Filed 2/19/14
                            CERTIFIED FOR PUBLICATION



             IN THE COURT OF APPEAL OF THE STATE OF CALIFORNIA

                            SECOND APPELLATE DISTRICT

                                    DIVISION THREE



CYNTHIA BURCH,                                       B248830

        Petitioner,                                  (Los Angeles County
                                                     Super. Ct. No. SC101002)
        v.

THE SUPERIOR COURT OF
LOS ANGELES COUNTY,

        Respondent;

PREMIER HOMES, LLC, et al.,

        Real Parties in Interest.



        ORIGINAL PROCEEDINGS in mandate. Gerald Rosenberg, Judge.
Petition granted.
        Best Best & Krieger, Victor L. Wolf, Scott W. Ditfurth and Kevin J. Abbott for
Petitioner.
        No appearance for Respondent.
        Zimmerman & Kahanowitch and Brian F. Zimmerman for Real Parties in
Interest.
                      _______________________________________
       Cynthia Burch challenges an order granting summary adjudication in favor of

Premier Homes, LLC (Premier Homes), Custom Home Builders, Inc. (Custom Home

Builders), Scott Warren, and Daniel Sahar in a construction defect action. The

defendants argued that the Right to Repair Act (Civ. Code, § 895 et seq.) provides the

exclusive remedy for a homeowner seeking damages for construction defects and

precludes common law causes of action for negligence and breach of implied warranty.

Custom Home Builders, Warren, and Sahar also argued that they owed Burch no duty of

care and that they could not be liable for breach of implied warranty because they were

not parties to any contract with her.

       We hold that the Right to Repair Act does not provide the exclusive remedy for

a homeowner seeking damages for construction defects that have resulted in property

damage, as here. In addition, we also conclude that Custom Home Builders, Warren,

and Sahar failed to negate a duty of care owed to Burch as a prospective purchaser and

failed to negate an implied warranty in favor of Burch as a third party beneficiary of the

construction contract. We therefore conclude that the court erred by summarily

adjudicating the counts for negligence and breach of implied warranty in favor of the

defendants.

                  FACTUAL AND PROCEDURAL BACKGROUND

       1.     Factual Background

       Custom Home Builders, a general contractor, built a single family residence in

Pacific Palisades area of Los Angeles pursuant to a written construction contract with

Premier Homes, the developer. The residence was not built specifically for Burch, but

                                            2
instead was built to be marketed to the general public. After the construction was

completed and the home was put on the market, Burch purchased it from Premier

Homes pursuant to a written sales contract. Warren and Sahar are the principals and

owners of both Custom Home Builders and Premier Homes.

       2.     Complaint

       Burch filed a complaint against Premier Homes, Custom Home Builders,

Warren, Sahar, and others in December 2008. She filed a third amended complaint in

August 2012. She alleged in her third amended complaint that the home suffered from

numerous construction defects. She also alleged that Premier Homes and Custom

Home Builders were the alter egos of the individual defendants. She alleged counts for

(1) breach of the sales contract; (2) negligence; (3) breach of implied warranty;

(4) unjust enrichment; (5) breach of contract/third party beneficiary; and other counts.

       Burch alleged in her second count for negligence that the defendants breached

their duty of care in connection with the construction, resulting in deficient construction.

She specified several defects that allegedly have resulted in property damage. She

alleged in her third count for breach of implied warranty that Premier Homes contracted

with Custom Home Builders for the construction and that Custom Home Builders was

aware that a party such as Burch would purchase the property. She alleged that the

defendants impliedly represented to her, as a third party beneficiary, that they had used

reasonable skill and judgment in the construction and alleged that they breached such

implied warranty.



                                             3
       3.     Summary Adjudication

       Custom Home Builders, Warren, and Sahar jointly moved for summary judgment

or summary adjudication of several counts. Premier Homes also separately moved for

summary judgment or summary adjudication. The defendants argued that the Right to

Repair Act established a statutory action for violation of the standards set forth in the

act as the exclusive remedy for damages for construction defects and abrogated

common law claims for damages for construction defects.

       Custom Home Builders, Warren, and Sahar also argued with respect to the

negligence count that they had no contractual or other relationship with Burch and owed

her no duty of care. They argued, with respect to the count for breach of implied

warranty, that they could not be liable for such a breach because they were not parties to

any contract with Burch. They also argued that an implied warranty could arise only in

connection with the sale of goods and that they did not enter into a sales contract with

Burch or sell her any goods and therefore could not be liable for breach of implied

warranty.

