Filed 7/24/14 AFC Low Income Housing Partners v. POZ Village Development CA2/5
                  NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS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 This opinion has not been certified for publication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

                                     SECOND APPELLATE DISTRICT

                                                  DIVISION FIVE


AFC-LOW INCOME HOUSING                                               B247349
PARTNERS,
                                                                     (Los Angeles County
         Plaintiff and Appellant,                                    Super. Ct. No. BC354676)

         v.


POZ VILLAGE DEVELOPMENT, INC.,

         Defendant and Appellant.




         APPEAL from a judgment of the Superior Court of Los Angeles County, Ralph
W. Dau, Judge. Affirmed.
         Kennedy Kamrowski, J. Grant Kennedy for Defendant and Appellant.
         Reuben Raucher & Blum, Timothy D. Reuben and Stephen L. Raucher for
Plaintiff and Appellant.
       Plaintiffs United Housing Preservation Corporation (United), AFC-Low Income
Housing Credit Partners-I, AFC American Housing Partners-16 and Housing
Preservation Partners are partners in the Coliseo Housing Project, which was formed to
construct and operate a low to moderate income housing project in Los Angeles.
Plaintiffs removed defendants The Bedford Group (Bedford) and POZ Village
Development, Inc. (POZ) as general partners in the Coliseo Housing Partnership and
elected to buy-out their partnership interests. Plaintiffs then sought declaratory relief,
including an order to compel an appraisal of the removed partners’ partnership interests.
Following the court-ordered appraisal, plaintiff United expanded the case to include
causes of action for rescission, breach of contract and breach of fiduciary duty. The
rescission cause of action were tried by the court, then the breach of contract and breach
of fiduciary duty claims were tried by a jury. Defendant POZ now appeals from the final
judgment in this matter disposing of all issues in this case.
       POZ contends the court should have ordered in the final judgment that plaintiffs’
buy-out of POZ’s partnership interest be completed, and should have awarded interest on
the appraisal valuation. POZ also contends the court erred in ruling that United’s breach
of fiduciary duty and breach of contract claims were not barred by the statute of
limitations and also in granting United’s motion for Judgment Notwithstanding the
Verdict (JNOV). We affirm the judgment.


                                            Facts
       1. Background
       The Coliseo Housing Partnership (Partnership) was formed in 1988 to construct
and operate a low to moderate income housing project on Martin Luther King Boulevard
near the Los Angeles Memorial Coliseum. The purpose of the Partnership was to qualify
for and sell low-income housing tax credits. By October 1990, there were six partners in
the partnership: plaintiff United (a general partner with a 0.5% interest), co-plaintiffs
AFC–Low Income and AFC American (limited partners with a combined 97% interest),
defendants POZ and Bedford (general partners with a combined 1.5% interest), and

                                              2
Housing Preservation Partners (a limited partner with a 1% interest). The partnership
was governed by the Amended and Restated Agreement of Limited Partnership of
Coliseo Housing Partnership, effective May 1, 1990, (hereafter the Agreement).
       The project was financed in part through a loan from the Community
Redevelopment Agency (“CRA”) for $3,954,000 and was built on land leased from the
CRA.1 The Partnership agreed to repay the loan in annual payments consisting of 50% of
the residual rent receipts generated by the project. Another 10% of the residual rents
receipts were to be paid to the CRA for the ground lease. The CRA held the second Deed
of Trust on the property.
       From completion of construction through the end of 1995, the project was
managed by TBG Management, an arm of Bedford. In late 1995, the CRA discovered
that TBG had distributed $342,000 to Bedford and POZ, an action which affected the
residual rent receipts calculation. The CRA believed it was owed $155,705 as its share of
the residual rent receipts generated by the project through the end of 1995. Bedford
contended that the distributions were permissible because the Partnership owed
$1,743,000 to Bedford and POZ for their efforts in developing the project, and those
payments on that promissory agreement (the “Developer’s Note”) took priority over
repayment of the CRA.2 The CRA disagreed, declared a default and filed a notice of
foreclosure in February, 1996.


1
        The project was also financed by a $3,500,000 loan from another lender, who held
the first Deed of Trust on the property, which was to be repaid by fixed monthly
payments.
2
        The liability for this Note was reflected in the Partnership’s financial statements
for the years ended December 31, 1991, 1992, 1993, 1994, 1995 and 1996 which show,
in the notes under “liabilities other than current,” notes due to the general partners in the
amount of $1,743,000. The statements for 2004 and 2005 do not show these debts. They
contained a note which states: “During 2004, it was discovered that the general partner
notes totaling $1,743,000 were not valid notes and should never have been recorded on
the books of the Partnership. . . .” In August 2009, while this action was still pending, the
Partnership filed a separate lawsuit to cancel the Note. (Los Angeles County Superior
Court Case No. BC419577.) The court found in favor of POZ and Bedford on two
                                             3
       The CRA later withdrew the notice of foreclosure pursuant to an agreement with
the Partnership, after the Partnership removed TBG as the property manager and agreed
to put all income from the property into a trust account which required written approval
of the CRA for disbursements and to pay the CRA 100% of the residual rents until the
debt was paid was off.
       The project generated $39,973 in residual rents for 1996. No residual rent receipts
were generated by the project from 1997 through 2004. In August 2004, the CRA
renewed its demand for payment for the earlier debt, which now totaled $195,677.
United “advanced” the sum of $195,677 to the Partnership which the Partnership paid to
the CRA to avoid foreclosure. According to United’s expert, United would have had to
repay millions of dollars in tax credits and penalties if the project were foreclosed upon.
       On April 26, 2006, the limited partners of the Partnership notified POZ and
Bedford that they had been removed as general partners. United elected to continue the
business of the Partnership as a General Partner.


