Filed 6/25/14 Jiagbogu v. Bank of America CA4/3




                        NOT TO BE PUBLISHED IN OFFICIAL REPORTS
California Rules of Court, rule 8.1115(a), prohibits courts and parties from citing or relying on opinions not certified for
publication or ordered published, except as specified by rule 8.1115(b). This opinion has not been certified for publication
or ordered published for purposes of rule 8.1115.


              IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                                     FOURTH APPELLATE DISTRICT

                                                 DIVISION THREE


AZUBUEZE JIAGBOGU,

     Plaintiff and Appellant,                                          G048858

                   v.                                                  (Super. Ct. No. 30-2011-00453635)

BANK OF AMERICA, N.A.,                                                 OPINION

     Defendant and Respondent.



                   Appeal from a judgment of the Superior Court of Orange County, Luis A.
Rodriguez, Judge. Affirmed.
                   Fransen and Molinaro and Nathan W. Fransen for Plaintiff and Appellant.
                   Severson & Werson, Navdeep K. Singh, Jan T. Chilton, and Kerry W.
Franich for Defendant and Respondent.


                                             *               *               *
              Plaintiff Azubueze Jiagbogu appeals from a judgment entered in favor of
defendant Bank of America after the trial court granted its motion for summary judgment.
The court held no triable issue of fact existed as to (1) defendant’s statute of limitations
defense on the causes of action for fraud, negligent misrepresentation, and violation of
the Unfair Competition Law (Bus. & Prof. Code, § 17200; UCL); and (2) the absence of
evidence to support a finding of justifiable reliance on the first two counts. We affirm.


                     FACTS AND PROCEDURAL BACKGROUND


              In 2003, plaintiff purchased a residence in Mission Viejo with a $990,000
loan from Long Beach Mortgage Company, secured by a deed of trust on the property.
The loan provided for an initial fixed rate of interest that would change to an adjustable
rate after two years. The next year, plaintiff refinanced the home, obtaining an adjustable
rate loan for over $1.3 million from Washington Mutual Bank. Several months later, he
borrowed an additional $364,000 from Countrywide Home Loans, Inc. (Countrywide),
secured by a second deed of trust on the property. Countrywide was later acquired by
defendant.
              Plaintiff claimed he once again went to a Countrywide office in 2005,
seeking to refinance the loans secured by his home. He met with Tim Doherty, the
branch manager, and John Omen, an employee. Plaintiff claimed Doherty and Omen
urged him to refinance the property with an option adjustable rate mortgage (option-
ARM) loan. They said it could reduce his monthly payments and save him money in
interest payments over the life of the loan. Omen represented the monthly payments on a
fixed interest rate loan would amount to $11,000, whereas an option-ARM loan’s
payments would range between $5,800 and $8,000.




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              Plaintiff initially was unconvinced, but eventually agreed to refinance the
property with a $1.984 million option-ARM loan. The trust deed securing this loan
incorporated an adjustable rate rider that plaintiff separately signed. The rider stated
the promissory note “contains provisions that will change the interest rate and the
monthly payment,” “[t]he principal amount to repay could” increase to 115% of the
“amount . . . originally borrowed,” and if the principal reached that limit, plaintiff’s
monthly payments would increase to “an amount . . . sufficient to repay [the] . . . unpaid
[p]rincipal in full on the Maturity Date in substantially equal payments at the current
Interest rate.” (Some capitalization and bold omitted.)
              In early 2006, plaintiff obtained two more loans, one for $100,000 and a
second for $125,000. Each loan was secured by a subordinate trust deed on his property.
The loans were again obtained through Countrywide, but plaintiff does not assert Doherty
or Omen assisted him in these transactions.
              Later that year, plaintiff claimed he received a telephone call from Doherty
informing him a $101,000 balloon payment was “due on my mortgage.” According to
plaintiff, Doherty and Omen proposed he refinance the current loans secured by the
property, then totaling over $2.13 million, with a $2.15 million cash out loan they
represented was fully amortized and carried a fixed interest rate with monthly payments
of approximately $7,600 for the life of the obligation. Plaintiff agreed to this proposal.
              The documentation submitted by defendant in support of its summary
judgment motion paints a different picture. First, it presented a loan application plaintiff
acknowledged he signed that stated he was seeking an adjustable rate loan. Second, the
promissory note, dated July 11, 2006, and bearing plaintiff’s signature is entitled
“Adjustable Rate Note” (bold and some capitalization omitted). Directly below the
caption, in all capital letters and bold print, appears the statement: “This note contains
provisions that will change the interest rate and the monthly payment,” and “the principal
amount to repay could be greater than the amount originally borrowed.” (Capitalization