       The trial court granted summary adjudication in favor of Custom Home Builders,

Warren, Sahar, and Premier Homes on the second count for negligence and third count

for breach of implied warranty, among other counts. At the hearing on the motions, the

court cited Civil Code sections 896 and 943 in support of its ruling. The court denied

summary adjudication of the fifth count for breach of contract/third party beneficiary,

stating in a minute order that there was “a triable issue whether Plaintiff is a third party

beneficiary of the contract between Premier Homes and Custom Home Builders.”

                                              4
         4.    Petition for Writ of Mandate

         Burch petitioned this court for a writ of mandate in May 2013 challenging only

the summary adjudication of the second and third counts. We issued an order to show

cause.

         5.    Fourth Amended Complaint

         Meanwhile, Burch moved for leave to file a fourth amended complaint. The trial

court granted the motion, and Burch filed a fourth amended complaint in September

2013 adding a new tenth count for damages pursuant to the Right to Repair Act. She

alleges in the tenth count that the defendants breached their duty of care and caused

defects that violate the standards set forth in Civil Code section 896 or are otherwise

actionable pursuant to Civil Code section 897. She lists the same defects previously

alleged in the second count for negligence and realleged in the fourth amended

complaint in a negligence count against other defendants. She does not reallege the

counts for negligence and breach of implied warranty against the defendants who

successfully moved for summary adjudication of those counts.

                                     CONTENTIONS

         Burch contends (1) the Right to Repair Act does not provide the exclusive

remedy for damages for construction defects, and the trial court erred by summarily

adjudicating her counts for negligence and breach of implied warranty on this basis; and

(2) Custom Home Builders, Warren, and Sahar failed to negate the existence of a duty

of care and an implied warranty.



                                              5
                                       DISCUSSION

       1.     Standard of Review

       “Summary adjudication of a cause of action is appropriate only if there is no

triable issue of material fact as to that cause of action and the moving party is entitled to

judgment on the cause of action as a matter of law. (Code Civ. Proc., § 437c,

subd. (f)(1).) A defendant moving for summary adjudication of a cause of action must

show that one or more elements of the plaintiff’s cause of action cannot be established

or that there is a complete defense. (Id., subd. (p)(2).) If the defendant makes that

initial showing, the burden then shifts to the plaintiff to show that a triable issue of

material fact exists. (Ibid.)

       “We review the trial court’s ruling de novo, liberally construe the evidence in

favor of the party opposing the motion, and resolve all doubts concerning the evidence

in favor of the opposing party. (Miller v. Department of Corrections (2005) 36 Cal.4th

446, 460 [30 Cal.Rptr.3d 797, 115 P.3d 77].) We must affirm a summary adjudication

if it is correct on any ground that the parties have had an adequate opportunity to

address on appeal, regardless of the trial court’s stated reasons. (Johnson v. United

Cerebral Palsy/Spastic Children’s Foundation (2009) 173 Cal.App.4th 740, 754

[93 Cal.Rptr.3d 198]; Western Mutual Ins. Co. v. Yamamoto (1994) 29 Cal.App.4th

1474, 1481 [35 Cal.Rptr.2d 698]; see Gov. Code, § 68081; Code Civ. Proc., § 437c,

subd. (m)(2).)” (Bell v. H.F. Cox, Inc. (2012) 209 Cal.App.4th 62, 71.)




                                              6
       2.     Mootness/Waiver

       Contrary to the defendants’ argument, Burch’s filing of a fourth amended

complaint after the trial court’s ruling did not render moot her challenge to the ruling.

Burch has shown no intention of abandoning her counts for negligence and breach of

implied warranty against the defendants and need not reallege those summarily

adjudicated counts in each amended complaint in order to avoid a waiver. (National

Union Fire Ins. Co. of Pittsburgh, PA v. Cambridge Integrated Services Group, Inc.

(2009) 171 Cal.App.4th 35, 44-45 [held that the plaintiff need not reallege in an

amended complaint a count to which a demurrer had been sustained without leave to

amend in order to challenge the ruling on appeal].)

