in Re Houston Livestock Show and Rodeo, Inc. ( 2019 )

Opinion issued June 6, 2019
In The
Court of Appeals
For The
First District of Texas
————————————
NO. 01-18-00825-CV
———————————
IN RE HOUSTON LIVESTOCK SHOW AND RODEO, INC., Relator
Original Proceeding on Petition for Writ of Mandamus
MEMORANDUM OPINION
Relator, Houston Livestock Show and Rodeo, Inc. (HLSR), has filed a petition
for a writ of mandamus, challenging the trial court’s order granting a Motion to
Consolidate/Transfer HLSR’s declaratory judgment suit from one Harris County
district court to another Harris County district court. The defendant in the declaratory
judgment action and the real party in interest is Dolcefino Communications, LLC,
doing business as Dolcefino Consulting (Dolcefino).1 In its sole issue, HLSR
contends that the trial court abused its discretion in granting the motion and HLSR
is entitled to relief because it does not have an adequate remedy by appeal. We
conditionally grant the petition.
Background
Brie Ana Williams filed suit, in Harris County district court, against HLSR,
two individuals, and the Los Vaqueros Rio Grande Trail Ride Association, seeking
damages arising from a sexual assault at a trail ride event (the “personal injury suit”).
The personal injury suit was assigned to the 334th District Court of Harris County
and docketed as cause number 2017-19367.
Williams retained Dolcefino “as an investigative consultant.” On March 23,
2018, Dolcefino sent to HLSR, in correspondence that made no reference to the
personal injury suit, “a formal request to inspect and if desired obtain copies of
records” under section 22.353 of the Texas Business Organizations Code.2 Dolcefino
1
The underlying case is Brie Ana Williams v. Alvin Wesley Prine, David L. Ramirez,
Los Vaqueros Rio Grande Trail Ride Association, LLC, and Houston Livestock
Show and Rodeo, Inc., Cause Number 2017-19367, in the 334th District Court of
Harris County, Texas, the Honorable Steven Kirkland presiding; and initially filed
as Houston Livestock Show and Rodeo, Inc. v. Dolcefino Communications, LLC
d/b/a Dolcefino Consulting, Cause Number 2018-50038, in the 113th District Court
of Harris County, Texas.
2
See TEX. BUS. ORGS. CODE ANN. § 22.353 (requiring certain nonprofit corporations
to keep “records, books, and annual reports of the corporation’s financial activity”
and make those records, books, and annual reports available to public for inspection
and copying).
2
requested “[a] searchable ledger detailing payments made to any security company”
from January 1, 2012 through December 31, 2013, and January 1, 2017 through the
present; and “PDF copies of documents detailing any payments made to settle any
litigation involving harassment or assault, redacted to exclude any information made
confidential under state law, between January 1, 2012 through the present.” During
the next several months, Dolcefino also requested inspection of other financial
records and documents, including:
• “[f]inancial records detailing the purchase of all furniture since January
1, 2016”;
• “[f]inancial records” detailing expenditures for travel and
entertainment since January 1, 2016”;
• “[f]inancial records detailing the prizes and awards for Champion
livestock at the Rodeo for the last two years, including the payments to
the winners, and documents detailing the use of all remaining
proceeds”;
• “financial records detailing the purchase of any services or materials or
anything of value from any Board Members as identified in 990 tax
returns since January 1, 2015”;
• “[s]alaries and compensation of all current rodeo officers and
employees”;
• “[d]ocuments detailing any complaints of sexual harassment or sexual
assault from Jan. 1, 2013 to the present”;
• “[d]ocuments detailing all employees terminated from Jan. 1, 2013 to
the present”; and
• “[d]ocuments detailing all expenditures on travel and entertainment
from Jan. 1, 2013 to the present.”
After Dolcefino sent his initial request, HLSR moved for a protective order in
the 334th District Court where the personal injury suit was pending, contending that
3
“[n]one of the permissible forms of discovery includ[ed] a public inspection request
to a non-profit institution.” HLSR asserted that Williams was “attempting to
circumvent” the discovery rules “by abusing” section 22.353 and “having
[Dolcefino] obtain certain financial documents of HLSR outside allowable
discovery,” and Dolcefino was “attempting to obtain information that [Williams]
would not be entitled to obtain through the normal course of discovery and use such
information in the instant lawsuit and to create negative publicity in an effort to
prejudice HLSR.” The trial court denied HLSR’s motion.