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and bold omitted.) The same paragraph appears in an adjustable rate rider incorporated
into the trust deed securing the loan which also bears plaintiff’s signature. Finally,
although he denied receiving it, defendant submitted a truth in lending statement bearing
plaintiff’s signature, declaring “[t]his loan has a Variable Rate Feature” and disclosures
about the rate “have been provided to you . . . .”
              Plaintiff’s declaration opposing the summary judgment motion denied that
he saw any of these documents until 2009. But he did not deny signing them or assert the
signatures appearing on the documents were forged, and his response to defendant’s
separate statement of facts merely states each “document speaks for itself.”
              In October 2008, plaintiff received a statement declaring his monthly
payment would increase to over $22,000. He claims this was when he learned the loan
was a pay-option ARM with negative amortization. According to plaintiff, he spoke with
Doherty who again offered to refinance the loan and also suggested he seek a loan
modification from defendant.
              Plaintiff initially filed suit against defendant and Countrywide in federal
court on August 5, 2010. His verified federal complaint acknowledged he obtained an
option-ARM loan from defendant. Defendant moved to dismiss the federal complaint
and on November 10, the district court granted dismissal with leave to amend.
              Instead of amending his federal complaint, on February 28, 2011, plaintiff
filed this action against defendant alone. The complaint alleged causes of action for
fraud, negligent misrepresentation, negligence, and violation of the UCL. The trial court
sustained a demurrer to the negligence count without leave to amend. Defendant moved
for summary judgment on the remaining three counts. The trial court granted the motion
and entered judgment in defendant’s favor.




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                                        DISCUSSION


1. Standard of Review
              “Any party may move for summary judgment in any action or proceeding if
it is contended that the action has no merit or that there is no defense to the action or
proceeding.” (Code Civ. Proc., § 437c, subd. (a).) The court shall grant the motion “if
all the papers submitted show that there is no triable issue as to any material fact and that
the moving party is entitled to a judgment as a matter of law.” (Code Civ. Proc., § 437c,
subd. (c).) For a defendant to succeed on a motion for summary judgment, it must
establish “that a cause of action has no merit” by showing “one or more elements of the
cause of action, even if not separately pleaded, cannot be established, or that there is a
complete defense to that cause of action.” (Code Civ. Proc., § 437c, subd. (p)(2).)
              The moving party “bears the burden of persuasion that there is no triable
issue of material fact and that he is entitled to judgment as a matter of law,” plus “an
initial burden of production to make a prima facie showing of the nonexistence of any
triable issue of material fact.” (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826,
850.) If the moving party carries its production burden, “the opposing party is then
subjected to a burden of production of his own to make a prima facie showing of the
existence of a triable issue of material fact.” (Ibid.) When opposing a defendant’s
summary judgment motion, “[t]he plaintiff . . . may not rely upon the mere allegations or
denials of its pleadings to show that a triable issue of material fact exists but, instead,
shall set forth the specific facts showing that a triable issue of material fact exists as to
that cause of action or a defense thereto.” (Code Civ. Proc., § 437c, subd. (p)(2).)
              On appeal, we review an order granting a summary judgment motion de
novo. (Dollinger DeAnza Associates v. Chicago Title Ins. Co. (2011) 199
Cal.App.4th 1132, 1144.) “In performing our de novo review, we must view the


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evidence in a light favorable to plaintiff as the losing party [citation], liberally construing
h[is] evidentiary submission while strictly scrutinizing defendant[’]s own showing, and
resolving any evidentiary doubts or ambiguities in plaintiff’s favor.” (Saelzler v.
Advanced Group 400 (2001) 25 Cal.4th 763, 768.)