       3.     The Right to Repair Act Does Not Preclude the Counts for Negligence
              and Breach of Implied Warranty

       The California Supreme Court in Aas v. Superior Court (2000) 24 Cal.4th 627,

647, 652-653 (Aas), held that deficiencies in residential construction were actionable in

tort only if they caused property damage or personal injury. The Legislature enacted the

Right to Repair Act in 2002 abrogating the holding in Aas by allowing the recovery of

damages for specified defects resulting in only economic loss. (Liberty Mutual Ins. Co.

v. Brookfield Crystal Cove LLC (2013) 219 Cal.App.4th 98, 103-104 (Liberty Mutual);

Greystone Homes, Inc. v. Midtec, Inc. (2008) 168 Cal.App.4th 1194, 1212.) The act

sets forth construction standards the violation of which constitutes a deficiency in

construction for which a “builder,” as defined in the act, and to some extent a general

contractor and others, can be held liable to a homeowner without the need to show


                                             7
property damage or other injury. (Civ. Code, §§ 896, 897, 942.) The act also prescribes

a nonadversarial prelitigation procedure for the parties to follow in an attempt to resolve

the dispute, litigation procedures for claims under the act, and the measure of damages.

(Id., §§ 910-945.5.)

       Civil Code section 896 states that in any action for damages arising out of or

related to deficiencies in residential construction, a builder’s liability, and to some

extent the liability of a general contractor and others, is limited to liability for violation

of the construction standards set forth in the Right to Repair Act, except as specifically

stated in the act. Civil Code section 944 prescribes the measure of damages for

violation of the standards set forth in the act. Civil Code section 943, subdivision (a)

states, “Except as provided in this title, no other cause of action for a claim covered by

this title or for damages recoverable under Section 944 is allowed. In addition to the

rights under this title, this title does not apply to any action by a claimant to enforce

a contract or express contractual provision, or any action for fraud, personal injury, or

violation of a statute. . . . ” Civil Code section 897 specifically excepts from the

limitation of liability under the act any defect that “causes damage.”1

       Thus, the Right to Repair Act abrogates the holding in Aas, supra, 24 Cal.4th

627, by providing a remedy for particular residential construction defects that cause no

property damage. The act, however, does not limit or preclude common law claims for

1
       “The standards set forth in this chapter are intended to address every function or
component of a structure. To the extent that a function or component of a structure is
not addressed by these standards, it shall be actionable if it causes damage.” (Civ.
Code, § 897.)


                                               8
damages for construction defects that have caused property damage. (Liberty Mutual,

supra, 219 Cal.App.4th at p. 108.) Liberty Mutual examined the act and its legislative

history and concluded that the act does not provide an exclusive remedy and does not

limit or preclude common law claims for damages for construction defects that have

caused property damage. (Id. at pp. 103-108.) We agree.

       Burch alleged in her second count for negligence in her third amended complaint

that the defendants breached their duty of care resulting in deficient construction,

including but not limited to specified defects that caused property damage. She alleged

in her third count for breach of implied warranty that the defendants breached an

implied warranty with respect to the construction. Both counts allege common law

claims for damages for construction defects, including defects allegedly resulting in

property damage. We conclude that the Right to Repair Act does not preclude such

common law claims and that the summary adjudication of the second and third counts

on this basis was error.2

       4.     The Defendants Failed to Establish the Absence of a Duty of Care

       Custom Home Builders, Warren, and Sahar also argued in their motion for

summary adjudication that they had no contractual or other relationship with Burch,

owed her no duty of care, and therefore could not be liable for either negligence or

breach of implied warranty. We first will address the negligence count.

2
       The Right to Repair Act is expressly inapplicable to an action to enforce
a contract. (Civ. Code, § 943, subd. (a).) In light of our conclusion, we need not decide
whether an action for damages for breach of an implied warranty is an action to enforce
a contract within the meaning of the statute.


                                             9
       The existence of a duty of care is an essential element of a negligence cause of

action. (Bily v. Arthur Young & Co. (1992) 3 Cal.4th 370, 397 (Bily).) Whether a duty

of care exists in a particular case is a question of law for the court to decide. (Ibid.)