Dolcefino also filed a verified Complaint of Violations of Chapter 22—Texas
Business Organizations Code with the Harris County District Attorney’s Office
stating that, on March 23, 2018, Dolcefino “filed a request for information with
[HLSR] under Chapter 22 of the Texas Business Organizations Code,” and HLSR
“then filed a protective order in a current civil litigation to withhold records sought.”
The complaint also stated that “a [c]ivil lawsuit” was pending but was “unrelated to
the requested records.”
After filing the complaint, Dolcefino requested inspection of “copies of
documents detailing [HLSR’s] general ledger for the last three fiscal years,”
“documents detailing purchases of currently held real estate” and a copy of HLSR’s
operating agreement with Reliant/NRG Stadium. HLSR advised Dolcefino that it
was preparing HLSR’s general ledger for the previous three years for “public
4
inspection,” amounts paid to the performers would be redacted because HLSR
considered that information as proprietary, confidential and trade-secret
information, and “major donors names and amounts would be redacted.” Dolcefino
then requested “performance contracts with any concert performer from Jan. 1, 2014
to the present.”
In the 334th District Court, HLSR moved for leave to file a counterclaim and
a third-party petition for declaratory relief against Williams and Dolcefino, seeking
a declaratory judgment regarding its obligations under section 22.353 and liability
under 22.3543 of the Business Organizations Code. Williams opposed the motion.
According to Williams, she had retained Dolcefino “as an investigative consultant
to assist counsel in locating and interviewing witnesses” but had not directed
Dolcefino to make requests under section 22.353. Williams declared that many of
the records sought were not relevant to the litigation, and were being sought
“because [HLSR] has long been an interest to Dolcefino.” She asserted that the
declaratory judgment action would not only inconvenience her, but also delay her
trial. She argued that HLSR’s requested relief “[had] nothing to do with the [personal
injury] suit,” there was “no real controversy between [her] and HLSR,” and “any
real controversy” arising out of these requests was between Dolcefino and HLSR.
3
See id. § 22.354 (providing “fail[ure] to maintain a financial record, prepare an
annual report, or make the record or report available to the public in the matter
required by Section 22.353” is class B misdemeanor).
5
After a hearing, the judge of the 334th District Court denied HLSR’s motion for
leave to file a third-party petition.
HLSR then filed an Original Petition for Declaratory Relief, which was
assigned to the 113th District Court and docketed as cause number 2018-50038 (the
declaratory judgment suit). In its petition, HLSR named Dolcefino as the only
defendant and again sought declarations regarding its obligations under section
22.353 and its liability under section 22.354. Dolcefino answered and asserted
counterclaims for declaratory relief, a violation of section 36.06 of the Texas Penal
Code, negligence per se, gross negligence and malice, and malicious prosecution.
In both the declaratory judgment suit and the personal injury suit, Dolcefino
filed a Motion to Transfer/Consolidate. Dolcefino asked that the declaratory
judgment suit be transferred from the 113th District Court to the 334th District Court
or alternatively that the declaratory judgment suit and the personal injury suit be
consolidated “into [the 334th District Court].” But the motion also stated that
Dolcefino did not “specifically request the consolidation of [the declaratory
judgment suit] into [the personal injury suit].” Dolcefino described the declaratory
judgment suit as an “attempt to block the discovery of documents that may be
directly relevant” to the personal injury suit and “consolidation” of the cases into the
334th District Court would “promote judicial economy.” In response, HLSR asserted
that the 334th District Court could not “unilaterally transfer” the declaratory
6
judgment suit to that court and consolidation was not proper because the two cases
did not have common issues of law of fact. Further, consolidation “would deprive
HLSR of its right to [a] speedy summary judgment hearing on its right to declaratory
relief and result in delay and prejudice to HLSR.”
