,
    
    2014, order of the Circuit Court of Harrison County.
    
                 The circuit court’s order pertained to a lawsuit against ECA stemming from
    
    a car wreck that occurred in Pennsylvania. The plaintiffs’1 lawsuit has two separate
    
    causes of action, each with a different defending party: (1) a negligence claim against
    
    ECA for causing the wreck; and (2) a bad faith claim against the plaintiffs’ insurer for
    
    refusing to pay medical payments coverage for wreck-related injuries. The plaintiffs
    
    assert that they may join their claims against their insurer and ECA under the permissive
    
    joinder rule in West Virginia Rule of Civil Procedure 20(a).2
    
                 ECA argues that joinder of the plaintiffs’ insurer and ECA was improper
    
    under Rule 20(a). ECA further contends that because joinder was improper, the mere fact
    
    that Harrison County was a proper venue for the plaintiffs’ insurer did not make Harrison
    
    County a proper venue for ECA.
    
    
    
    
                 1
                  The plaintiffs consist of three people: the owner of the car involved in the
    wreck and two people who were inside that car when the wreck occurred.
                 2
                    West Virginia Rule of Civil Procedure 20(a) allows for parties to be
    joined as co-defendants when “any right to relief in respect of or arising out of the same
    transaction, occurrence, or series of transactions or occurrences and if any question of
    law or fact common to all defendants will arise in the action.” W.VA. R. CIV. P. 20
    [1998].
    
                                                1
    
                 After careful consideration, we grant the requested writ of prohibition as
    
    moulded. As we discuss below, the circuit court improperly permitted the plaintiffs to
    
    join ECA with the plaintiffs’ insurer, and it should have severed the two claims. Once
    
    severed, the circuit court should have dismissed the claims against ECA for lack of
    
    venue.
    
    
                                      I.
    
                     FACTUAL AND PROCEDURAL BACKGROUND
    
    
                 In 2012, the plaintiffs’ car and one of ECA’s work-trucks (driven by an
    
    ECA employee, John D. Sallon) were involved in a wreck. The wreck occurred in
    
    Pennsylvania. However, all three plaintiffs live in Harrison County, West Virginia.
    
                 In 2013, the plaintiffs filed a tort claim in Harrison County against ECA for
    
    negligently causing the wreck. ECA timely filed a motion to dismiss on the ground that
    
    Harrison County was not a proper venue. The circuit court noted that the wreck occurred
    
    in Pennsylvania and that ECA is a West Virginia corporation with its local office and
    
    chief officers residing in Kanawha County. It therefore dismissed the plaintiffs’ claim
    
    against ECA for improper venue.3
    
                 In the meantime, according to the plaintiffs, they notified their motor
    
    vehicle insurer, State Auto, of the wreck and resulting injuries. Assuming the plaintiffs’
    
    medical bills were covered under their medical payments coverage, the plaintiffs’ insurer
    
    
                 3
                  We note that in addition to its local, Kanawha County office, and the fact
    that ECA’s president resides in Kanawha County, ECA also maintains a headquarters in
    Denver, Colorado.
    
                                                2
    
    would be obligated to provide coverage regardless of who was at fault in causing the
    
    wreck. Nevertheless, the plaintiffs contend that their insurer failed to either accept or
    
    reject their request to pay the medical bills.
    
                  In 2014, the plaintiffs filed a bad faith claim in Harrison County against
    
    their insurer. They alleged that their insurer violated the Unfair Trade Practices Act by
    
    failing to provide no fault medical payments coverage for wreck-related injuries as
    
    required by their insurance policy.4 The plaintiffs joined ECA as a co-defendant to their
    
    suit, seeking tort damages for the wreck.
    
                  ECA timely filed a motion to sever for improper joinder and dismiss for
    
    improper venue. In an order dated September 30, 2014, the circuit court denied ECA’s
    
    motion to sever and held that ECA could be tried in Harrison County. It found that the
    
    negligence claim against ECA and the contractual medical payments claim against the
    
    plaintiffs’ insurer arose from the same wreck, and therefore, they were part of the same
    
    “transaction or occurrence.” The circuit court also found that, once joined, the plaintiffs’
    
    insurer was a “venue-giving defendant” as to ECA. Accordingly, because venue was
    
    proper in Harrison County for the plaintiffs’ insurer, it was also proper for ECA (even
    
    though it would not have been a proper venue had the plaintiffs’ insurer not been joined
    
    with ECA as a co-defendant). ECA then petitioned this Court for a writ of prohibition.
    
    
    
    
                  4
                   The Unfair Trade Practices Act, as codified in WEST VIRGINIA CODE § 33­
    11-4(9) [2002], requires that insurers, among other things, affirm or deny coverage of
    claims within a reasonable time.
    