The existence of a duty of care in the absence of privity of contract is a policy question

that depends on the balancing of several factors, including “[1] the extent to which the

transaction was intended to affect the plaintiff, [2] the foreseeability of harm to [the

plaintiff], [3] the degree of certainty that the plaintiff suffered injury, [4] the closeness

of the connection between the defendant’s conduct and the injury suffered, [5] the moral

blame attached to the defendant’s conduct, and [6] the policy of preventing future

harm.’ ” (Ibid., quoting Biakanja v. Irving (1958) 49 Cal.2d 647, 650 (Biakanja).)

       Bily involved an action for professional negligence brought by investors against

an accounting firm that had prepared an independent audit of a client’s financial

statements. (Bily, supra, 3 Cal.4th at pp. 377-379.) Bily focused on “three central

concerns” with allowing “all merely foreseeable third party users of audit reports to sue

the auditor on a theory of professional negligence” (id. at p. 398): (1) the auditor could

face potential liability far out of proportion to its fault; (2) the class of plaintiffs in such

an action, generally more sophisticated business lenders and investors, could control

and adjust the risks by contract rather than rely on tort liability; and (3) potential

liability to third parties would more likely result in an increase in the cost and decrease

in the availability of audit services, rather than more careful audits. (Id. at pp. 398-406.)

In light of these considerations, Bily held that an auditor’s liability for negligence in



                                               10
connection with performing an audit of a client’s financial statements is limited to the

client. (Id. at p. 406.)

       Biakanja, supra, 49 Cal.2d 647, involved a negligence action against a notary

public who prepared a will in which the plaintiff was named as the sole beneficiary.

The will was denied probate because it lacked proper attestation. As a result, instead of

receiving the entire estate under the will, the plaintiff received only one-eighth of the

estate by intestate succession. (Id. at p. 648.) Applying the six factors listed above

(Biakanja factors), Biakanja stated that the defendant must have been aware that the

plaintiff would suffer a loss if the will were declared invalid, and the plaintiff would

have received the entire estate but for the defendant’s negligence. (Id. at pp. 650-651.)

The defendant clearly was not qualified to draft a will and supervise its execution, and

by doing so he had engaged in the unauthorized practice of law, a misdemeanor. (Id. at

p. 651.) Biakanja concluded that the defendant owed the plaintiff a duty of care despite

the lack of privity of contract. (Ibid.)

       Stewart v. Cox (1961) 55 Cal.2d 857 applied the Biakanja factors in holding that

a concrete subcontractor was liable to homeowners for the negligent construction of

a swimming pool, despite the lack of privity of contract. (Id. at p. 863.) The plaintiffs

had settled with the general contractor who agreed to construct the pool for them. (Id. at

p. 860.) Stewart stated that the subcontractor’s work was intended to benefit the

plaintiffs as owners and that it was foreseeable that they would suffer property damage

if the pool was not sound. There was no doubt that the plaintiff suffered serious damage

caused by escaping water, and the trial court found based on ample evidence that the

                                             11
injury resulted from the defendant’s negligence. (Id. at p. 863.) Stewart concluded that

the subcontractor “should not be exempted from liability if negligence on his part was

the proximate cause of the damage to plaintiffs.” (Ibid.)

       Sabella v. Wisler (1963) 59 Cal.2d 21 held that a developer and contractor who

built a home for the purpose of offering it for sale to the public was liable to the

purchasers for negligent construction. (Id. at pp. 27-30.) The house was negligently

constructed on insufficiently compacted filled land. (Id. at pp. 23-24.) Applying the

Biakanja factors, Sabella stated that although the house was not built specifically for the

plaintiffs, they were members of the class of prospective homebuyers for which the

defendant built the house. (Sabella, supra, at p. 28.) “Thus as a matter of legal effect

the home may be considered to have been intended for the plaintiffs, and Wisler owed

them a duty of care in construction. [Citation.]” (Ibid.) The harm to prospective

homebuyers was foreseeable, it was undisputed that the house was seriously damaged,

and there was a close connection between the defendant’s negligence and the injury

suffered. (Ibid.) “Finally, the prevention of future negligent construction of buildings

upon insufficiently supportive material would not be furthered by exempting defendant

Wisler from liability for his negligence. [Citations.]” (Id. at p. 29.)