Dolcefino set the Motion to Transfer/Consolidate for a hearing in the 334th
District Court, the court to which the personal injury suit was assigned. At the
hearing on Dolcefino’s motion, Williams’s counsel explained that Williams had
“resolved [her] case with all parties,” soon would be “non-suiting the remaining
parties,” and had already filed a motion to dismiss her claims against HLSR. HLSR’s
counsel explained further that, as to claims against the other defendants, there was
“going to be a structured settlement,” which was “going to take time.” Dolcefino’s
counsel argued that the 334th District Court “still [had] the ability to consolidate”
because it had not signed Williams’s pending motion to dismiss HLSR and HLSR
was “still a party.” Counsel argued that it made “more sense to have” the declaratory
judgment suit in 334th District Court because that court “[had] the entire history of
this case” and “for judicial economy purposes,” it would be “easier for [that court]
to get up to speed.” HLSR pointed out that, under Harris County District Courts
Local Rule 3.2.5, transfer of the declaratory judgment case to the 334th District
Court could be accomplished only by written order of the 113th District Court, with
the written agreement of the 334th District Court, or by the written order of the
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Administrative Judge of the Civil Trial Division, none of which had occurred.
Further, HLSR argued that the declaratory judgment case and personal injury case
did not meet the standards for consolidation of cases and that consolidation or
transfer would delay the hearing that was set on HLSR’s motion for summary
judgment and Dolcefino’s motion to dismiss. At the end of the hearing, the trial court
stated that “the motion to consolidate is granted,” and signed an order granting
Dolcefino’s Motion to Transfer/Consolidate. Later the same day, the trial court
signed an order granting Williams’s motion to dismiss and dismissed her claims
against HLSR with prejudice.4
HLSR then filed its petition for a writ of mandamus in this Court.
Standard of Review
Generally, to be entitled to mandamus relief, the relator must demonstrate that
the trial court abused its discretion and that it has no adequate remedy by appeal. See
In re J.B. Hunt Transp., Inc., 492 S.W.3d 287, 299 (Tex. 2016) (orig. proceeding);
Walker v. Packer, 827 S.W.2d 833, 839 (Tex. 1992) (orig. proceeding). A trial court
abuses its discretion if it acts arbitrarily, unreasonably, or without regard to guiding
4
After HLSR filed its mandamus petition, the trial court signed an order dismissing
Williams’s claims against the remaining personal injury suit defendants. And,
documents filed in this Court indicate that the declaratory judgment suit was
“administratively transferred to the 334th District Court” from the 113th District
Court. We previously stayed the trial court’s order granting the Motion to
Transfer/Consolidate.
8
legal principles. In re J.B. Hunt Transp., 492 S.W.3d at 293–94. A trial court has no
discretion in determining what the law is or in applying the law to the facts. Id. at
294; In re Prudential Ins. Co. of Am., 148 S.W.3d 124, 135 (Tex. 2004) (orig.
proceeding). Thus, the trial court’s failure to analyze or apply the law correctly
constitutes an abuse of discretion. See In re Nationwide Ins. Co. of Am., 494 S.W.3d
708, 712 (Tex. 2016) (orig. proceeding).
A petitioner for mandamus relief also must demonstrate that it does not have
an adequate remedy at law, such as a remedy by an appeal. See In re J.B. Hunt
Transp., 492 S.W.3d at 299. The adequacy of appeal as a remedy for an alleged clear
abuse of discretion in an interlocutory ruling involves a balance of jurisprudential
considerations that “implicate both public and private interests.” In re Ford Motor
Co., 165 S.W.3d 315, 317 (Tex. 2005) (orig. proceeding) (internal quotations
omitted); see In re Prudential Ins. Co., 148 S.W.3d at 136. We determine the
adequacy of an appellate remedy by balancing the benefits of mandamus review
against the detriments. See In re Essex Ins. Co., 450 S.W.3d 524, 528 (Tex. 2014)
(orig. proceeding); In re Prudential Ins. Co., 148 S.W.3d at 136.
Transfer/Consolidation
In its sole issue, HLSR first contends that the trial court abused its discretion
in granting Dolcefino’s motion to transfer/consolidate. HLSR argues that the trial
court did not have any basis to consolidate the declaratory judgment case and the
9
personal injury case because there are no common issues of law or fact. HLSR
further argues that the trial court did not have the authority to transfer the declaratory
judgment suit from the 113th District Court to the 334th District Court because “a
district court has no authority to unilaterally transfer a case to itself that is filed in
another court.”