                                                     3
    
                                           II.
    
                                   STANDARD OF REVIEW
    
    
    
                  When considering a petition for a writ of prohibition, we have held:
    
                  In determining whether to entertain and issue the writ of
                  prohibition for cases not involving an absence of jurisdiction
                  but only where it is claimed that the lower tribunal exceeded
                  its legitimate powers, this Court will examine five factors: (1)
                  whether the party seeking the writ has no other adequate
                  means, such as direct appeal, to obtain the desired relief; (2)
                  whether the petitioner will be damaged or prejudiced in a way
                  that is not correctable on appeal; (3) whether the lower
                  tribunal's order is clearly erroneous as a matter of law; (4)
                  whether the lower tribunal's order is an oft repeated error or
                  manifests persistent disregard for either procedural or
                  substantive law; and (5) whether the lower tribunal's order
                  raises new and important problems or issues of law of first
                  impression. These factors are general guidelines that serve as
                  a useful starting point for determining whether a discretionary
                  writ of prohibition should issue. Although all five factors
                  need not be satisfied, it is clear that the third factor, the
                  existence of clear error as a matter of law, should be given
                  substantial weight.
    
    Syl. Pt. 4, State ex rel. Hoover v. Berger, 
    199 W. Va. 12
    , 
    483 S.E.2d 12
     (1996) (emphasis
    
    added).
    
    
                                              III.
    
                                           ANALYSIS
    
    
    
                  The West Virginia Rules of Civil Procedure allow for defendants to be
    
    joined in a single action if the claims asserted against them are sufficiently related. See
    
    W.VA. R. CIV. P. 20. Furthermore, West Virginia follows the venue-giving defendant
    
    principle: once venue is proper for one defendant in an action, venue is also proper for all
    
    
                                                 4
    
    other defendants in that same action, but only if the venue-giving defendant was properly
    
    joined. See State ex rel. Kenamond v. Warmuth, 179 W.Va. 230, 231, 
    366 S.E.2d 738
    ,
    
    739 (1988).
    
                      ECA’s petition raises two arguments: (1) joinder of ECA and the plaintiffs’
    
    insurer was improper under West Virginia Rule of Civil Procedure 20; and (2) because
    
    joinder was improper, the venue-giving defendant principle did not apply to make
    
    Harrison County a proper venue for ECA. We examine the parties’ arguments on these
    
    issues in turn.
    
        A. Joinder of the defendants under West Virginia Rule of Civil Procedure 20(a)
    
                      The plaintiffs joined their insurer and ECA as co-defendants under West
    
    Virginia Rule of Civil Procedure 20(a). This rule provides for discretionary joinder of
    
    multiple defendants in a single complaint. Rule 20(a) states, in pertinent part:
    
                      All persons may be joined in one action as defendants if there
                      is asserted against them jointly, severally, or in the
                      alternative,5 any right to relief in respect of or arising out of
                      the same transaction, occurrence, or series of transactions or
                      occurrences and if any question of law or fact common to all
                      defendants will arise in the action.
    
    W.VA. R. CIV. P. 20(a) [1998] (footnote added).
    
    
    
    
                      5
                     By “jointly, severally, or in the alternative,” the drafters of the rules of
    civil procedure alluded to a common law rule which allowed multiple plaintiffs to “sue
    together to assert joint, but not several rights . . . Thus, Rule 20(a) avoids the restrictions
    imposed by historic practice, as well as the confusion engendered by the use of terms
    such as ‘joint’ and ‘several.’” JAMES W. MOORE, MOORE’S FEDERAL PRACTICE, § 20.03
    at 20-26 (3d ed. 2015).
    
                                                     5
    
                  We recently interpreted similar language in Rule 20(a) as it pertains to the
    
    joinder of multiple plaintiffs, holding that:
    
                  Rule 20(a) of the West Virginia Rules of Civil Procedure
                  provides that “[a]ll persons may join in one action as
                  plaintiffs if they assert any right to relief … [1] arising out of
                  the same transaction [or] occurrence ... and [2] if any question
                  of law or fact common to all these persons will arise in the
                  action.” Under Rule 20(a), joinder is proper only if both of
                  these requirements are satisfied.
    
    Syl. Pt. 2, State ex rel. J.C. v. Mazzone, 233 W.Va.457, 
    759 S.E.2d 200
     (2014) (emphasis
    
    added).
    
                  Thus, Rule 20(a) sets out a two-pronged test for permissive joinder of
    
    plaintiffs or defendants: (1) the joined claims must be transactionally related; and (2) a
    
    question of law or fact common to all parties must arise in the action. See FRANKLIN D.
    