       Custom Home Builders, Warren, and Sahar as the parties moving for summary

adjudication had the initial burden to present evidence showing that Burch could not

establish an element of her negligence count. In our view, the evidence presented in

support of their motion fails to show that Burch cannot establish a duty of care, and

instead tends to show that a duty of care existed. As in Sabella v. Wisler, supra,

                                             12
59 Cal.2d at page 28, Burch is a member of a class of prospective homebuyers for

which the defendants performed the construction, so in legal effect the construction may

be considered to have been intended for her.3 It was foreseeable that a prospective

owner would suffer harm if the construction was deficient, and the defendants have

presented no evidence showing that the harm to Burch is uncertain. There is a close

causal connection between the defendants’ construction of the property as the general

contractor and any construction deficiencies and resulting damage. Finally, the policy

of preventing future harm from deficient construction would not be served if the general

contractor were excused from liability to the prospective owner for its alleged

negligence.4 (Sabella, supra, at pp. 28-29; Stewart v. Cox, supra, 55 Cal.2d at p. 863.)

       Weseloh Family Ltd. Partnership v. K.L. Wessel Construction Co., Inc. (2004)

125 Cal.App.4th 152 (Weseloh), cited by the defendants, is distinguishable. That case

involved the construction of facilities for an automobile dealership. The defendants

were engineers who designed retaining walls for a subcontractor on the project and were

not otherwise involved in the construction. After the retaining walls failed, the owners

and the general contractor sued the design engineers for negligence. The trial court

granted summary judgment in favor of the design engineers. (Id. at pp. 158-160.)


3
       Custom Home Builders, Warren, and Sahar did not challenge the alter ego
allegations in their motion for summary adjudication and have not shown that the
individual defendants should be regarded as any different from Custom Home Builders,
the general contractor on the project.
4
      The evidence in the record does not suggest that the defendants’ conduct was
morally blameworthy apart any moral blame encompassed in the other factors.


                                           13
Weseloh stated that the design engineers satisfied their initial burden on the summary

judgment motion to negate the existence of a duty of care by presenting evidence that

they had no contractual privity with either the owners or the general contractor and only

performed professional design services for a subcontractor. The burden on the motion

therefore shifted to the owners and the general contractor. (Id. at p. 164.)

       Considering the Biakanja factors and the concerns cited in Bily, supra, 3 Cal.4th

at pages 398-406, Weseloh concluded that the design engineers owed no duty of care to

either the owners or the general contractor. (Weseloh, supra, 125 Cal.App.4th at

pp. 166-173). As in Bily, Weseloh noted the prospect of the design engineers’ liability

far out of proportion to their fault, the sophistication of the owners and the general

contractor and their ability to control and adjust the risks by contract rather than rely on

tort liability, and their failure to show any benefit from imposing liability to third parties

on a provider of professional services in those circumstances. (Weseloh, supra, at

pp. 170-172.) Weseloh stated that the owner could pursue a claim for damages against

the general contractor and the general contractor could pursue a claim for damages

against the subcontractor. (Id. at p. 170.) Weseloh also noted the absence of evidence

that the design engineers’ design was used without alteration and the absence of

evidence of causation in general. (Id. at pp. 168-169.)

       Here, in contrast, Custom Home Builders was the general contractor on the

project responsible for the overall construction, rather than a provider of professional

services to a subcontractor, and the defendants have not challenged the element of

causation. The concerns cited in Bily, supra, 3 Cal.4th at pages 398-406, do not apply

                                             14
here. We therefore hold that Weseloh, supra, 125 Cal.App.4th 152, does not support the

absence of a duty of care in these circumstances.

       Our consideration of the Biakanja factors causes us to conclude that the

defendants failed to establish the absence of a duty of care. Instead, the evidence in the

present record supports the existence of a duty of care. The summary adjudication of

the negligence count in favor of Custom Home Builders, Warren, and Sahar cannot be

upheld based on the absence of a duty of care.

       5.     The Defendants Failed to Negate a Breach of Implied Warranty

       Burch alleged in her third amended complaint that she was a third party

beneficiary of the construction contract between Premier Homes and Custom Home

Builders and that the defendants impliedly represented that Custom Home Builders used

reasonable skill and judgment in the construction.