2. The Fraud and Negligent Misrepresentation Causes of Action
              a. Statute of Limitations
              Plaintiff’s complaint sought damages for fraud and negligent
misrepresentation based on allegations that in July 2006 both Doherty and Omen induced
him to accept the $2.15 million cash out refinance loan by falsely representing the loan
was fully amortized and carried a fixed rate of interest with monthly payments of
approximately $7,600 for the entire loan term. The statute of limitations for a cause of
action alleging either fraud or negligent misrepresentation is three years. (Code Civ.
Proc., § 338, subd. (d); Broberg v. The Guardian Life Ins. Co. of America (2009) 171
Cal.App.4th 912, 920.) Plaintiff did not file this action until February 2011, over four
and one-half years after he accepted the loan.
              But Code of Civil Procedure section 338 also provides “[t]he cause of
action . . . is not deemed to have accrued until discovery, by the aggrieved party, of the
facts constituting the fraud . . . .” (Code Civ. Proc., § 338, subd. (d).) Plaintiff alleges he
relied on the representations by Doherty and Omen concerning the nature of the cash out
loan and did not learn the truth until he received the October 2008 statement demanding
he pay $22,000 a month on the loan. In response, defendant argues plaintiff’s complaint
failed to adequately allege facts supporting delayed accrual and his actual knowledge of
the fraud is irrelevant; instead, the question is when plaintiff should have reasonably
discovered the falsity of the alleged misrepresentations.
              We agree with defendant’s analysis. While the statute of limitations is
subject to delayed accrual, “The courts interpret discovery in this context to mean not

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when the plaintiff became aware of the specific wrong alleged, but when the plaintiff
suspected or should have suspected that an injury was caused by wrongdoing.” (Kline v.
Turner (2001) 87 Cal.App.4th 1369, 1374.) “‘Under this rule constructive and presumed
notice or knowledge are equivalent to knowledge. So, when the plaintiff has notice or
information of circumstances to put a reasonable person on inquiry, or has the
opportunity to obtain knowledge from sources open to [him,] . . . the statute commences
to run.’” (Parsons v. Tickner (1995) 31 Cal.App.4th 1513, 1525, italics added.)
              In addition, “the discovery rule operates as an exception to the statute of
limitations, [and] ‘if an action is brought more than three years after commission of the
fraud, plaintiff has the burden of pleading and proving that he did not make the discovery
until within three years prior to the filing of his complaint.’ [Citation.] To excuse failure
to discover the fraud within three years after its commission, a plaintiff also must plead
‘facts showing that he was not negligent in failing to make the discovery sooner and that
he had no actual or presumptive knowledge of facts sufficient to put him on
inquiry.’ . . . The discovery-related facts should be pleaded in detail to allow the court
to determine whether the fraud should have been discovered sooner.” (Cansino v. Bank
of America (2014) 224 Cal.App.4th 1462, 1472.)
              Plaintiff’s complaint does allege he first discovered “that he had a
negatively amortizing pay-option loan” when he contacted defendant in October 2008
after receiving notice his monthly payment had increased to over $22,000. But although
plaintiff alleges (1) Doherty and Omen represented the loan had a fixed interest rate with
monthly payments of about $7,600, (2) “the . . . [l]oan funded” without him being
“provided with copies of loan documents,” and (3) his mortgage statements initially
“demanded monthly payments of approximately $7,600[],” he offers no evidence why he
could not have discovered the loan’s true nature when he signed the loan documents.
              Even if the complaint is construed as sufficiently alleging delayed accrual,
plaintiff failed to present sufficient evidence to demonstrate a triable issue of fact existed