    CLECKLEY, ROBIN JEAN DAVIS, AND LOUIS J. PALMER, JR., LITIGATION HANDBOOK ON
    
    WEST VIRGINIA RULES OF CIVIL PROCEDURE § 20(a), at 572 (4th ed. 2012).
    
    Accordingly, we hold that under West Virginia Rule of Civil Procedure 20(a), persons
    
    may be joined in one action as defendants if: (1) any right to relief is asserted against
    
    them with respect to or arising out of the same transaction, occurrence, or series of
    
    transactions or occurrences; and (2) any question of law or fact common to all of the
    
    defendants will arise in the action. Under Rule 20(a), joinder of defendants is proper
    
    only if both of these requirements are satisfied. See CLECKLEY, DAVIS, AND PALMER,
    
    LITIGATION HANDBOOK § 20(a), at 572.
    
                  Therefore, determining whether joinder of defendants is proper under Rule
    
    20(a) entails a two-step process. The first step is to assess whether the claims to be
    
                                                    6
    
    joined arise out of the same transaction or series of transactions. If the answer to the first
    
    question is yes, then the second step is to consider whether any common question of law
    
    or fact will arise in the joined claims. A court reviewing joinder of parties should make
    
    these determinations in light of Rule 20(a)’s purpose, which is to promote judicial
    
    efficiency, prevent duplication of effort, and alleviate the uncertainty that comes with
    
    piecemeal litigation. Morris v. Crown Equip. Co., 219 W.Va. 347, 357 n.8, 
    633 S.E.2d 292
    , 302 n.8 (2006).      Further, Rule 20(a) is based on “common sense, fact-based
    
    considerations.” MOORE’S FEDERAL PRACTICE, § 20.02 at 20-5. If common sense
    
    dictates that the claims to be joined are sufficiently related to further these goals, Rule
    
    20(a) should be liberally construed. See Anderson v. McDonald, 170 W.Va. 56, 60, 
    289 S.E.2d 729
    , 734 (1982).
    
                  As to the first prong (transactional relatedness), there are no hard and fast
    
    rules for determining whether it has been met. Mosley v. Gen. Motors Corp., 
    497 F.2d 1330
    , 1333 (8th Cir. 1974) (interpreting Federal Rule of Civil Procedure 20).6 However,
    
    it is well established that this prong does not require that the events giving rise to the
    
    claims be absolutely identical. Mazzone, 223 W.Va. at 464, 759 S.E.2d at 207. Rather,
    
    claims are transactionally related if there is a logical relation between them. Mosley, 497
    
    
                  6
                     “Because the West Virginia Rules of Civil Procedure are patterned after
    the Federal Rules of Civil Procedure, we often refer to interpretations of the Federal
    Rules when discussing our own rules.” See Hardwood Group v. Larocco, 219 W.Va. 56,
    61 n.6, 
    631 S.E.2d 614
    , 619 n.6 (2006). However, we caution that “[a] federal case
    interpreting a federal counterpart to a West Virginia rule of procedure may be persuasive,
    but it is not binding or controlling.” Syl. Pt. 3, Brooks v. Isinghood, 213 W.Va. 675, 
    584 S.E.2d 531
     (2003).
    
                                                  7
    
    F.2d at 1333 (“‘Transaction’ is a word of flexible meaning. It may comprehend a series
    
    of many occurrences, depending not so much upon the immediateness of their connection
    
    as upon their logical relationship.”). In other words, transactional relatedness will be
    
    found when the claims “involve enough related operative facts to make joinder in a single
    
    case fair.” MOORE’S FEDERAL PRACTICE, § 20.05 at 20-30. Joinder of multiple claims
    
    into a single action may be fair if there is a “substantial evidentiary overlap” between
    
    them. Klamath Irrigation Dist. v. U.S., 
    113 Fed. Cl. 688
    , 707 (2013). For example, a
    
    single transaction may be found when otherwise unrelated parties are affected by the
    
    same state-wide discriminatory policy. See Mosley, 497 F.2d at 1333.
    
                  The second prong (commonality) is an easy requirement to satisfy and is
    
    relatively straightforward. Mazzone, 223 W.Va. at 464, 759 S.E.2d at 207. It only
    
    requires that a single factual or legal question will arise in the litigation against the joined
    
    parties. Id. at 465, 759 S.E.2d at 208. The commonality requirement is satisfied even if
    
    the common question is not the most dominant issue in the case. Id. This requirement
    
    ensures that the claims can be tried together conveniently. MOORE’S FEDERAL PRACTICE,
    
    § 20.04 at 20-30.
    