Texas Rule of Civil Procedure allows district court judges to transfer a case
from one court to another court. TEX. R. CIV. P. 330(e). Courts are to adopt local
rules to govern the transfer of cases. TEX. GOV’T CODE ANN. § 74.093(a), (b); see
Polk v. Sw. Crossing Homeowners Ass’n, 165 S.W.3d 89, 93 (Tex. App.—Houston
[14th Dist.] 2005, pet. denied). The local rules applicable to the Harris County
district courts provide that:
[a]ny case may be transferred from one court to another court by written
order of the Administrative Judge of the Civil Trial Division or by
written order of the judge of the court from which the case is
transferred; provided, however, that in the latter instance the transfer
must be with the written consent of the court to which the case is
transferred.
Harris (Tex.) Civ. Dist. Loc. R. 3.2.5. Trial courts have broad discretion to transfer
cases under a court’s local rules but that discretion is not unlimited. See In re
Houston Lighting & Power Co., 976 S.W.2d 671, 673 (Tex. 1998) (orig.
proceeding); Alpert v. Gerstner, 232 S.W.3d 117, 123 (Tex. App.—Houston [1st
Dist.] 2006, pet. denied).
10
Neither the administrative judge nor the judge of the 113th District Court
signed an order to transfer the declaratory judgment suit from the 113th District
Court to the 334th District Court. The 334th District Court, acting by itself, did not
have authority to transfer the declaratory judgment suit to that court. See Harris
(Tex.) Civ. Dist. Loc. R. 3.2.5. Accordingly, in transferring the declaratory judgment
suit to the 134th District Court, the trial court abused its discretion. See Id.; In re Rio
Grande Valley Gas Co., 987 S.W.2d 167, 176 (Tex. App.—Corpus Christi–
Edinburg 1999, orig. proceeding); see also In re City of Coppell, 219 S.W.3d 552,
560–62 (Tex. App.—Dallas 2007, orig. proceeding);
HLSR further contends that the trial court abused its discretion in
consolidating the declaratory judgment suit and the personal injury suit. Texas Rule
of Civil Procedure 174(a) provides that “[w]hen actions involving common question
of law or fact are pending before the court,” a court “may order all actions
consolidated.” TEX. R. CIV. P. 174(a).5 Consolidation “involves merging separate
suits into a single proceeding under one docket number.” Hong Kong Dev., Inc. v.
5
HLSR also argues that consolidation was not available because a case was not
“pending” in the 113th District Court. However, at the time that the trial court signed
the order granting the motion to transfer/consolidate, the trial court had not disposed
of all parties and claims in the personal injury suit. See Thomas v. Oldham, 895
S.W.2d 352, 356 (Tex. 1995) (holding suit or action “continues at least until the
expiration of the trial court’s plenary power over the proceeding”); In re Guthrie,
45 S.W.3d 719, 728 (Tex. App.—Dallas 2001, pet. denied) (explaining suit or action
remains pending “until all issues have been determined, final judgment has been
rendered, and postjudgment motions disposed of”).
11
Nguyen, 229 S.W.3d 415, 432 (Tex. App.—Houston [1st Dist.] 2007, no pet.); see
Amir-Sharif v. Cadieux, No. 05-14-01055-CV, 2015 WL 1346154, at *1 (Tex.
App.—Dallas Mar. 15, 2015, no pet.) (mem. op.) (“After consolidation all issues of
law and fact are merged.”). Under the Harris County district court local rules, a
motion to consolidate cases is “heard in the court where the first filed case is
pending” and, if the motion is granted, “the consolidated case will be given the
number of the first filed case and assigned to that court.” Harris (Tex.) Civ. Dist.
Loc. R. 3.2.3.
A trial court has broad but not unlimited discretion to consolidate cases with
common issues of law or fact. See In re Woodward, No. 12-16-00032-CV, 2016 WL
1731473, at *2 (Tex. App.—Tyler Apr. 29, 2016, orig. proceeding) (mem. op.); In
re Gulf Coast Bus. Dev. Corp., 247 S.W.3d 787, 794 (Tex. App.—Dallas 2008, orig.
proceeding); Lone Star Ford, Inc. v. McCormick, 838 S.W.2d 734, 737 (Tex. App.—
Houston [1st Dist.] 1992, writ denied). A trial court may consolidate actions that
relate to substantially the same transaction, occurrence, subject matter, or question.