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concerning that allegation. As noted, while he claimed he never received copies of the
loan documents until April 2009, plaintiff did not deny signing them when he obtained
the loan. Had he read those documents, it would have been immediately clear that he was
applying for and agreeing to a pay-option ARM loan similar to the one he had obtained a
year earlier. “California law . . . requires that the plaintiff, in failing to acquaint himself
or herself with the contents of a written agreement before signing it, not have acted in an
objectively unreasonable manner. One party’s misrepresentations as to the nature or
character of the writing do not negate the other party’s apparent manifestation of assent,
if the second party had ‘reasonable opportunity to know of the character or essential
terms of the proposed contract.’ [Citation.] If a party, with such reasonable opportunity,
fails to learn the nature of the document he or she signs, such ‘negligence’ precludes a
finding the contract is void for fraud in the execution. [Citation.]” (Rosenthal v. Great
Western Fin. Securities Corp. (1996) 14 Cal.4th 394, 423; see Simpson v. Dalziel (1902)
135 Cal. 599, 603 [“Natural curiosity, as well as business prudence, would have
compelled him to make the inquiry, and his failure to make it was inexcusable
negligence; and it is well settled in this class of cases that ‘one will be presumed to have
known whatever with reasonable diligence he might have ascertained concerning the
fraud of which he complains’”].)
              Plaintiff argues Rosenthal is distinguishable because he is seeking damages,
not a declaration the loan is void. He relies on language in Lynch v. Cruttenden & Co.
(1993) 18 Cal.App.4th 802, stating, “The general rule in California is that even in the
absence of a fiduciary relationship plaintiff’s failure to read a contract is excusable where
reliance is placed on the misrepresentations of the other party.” (Id. at p. 807.) This
argument is unavailing. Lynch did not involve an action for damages. Also, Rosenthal
criticized it and other authorities containing similar language, declaring they “state the
rule of excuse too broadly. While some prior cases have held equitable relief, such as
rescission or reformation of the contract, may be available despite the defrauded party’s

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failure to read the contract, our law is clear that misrepresentation does not render the
contract void unless the misled party, before making the agreement, lacked a reasonable
opportunity to learn its terms.” (Rosenthal v. Great Western Fin. Securities Corp., supra,
14 Cal.4th at p. 421.) We also note the Supreme Court recently recognized the potential
application of Rosenthal’s holding to a case where the plaintiffs sought damages for the
defendants’ alleged misrepresentations that induced them to execute a contract.
(Riverisland Cold Storage, Inc. v. Fresno-Madera Production Credit Assn. (2013) 55
Cal.4th 1169, 1183, fn. 11.)
               A review of the loan application or the title of the promissory note, both of
which he signed, would have informed plaintiff the loan carried an adjustable interest
rate. Further, the paragraph just below the promissory note’s title, printed in all capitals
and bold lettering, would have alerted him to the fact the loan would negatively amortize
if he only paid the minimum amount each month. (See Loeffler v. Wright (1910) 13
Cal.App. 224, 231-232 [action to set aside signed deed held untimely; “it is not sufficient
for the plaintiff to allege that he did not discover the fraud till a certain date” since “it
must also appear as well that the discovery could not have been made by the exercise of
reasonable diligence[ a]nd plaintiff is presumed to have known all that reasonable
diligence would have disclosed”].) Under the circumstances of this case, plaintiff’s
failure to read the loan documents before signing them bars him from asserting delayed
discovery of the false representations by Doherty and Omen.
               Plaintiff relies on Alfaro v. Community Housing Improvement System &
Planning Assn., Inc. (2009) 171 Cal.App.4th 1356 for the proposition he was not required
to read the loan documents in advance of signing them. The case does not support his
argument. Alfaro involved an action by the purchasers of low and moderate income
housing filed more than three years after the plaintiffs were issued grant deeds. The
properties were subject to a recorded restriction requiring that they remain affordable to
persons with low to moderate incomes. The grant deeds issued by one developer