                  The circuit court considered Rule 20(a)’s first requirement and found that
    
    the claims against the plaintiffs’ insurer and ECA arose out of the same “transaction or
    
    occurrence.” We do not need to pass judgment on the circuit court’s determination
    
    because it erred in ending its inquiry there. Even assuming the circuit court was correct,
    
    it should have also considered Rule 20(a)’s second requirement, commonality. Mere
    
    satisfaction of Rule 20(a)’s first requirement does not automatically satisfy the second
    
                                                   8
    
    requirement. See Horton Co. v. Int’l Tel. & Tel. Corp., 
    85 F.R.D. 369
    , 371 (W.D. Pa.
    
    1980) (recognizing that two claims might have arisen out of same transaction or
    
    occurrence, but there was no commonality between them).
    
                  The plaintiffs’ claims against their insurer and ECA clearly do not raise a
    
    common factual or legal question. Assuming the plaintiffs’ claim against their insurer to
    
    be true, their insurer would be contractually required to pay the medical bills regardless
    
    of who was at fault in causing the wreck. Therefore, ECA’s negligence in causing the
    
    wreck has no bearing on whether the plaintiffs’ insurer is obligated to pay the claim for
    
    medical payments coverage. Likewise, the plaintiffs’ bad faith claim against their insurer
    
    does not affect ECA’s potential liability for its employee’s negligence in causing the
    
    wreck. Furthermore, we note that joining these two unrelated claims would not further
    
    Rule 20(a)’s objective of promoting judicial efficiency while preventing duplication of
    
    effort. Because these claims do not present a single factual or legal question in common,
    
    the claim against ECA can be resolved with just as much efficiency without being joined
    
    to the plaintiffs’ claim against their insurer.
    
                  Therefore, joinder of the plaintiffs’ insurer and ECA was improper because
    
    it failed to satisfy both requirements under Rule 20(a). Because the plaintiffs’ insurer and
    
    ECA were misjoined, the claims against them should have been severed under West
    
    Virginia Rule of Civil Procedure 21 [1960]. See CLECKLEY, DAVIS, AND PALMER,
    
    LITIGATION HANDBOOK § 21, at 574 (“If a trial court finds that a plaintiff has misjoined
    
    parties, the court should sever those parties or claims[.]”). The circuit court clearly erred,
    
    as a matter of law, in failing to do so.
    
                                                      9
    
               B. The Venue-Giving Defendant Principle and improper joinder
    
                 ECA argues that the circuit court erred in finding venue was proper in
    
    Harrison County. The wreck did not occur in West Virginia. Therefore, it contends that
    
    venue for ECA was only proper in a West Virginia county where its “principal office is
    
    or wherein its mayor, president or other chief officer resides[.]” W.VA. CODE § 56-1-1
    
    [2007]. ECA is a corporate defendant with its local office and some of its chief officers,
    
    including its president, located in Kanawha County. Accordingly, ECA asserts that
    
    Harrison County was not a proper venue for ECA.7
    
                 The circuit court’s finding that Harrison County was a proper venue for
    
    ECA was based on the “venue-giving defendant” principle, whereby “once venue is
    
    proper for one defendant, it is proper for all other defendants subject to process.”
    
    Kenamond, 179 W.Va. at 231, 366 S.E.2d at 739. The circuit court found that Harrison
    
    County was a proper venue for the insurer and that the insurer was a venue-giving
    
    defendant as to ECA.
    
                 ECA does not deny that West Virginia follows the venue-giving defendant
    
    principle. Rather, ECA contends that this principle does not apply to cases where joinder
    
    with the venue-giving defendant was improper. ECA contends that without the plaintiffs’
    
    insurer (who, as we just discussed, was improperly joined with ECA), there is no venue-
    
    giving defendant.
    
                 7
                   We note that the driver of the ECA work-truck involved in the wreck,
    John D. Sollon, resides in Monongalia County, West Virginia. Therefore, Monongalia
    County may also be a proper venue for the plaintiffs’ claim against ECA arising out of
    Mr. Sallon’s negligence in causing the wreck.
    
                                               10
    
                  When a venue-giving defendant is severed or dismissed from an action in
    
    its initial phase, and venue for the remaining defendant is improper under WEST VIRGINIA
    
    CODE § 56-1-1, the circuit court is required to grant the remaining defendant’s timely
    
    filed motion to dismiss for improper venue. See Syl. Pt. 11, Lester v. Rose, 147 W.Va.
    