In re Gulf Coast, 247 S.W.3d at 794; Crestway Care Ctr., Inc. v. Berchelmann, 945
S.W.2d 872, 873–74 (Tex. App.—San Antonio 1997, orig. proceeding); Lone Star
Ford, 838 S.W.2d at 737. “The actions should be so related that the evidence
presented will be material, relevant, and admissible in each case.” In re Gulf Coast,
247 S.W.3d at 794; see Crestway Care Ctr., 945 S.W.2d at 874. A trial court may
12
abuse its discretion by “incorrectly resolving the relatedness issue or by
consolidating cases when the consolidation results in prejudice to the complaining
party.” In re Gulf Coast, 247 S.W.3d at 794 (internal quotations omitted). “The
central and primary requirement for consolidation of actions as directed by rule
174(a) is that there must exist common issues of law or fact in both cases.” Id. at
795. Consolidation is improper “if the parties and issues differ.” Hong Kong Dev.,
229 S.W.3d at 439.
HLSR argues that consolidation of the declaratory judgment suit and the
personal injury suit was improper, in part, because the two lawsuits “are dramatically
different” and do not have common issues of law and fact. Dolcefino argues that
consolidation was warranted because “many/all of the requests” made to HLSR
resulted from, and were related to, the personal injury suit; decisions in the
declaratory judgment suit “could have a direct impact on” the personal injury suit,
and the 334th District Court had “detailed knowledge of this case and these issues.”
The pleadings in the declaratory judgment suit and the personal injury suit
reflect that the two suits do not have common issues of law and fact. The issues in
the personal injury suit involved Williams’s tort claims against the defendants for
sexual assault, negligence, gross negligence, and premises liability for which she
sought actual and exemplary damages. The issues in the declaratory judgment suit
involve the dispute between Dolcefino and HLSR regarding the interpretation or
13
construction of provisions of sections 22.353 and 22.354 of the Business
Organizations Code and HLSR’s obligations and liability under those provisions.
See City of El Paso v. Heinrich, 284 S.W.3d 366, 370 (Tex. 2009) (explaining
declaratory judgment act is remedial statute designed “to settle and to afford relief
from uncertainty and insecurity with respect to rights, status, or other legal relations”
(quoting TEX. CIV. PRAC. & REM. CODE ANN. § 37.002(b))).
Nevertheless, Dolcefino argues that consolidation was proper because HLSR
judicially admitted that the two cases are “sufficiently related.” When it filed its
motion for leave to file a third-party petition, HLSR argued that “Dolcefino [was] a
necessary party with regard to [HLSR’s] request for declaratory relief” and the
“request for declaratory relief is tangentially related to matters before the [c]ourt.”
Dolcefino also asserts that the statement, in HLSR’s reply in support of the motion
for leave, that “[Williams’s] claim that the relief that HLSR seeks ‘has nothing to do
with the underlying suit [was] simply not true’” is a judicial admission supporting
consolidation.
An assertion of fact, not pleaded in the alternative, in a party’s live pleading
is regarded as a formal judicial admission, and the judicially admitted fact is
established as a matter of law. In re Spooner, 333 S.W.3d 759, 764 (Tex. App.—
Houston [1st Dist.] 2010, orig. proceeding). In order for a pleading to be deemed a
judicial admission, it “must be clear, deliberate, and unequivocal.” Id. Even if
14
HLSR’s statements are judicial admissions, they do not allege, much less establish,
that the two suits have common issues of law and fact or that the declaratory
judgment suit and personal injury suit are “sufficiently related” to justify
consolidation.
The record does not demonstrate that Dolcefino met his burden to show the
primary requirement for consolidation, that is, the existence of common issues of
law and fact. Even if the cases have some relation through Dolcefino’s role as an
investigator in Williams’s suit, the operative facts and applicable law in each case
differ. Absent common issues of law and fact, consolidation of the two cases in the
334th District Court was improper and the trial court abused its discretion in
consolidating the two suits. See In re Gulf Coast, 247 S.W.3d at 796.
Adequate Remedy
Also in its sole issue, HLSR contends that its remedy by appeal is inadequate.
HLSR argues that mandamus relief is appropriate “in the special circumstances
here” because there was no authority for the trial court’s order and the order allowed
Dolcefino to “select the court for consolidation” and defeated the procedures for
random assignment of cases. Dolcefino responds that the trial court’s ruling is an
incidental trial court ruling for which an appellate remedy is adequate.