       Pollard v. Saxe & Yolles Dev. Co. (1974) 12 Cal.3d 374, 376, 379-380 (Pollard),

held that there is implied in a sales contract for newly constructed real property

a warranty of quality and fitness. Pollard stated, “the builder or seller of new

construction—not unlike the manufacturer or merchandiser of personalty—makes

implied representations, ordinarily indispensable to the sale, that the builder has used

reasonable skill and judgment in constructing the building.” (Id. at p. 379.) Pollard

stated further, “we conclude builders and sellers of new construction should be held to

what is impliedly represented—that the completed structure was designed and

constructed in a reasonably workmanlike manner.” (Id. at p. 380.) Pollard noted that

a similar implied warranty in construction contracts protects the owner from defective

                                            15
construction and stated, “it would be anomalous to imply a warranty of quality when

construction is pursuant to a contract with the owner—but fail to recognize a similar

warranty when the sale follows completion of construction.” (Id. at pp. 378-379.)

       The plaintiffs in Pollard, supra, 12 Cal.3d 374, purchased the property from the

defendant developers and were not parties to the construction contracts between the

developers and a general contractor, who was not a party to the litigation. (Id. at

p. 376.) Pollard held that the developers, as sellers of newly constructed real property,

could be held liable for breach of an implied warranty of quality and fitness, but that the

action was barred because the plaintiffs failed to notify the defendants of the defects

within a reasonable period of time after discovering the defects. (Id. at p. 380.)

Although Pollard stated that an implied warranty of quality and fitness applies to

builders and sellers of new construction, the case involved only the developers as

sellers. Pollard therefore did not suggest that an implied warranty ran from the general

contractor to the plaintiffs, with whom the general contractor had no contractual

relationship. East Hilton Drive Homeowners’ Assn. v Western Real Estate Exchange,

Inc. (1982) 136 Cal.App.3d 630, 632-633, cited by Burch, similarly involved sales by

the defendants to the plaintiffs, and did not suggest that an implied warranty could arise

absent privity of contract.

       An implied warranty arises in a contract and therefore generally cannot arise

without a contract between the plaintiff and the defendant. “The general rule is that

privity of contract is required in an action for breach of either express or implied

warranty and that there is no privity between the original seller and a subsequent

                                            16
purchaser who is in no way a party to the original sale. [Citations.]” (Burr v. Sherwin

Williams Co. (1954) 42 Cal.2d 682, 695 [noting exceptions that are inapplicable here].)

“ ‘It is settled law in California that privity between the parties is a necessary element to

recovery on a breach of an implied warranty of fitness for the buyer’s use, with

exceptions not applicable here. [Citation.]’ [Citation.]” (Huang v. Garner (1984)

157 Cal.App.3d 404, 419, disapproved on another ground in Aas supra, 24 Cal.4th at

p. 649.)

       Gilbert Financial Corp. v. Steelform Contracting Co. (1978) 82 Cal.App.3d 65

held that a real property owner could maintain a cause of action against a subcontractor

for breach of an implied warranty of quality and fitness despite the lack of a contract

between the owner and the subcontractor. Gilbert concluded that, in the circumstances

of that case, the owner was an intended beneficiary of the contract between the general

contractor and the subcontractor. (Id. at pp. 69-70.) Gilbert recognized an exception to

the general rule that an implied warranty can arise only in favor of a party to the

contract.

       The trial court here granted summary adjudication in favor of the defendants on

the second count for negligence and third count for breach of implied warranty based on

the Right to Repair Act. The court did not conclude that Burch was not an intended

beneficiary of the construction contract and summarily adjudicate the third count for

breach of implied warranty on that basis. Instead, the court concluded that there was

a triable issue of fact as to whether Burch was an intended beneficiary of the

construction contract, and therefore denied summary adjudication of the fifth count for

                                             17
breach of contract/third party beneficiary. The defendants do not challenge the court’s

determination that a triable issue of fact exists, have shown no error in that

determination, and therefore are not entitled to summary adjudication of the third count

for breach of implied warranty.

                                     DISPOSITION

       The petition for writ of mandate is granted, and the trial court is directed to

vacate its order granting the motion for summary adjudication as to the second count for

negligence and third count for breach of implied warranty and enter a new order

denying the motion on those counts. The operative complaint shall be deemed amended

to include those two counts. Burch is entitled to recover her costs in these appellate

proceedings.



       CERTIFIED FOR PUBLICATION

                                                                        CROSKEY, J.

WE CONCUR:

       KLEIN, P. J.

       KITCHING, J.




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