    575, 
    130 S.E.2d 80
     (1963) (modified by State ex rel. Sutton v. Spillers, 181 W.Va. 376,
    
    
    382 S.E.2d 570
     (1989)). See also In re Reynolds, 
    369 S.W.3d 638
    , 656-57 (Tex. App.
    
    2012) (holding that trial court erred in denying remaining defendant’s motion to dismiss
    
    for improper venue after venue-giving defendant was dismissed); Corry v. CFM Majestic
    
    Inc., 
    16 F. Supp. 2d 660
    , 665-57 (E.D. Va. 1998) (noting severance prevents a plaintiff
    
    from manipulating joinder rules to burden “defendant who otherwise would have been
    
    entitled to a [transfer of venue].”).
    
                  However, there is an exception to this rule which allows a circuit court to
    
    deny a remaining defendant’s motion to dismiss for improper venue after the venue-
    
    giving defendant is no longer a party to the action. This exception applies when: (1)
    
    application of the venue-giving defendant principle was initially proper; (2) the plaintiff
    
    had a reasonable belief that he/she had a bona fide cause of action against the venue-
    
    giving defendant; and (3) dismissal of the remaining defendant would result in substantial
    
    delay. See Syl. Pt. 1, Sutton, 181 W.Va. at 379, 382 S.E.2d at 573.
    
                  Application of the venue-giving defendant principle was not initially proper
    
    in this case because ECA’s joinder with the venue-giving defendant (the plaintiffs’
    
    insurer) was not allowed under West Virginia Rule of Civil Procedure 20(a). We have
    
    held that “[t]he principle of the venue-giving defendant . . . is closely intertwined with
    
                                                11
    
    our procedural rules on joinder.” Morris, 219 W.Va. at 357, 633 S.E.2d at 302. In
    
    Morris, we further explained the connection between the venue-giving defendant
    
    principle and our joinder rules, stating: “a requirement that the plaintiff independently
    
    ‘establish venue’ with respect to the out-of-state tortfeasor would effectively prevent
    
    joinder of the out-of-state tortfeasor. This would be an absurd result, contrary to all
    
    established procedure.” Id. at 357, 633 S.E.2d at 302. Similarly, application of the
    
    venue-giving defendant principle through an improperly joined party (the plaintiffs’
    
    insurer) was contrary to our established procedure on joinder and thus, produced an
    
    absurd result.
    
                     Furthermore, dismissing the claim against ECA for improper venue would
    
    not result in substantial delay. In determining this issue, we have stated:
    
                     The determination of what constitutes substantial delay in an
                     individual case is at the discretion of the circuit court since
                     the severity of the delay will vary from suit to suit. We point
                     out, however, that if a case is settled early in the life of the
                     suit, there would be no waste of judicial effort if the case was
                     transferred. Judicial economy is at issue only if time and
                     effort have been expended by the court in reviewing the case
                     and answering motions.
    
    Sutton, 181 W.Va. at 379 n.7, 382 S.E.2d at 573 n.7 (emphasis added). ECA timely filed
    
    its motion to dismiss for improper venue early in the life of this suit, before the parties (or
    
    judge) expended any time, research, or discovery on the action. See id., at 378-79, 382
    
    S.E.2d at 572-73.
    
                     Neither party argues that the plaintiffs lacked a reasonable belief that they
    
    had a bona fide cause of action against their insurer. We do not need to address this
    
    
                                                   12
    
    subject because application of the venue-giving defendant principle was not initially
    
    proper and because substantial delay would not result in dismissing the claim against
    
    ECA for improper venue. We therefore refrain from speculating on the plaintiffs’ good
    
    faith.
    
                  Once the plaintiffs’ insurer is properly severed from the claim against ECA,
    
    there will be no venue-giving defendant in this action.         Without a venue-giving
    
    defendant, Harrison County was not a proper venue for ECA. Our holding in Syllabus
    
    Point Eleven of Lester, 147 W.Va. 575, 
    130 S.E.2d 80
    , required the circuit court to grant
    
    ECA’s motion. The circuit court’s failure to do so was clear error, not correctable on
    
    appeal, and left ECA with no adequate means to obtain its desired relief other than to
    
    request a writ of prohibition.
    
                                            IV.
    
                                        CONCLUSION
    
    
    
                  Therefore, we find that the circuit court erred in denying ECA’s motion to
    
    sever and dismiss. Accordingly, we halt enforcement of the September 30, 2014, order
    
    denying ECA’s motion to sever for improper joinder and dismiss for improper venue. In
    
    addition, we direct the circuit court to sever and dismiss the plaintiffs’ claims against
    
    ECA. Likewise, we grant ECA’s requested writ of prohibition as moulded.
    
                                                                   Writ Granted as Moulded.
    
    
    
    
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