HLSR is entitled to mandamus relief only if it lacks an adequate remedy by
appeal. “An appellate remedy is ‘adequate’ when any benefits to mandamus review
15
are outweighed by the detriments.” In re Prudential Ins. Co., 148 S.W.3d at 136.
“There is no definitive list of when an appeal will be ‘adequate,’ as it depends on a
careful balance of the case-specific benefits and detriments of delaying or
interrupting a particular proceeding.” In re Gulf Expl., LLC, 289 S.W.3d 836, 842
(Tex. 2009) (orig. proceeding).
On the record before us, Dolcefino has made no showing of any case specific
benefits that would result from a denial of this mandamus request. At the time the
hearing on the motion to consolidate or transfer was conducted, and, indeed prior to
the granting of the motion, Williams had announced in open court that her personal
injury suit had settled and HLSR would be dismissed from the case that same day.
In fact, HLSR was dismissed from the case on Williams’s motion and the order
signed by the court later the same day. There was no personal injury action in the
334th District Court which would benefit from a consolidation, and there was no
discovery needed for the personal injury action in the 334th District Court because
the action had been settled and HLSR had been dismissed. The case subjected to
interruption and delay is the declaratory judgment action pending in the 113th
District Court that was the object of the void transfer order.6
6
The transfer was also stayed by order of this Court and the case remains pending in
the 113th District Court.
16
HLSR argues that allowing Dolcefino to select a court for consolidation is, on
this record, merely a transfer of a declaratory judgment action from one court to
another and amounts to forum shopping. HLSR maintains that this defeats the
procedures used for random assignment of cases and degrades confidence in the
legal system such that it calls for the extraordinary relief provided by the writ of
mandamus.
Texas courts have held that “[p]ractices that subvert random assignment
procedures breed ‘disrespect for and [threaten] the integrity of our judicial system.’”
In re Union Carbide Corp., 273 S.W.3d 152, 157 (Tex. 2008) (orig. proceeding)
(quoting In re Bennett, 960 S.W.2d 35, 40 (Tex. 1997) (orig. proceeding)). We do
not have to consider whether the motions to consolidate and transfer were meant to
be an end run around Harris County’s local rules and procedures effectuating random
assignment because the motion and the court’s abuse of discretion in granting the
motion resulted in circumvention of the rules governing random assignment of cases.
There will be no detriment to either party and significant benefit to the judicial
system if mandamus relief is granted.
The Harris County district court local rules set out the procedure for the
random assignment of cases. See Harris (Tex.) Civ. Dist. Loc. R. 3.1; In re Mike
Hooks, Inc., No. 01-12-00503-CV, 2012 WL 3629000, at *4 (Tex. App.—Houston
[1st Dist.] Aug. 23, 2012, orig. proceeding) (mem. op.). After the 334th District
17
Court denied its request to file a third-party petition, HLSR filed its declaratory suit
as a separate lawsuit. And, that lawsuit was randomly assigned to the 113th District
Court, as provided by the local rules. At this stage, the declaratory judgment suit
stands alone as the claims in the personal injury suit have been resolved. The transfer
or assignment of the declaratory judgment case to the 334th District Court
circumvented the random assignment of cases and, in these circumstances, giving
priority to those rules will further the interests of the courts of Harris County and the
judicial system in general. See In re Union Carbide, 273 S.W.3d at 157; In re Mike
Hooks, 2012 WL 3629000, at *4. We conclude that HLSR does not have an adequate
remedy by appeal.
We sustain HLSR’s sole issue.
18
Conclusion
Accordingly, because we conclude that the trial court abused its discretion in
granting Dolcefino’s motion to transfer/consolidate and HLSR does not have an
adequate remedy by appeal, we conditionally grant the petition for a writ of
mandamus and direct the trial court to withdraw its September 14, 2018 order
granting the Motion to Transfer/Consolidate. The writ will issue only if the trial court
fails to comply. Finally, we vacate our order, issued on September 18, 2018, staying
the trial court’s September 14, 2018 order and dismiss all pending motions as moot.
Russell Lloyd
Justice
Panel consists of Justices Lloyd, Landau, and Countiss.
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