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expressly referred to the recorded restriction. Only two deeds issued by a second
developer expressly mentioned it.
              The appellate court’s opinion does state “a buyer’s failure to read a deed
may be excused by justifiable reliance on a seller’s misrepresentations.” (Alfaro v.
Community Housing Improvement System & Planning Assn., Inc., supra, 171
Cal.App.4th at p. 1392.) But the decision affirmed the dismissal of the action against the
developers as to all of the grant deeds that “did disclose the deed restriction by express
reference to the recorded document” because it “gave plaintiffs actual knowledge of the
existence of the deed restriction and inquiry notice of the nature of the restriction.” (Id. at
p. 1393.)
              Plaintiff cites this court’s decision in Boschma v. Home Loan Center, Inc.
(2011) 198 Cal.App.4th 230, where we reversed the dismissal of an action against a
lender for failing to adequately disclose the terms of option-ARM loans. In that case the
trial court entered a judgment of dismissal after sustaining a demurrer to the plaintiffs’
second amended complaint and the issue on appeal was whether the plaintiffs could state
causes of action for fraud and violation of the UCL. Here, there is no dispute that a cause
of action can be stated. The lower court overruled defendant’s demurrer to the deceit and
UCL counts. Further, Boschma noted, “Plaintiffs’ actual interest rates and monthly
payments sufficient to amortize the loan . . . were hidden in the complexity of the Option
ARM contract terms,” and “‘“[t]he fact that a false statement may be obviously false to
those who are trained and experienced does not change its character, nor take away its
power to deceive others less experienced. There is no duty resting upon a citizen to
suspect the honesty of those with whom he [or she] transacts business. Laws are made to
protect the trusting as well as the suspicious. [T]he rule of caveat emptor should not be
relied upon to reward fraud and deception.”’” (Id. at p. 249.)
              In contrast, plaintiff could have learned the falsity of Doherty’s and Omen’s
statements by merely reading the title of the promissory note he signed and the paragraph

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directly below it. He was not required to wade through a morass of complex language to
realize his loan was not a fixed rate fully amortized loan. Plaintiff’s failure to read loan
documents he does not deny signing was unreasonable and precluded his reliance on the
delayed accrual rule in this case.
              In addition, even assuming Alfaro and Boschma justified plaintiff in failing
to read the loan documents before signing them, the result would be the same. Plaintiff’s
prior verified federal complaint acknowledged he knew the loan was an option-ARM.
That pleading alleged defendant and Countrywide engaged in a pattern of activity where,
to maximize profits from higher interest rates and fees, they induced borrowers to accept
option-ARM loans by representing these loans were “better than a fixed rate loan.” This
allegation is admissible to establish plaintiff knew or should have known that Doherty’s
and Omen’s representations concerning the nature of the July 2006 refinance loan were
false. (Kurinij v. Hanna & Morton (1997) 55 Cal.App.4th 853, 871 [“On summary
judgment such admissions are proper and overcome evidence even when the opposing
party seeks to contradict the prior admission”]; see Magnolia Square Homeowners Assn.
v. Safeco Ins. Co. (1990) 221 Cal.App.3d 1049, 1061.)
              “[R]esolution of the statute of limitations issue is normally a question of
fact, [but] where the uncontradicted facts established through discovery are susceptible of
only one legitimate inference, summary judgment is proper.” (Jolly v. Eli Lilly & Co.
(1988) 44 Cal.3d 1103, 1112.) The trial court properly found plaintiff’s causes of action
for fraud and negligent misrepresentation barred by the statute of limitations.


              b. Justifiable Reliance
              The trial court also concluded plaintiff failed to show a triable issue of fact
existed on the deceit counts’ justifiable reliance element. Again, we agree.
              In an “action for intentional or negligent misrepresentation, a plaintiff must
demonstrate that he or she actually and reasonably relied upon a representation made by

                                             11
the defendant.” (Ostayan v. Serrano Reconveyance Co. (2000) 77 Cal.App.4th 1411,
1419.) The question of whether a plaintiff reasonably relied on the defendant’s alleged
misrepresentation is one of fact unless “‘the undisputed facts leave no room for a
reasonable difference of opinion.’” (Alliance Mortgage Co. v. Rothwell (1995) 10
Cal.4th 1226, 1239.)
              For the reasons discussed above concerning the statute of limitations
defense, plaintiff cannot show a triable issue of fact existed on the element of justifiable
reliance because he could have discovered the falsity of the representations by merely
reading the loan documents. In Hadland v. NN Investors Life Ins. Co. (1994) 24
Cal.App.4th 1578, we affirmed the trial court’s grant of nonsuit on the plaintiffs’ fraud
cause of action in a suit against their health insurer that was based on a sales associate’s
representation the defendant’s policy “was ‘as good if not better’ than [their former]
coverage . . . at half the premium cost” (id. at p. 1581), because at trial the plaintiffs
acknowledged not reading the insurance policy before accepting it. “[A] comparison of
[the defendant’s] stated coverage with that offered by the [prior insurer’s] policy would
have revealed the [defendant’s] policy offered less protection” (id. at p. 1588), and thus
“any representations by defendants of . . . coverage ‘as good or better’ as the [prior]
policy, were patently at odds with the express provisions of the written contract.” (Id. at
p. 1589.)
              As noted, while plaintiff denied receiving the loan documents until much
later, he never denied signing them. Where “the conduct of the plaintiff in the light of his
own intelligence and information was manifestly unreasonable, . . . he will be denied a
recovery. [Citations.] ‘He may not put faith in representations which are preposterous,
or which are shown by facts within his observation to be so patently and obviously false
that he must have closed his eyes to avoid discovery of the truth . . . .’ [Citation.]”
(Seeger v. Odell (1941) 18 Cal.2d 409, 415.) Here, the “facts within [plaintiff’s]



                                              12
observation” would have shown the alleged statements by Doherty and Odell were
“patently and obviously false.” (Ibid.)
              The cases plaintiff relies on are inapposite. Butcher v. Truck Ins. Exchange
(2000) 77 Cal.App.4th 1442 is factually distinguishable from Hadland. (Butcher, supra,
at p. 1465.) Neither Spray, Gould & Bowers v. Associated Internat. Ins. Co. (1999) 71
Cal.App.4th 1260 nor Paper Savers, Inc. v. Nacsa (1996) 51 Cal.App.4th 1090 involved
an action for fraud or negligent misrepresentation. Further Spray, Gould rejected a claim
of constructive notice because an insurance regulation required the insurer give actual
notice. Also, unlike Paper Savers, where the issue was the effect of the policy’s terms, in
this case by merely reading the promissory note’s title and opening paragraph plaintiff
would have realized his loan was a negatively amortizing adjustable rate loan.
              We conclude the trial court properly held plaintiff failed to establish a
triable issue of fact on the element of justifiable reliance as to the fraud and negligent
misrepresentation counts.


3. The UCL Cause of Action
              The trial court granted summary judgment on plaintiff’s UCL cause of
action on two grounds. It found the claim barred by the statute of limitations and,
because plaintiff’s complaint alleged defendant “acquired Countrywide . . . during
January 2008,” defendant could not be held liable “because UCL claims cannot be based
on any sort of vicarious liability.”
              The parties’ appellate briefs do not discuss the second ground cited by the
trial court. Since we conclude plaintiff’s UCL claim is also untimely, we need not decide
the correctness of the court’s second ground.
              A cause of action under the UCL is governed by a four-year statute of
limitations. (Bus. & Prof. Code, § 17208.) But the Supreme Court has also held “the
UCL is governed by common law accrual rules to the same extent as any other statute”

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and “‘the nature of the right sued upon’ [citation] and the circumstances attending its
invocation control the point of accrual.” (Aryeh v. Canon Business Solutions, Inc. (2013)
55 Cal.4th 1185, 1196.)
               Plaintiff concedes his UCL cause of action “is entirely dependent on his
claims for fraud and negligent misrepresentation.” Thus, the wrongful conduct
underlying it occurred in July 2006 when plaintiff applied for and accepted the $2.15
million pay-option ARM, meaning the statute of limitations expired in July 2010.
Plaintiff did not file this action until February 28, 2011, seven months later. Further, as
discussed above plaintiff failed to adequately plead facts or present evidence raising a
triable issue of fact to show the delayed accrual doctrine applied in this case.
Consequently, the trial court properly dismissed the UCL count on the ground plaintiff
failed to timely file suit.


                                      DISPOSITION


               The judgment is affirmed. Respondent shall recover its costs on appeal.




                                                  RYLAARSDAM, ACTING P. J.

WE CONCUR:



BEDSWORTH, J.



MOORE, J.




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