       2. The lawsuit
       United filed this lawsuit on June 28, 2006. The complaint contained two causes of
action, both seeking declaratory relief. A request to compel an appraisal of POZ’s and
Bedford’s partnership interests was included in the prayer for relief. United moved to
compel an appraisal. This motion was denied by the trial court, which found that United
had not clearly elected to buy-out the interests of POZ and Bedford.
       United subsequently served a notice of buy-out election in which it stated: “[t]he
purpose of this letter is to provide you with notice that United Housing Preservation
Corporation will buy-out your company’s interest in the Partnership.” On November 27,
2006, the court ordered the parties to submit to the process provided in the Agreement for


substantive grounds, and also found the action was barred by the statute of limitations.
The Partnership appealed. On May 6, 2013, we affirmed the trial court’s judgment,
finding the court was correct that the claims were barred by the statute of limitations.
(Case No. B236713.)
                                             4
an appraisal. Each side appointed their own appraiser, and on October 26, 2007, the sides
exchanged appraisals. The appraisals were far apart. United’s appraiser valued the
partnership interests at $42,000. POZ’s appraiser valued the partnership interests at
$6,928,695.
       On October 15, 2008, the court appointed William Hanlin, Jr. to perform the third
appraisal called for in the Agreement. On April 27, 2009, Hanlin served his revised
award on the parties. He valued POZ’s interest at $4,891,658 and Bedford’s at
$3,052,554, for a total of $7,944,212. The appraiser included the Developer’s Note in his
valuation, which was shown with a value of $2,857,474 for each partnership interest, for
a combined total of $5,714,948.
       United filed a motion to vacate the award on the ground the appraiser exceeded his
authority by including the Developer’s Note in the valuation. POZ filed a motion to
confirm the award. On June 12, 2009, the trial court denied United’s motion to vacate
the award, but did not enter the judgment proposed by POZ, which would have ordered
United to pay the amount of the appraisal award to POZ and Bedford.
       United filed a Motion for Leave to File a First Amended and Supplemental
Complaint, which sought to add claims for rescission and for damages based on breach of
contract and breach of fiduciary duty, plus declaratory relief concerning POZ’s and
Bedford’s “tender” of their partnership interests. On August 3, 2009, the trial court
denied the motion. That same day, the court entered an Interlocutory Judgment
Regarding Valuation Determined by Appraiser, which stated: “IT IS ORDERED,
ADJUDGED, AND DECREED that as of October 17, 2006, the value of the interest of
POZ Village Development Corporation in the Coliseo Housing Partnership is $4,891,658
and the value of the interest of The Bedford Group in the Coliseo Housing Partnership is
$3,052,554.”
       United filed a separate action on October 15, 2009, to pursue the claims it had
sought unsuccessfully to raise in its first amended complaint in this action. (Los Angeles
Superior Court Case No. BC424019.)


                                             5
       In this case, trial was set for November 2009 on United’s cause of action for a
declaration that POZ and Bedford had been properly removed as general partners of the
Partnership. On November 12, 2009, POZ filed a trial brief which contended that the
buy-out dispute should be fully resolved in this action. POZ contended the trial court
should declare that POZ’s and Bedford’s partnership interests were delivered and that
payment in full was due to POZ and Bedford. That same day, United filed a Notice of
Related Case concerning Case No. BC424019.
       On November 13, the court issued an order permitting United to file and serve an
amended and supplemental complaint raising the issues it had raised in Case No.
BC424019. The court found that Case No. BC424019 was a related case. The court
further ordered that United’s declaratory relief and rescission claims would be tried to the
court first, as Phase One of the trial.
       On January 11, 2010, United filed its First Amended and Supplemental Complaint.
POZ filed their Answer on February 16, 2010.
       On November 10, 2010, POZ sought leave to file a Cross-Complaint for
declaratory relief. United opposed the filing of the cross-complaint. The court denied the
request.
       In February, 2011, the Phase One court trial on United’s rescission claims took
place. United lost on its rescission claims.
       On May 12, 2011, the court issued a minute order stating it was reconsidering its
confirmation of the appraisal award, and requesting briefing from the parties.
       In October 2011, after briefing and argument by the parties, the trial court issued
its Order on Reconsideration in which it found the appraiser had exceeded his powers.
The court set aside its 2009 order confirming the award and the resulting interlocutory
judgment.
       On December 5, 2011, POZ appealed from the order vacating the appraisal award.
(Case No. B237721)
       In May, 2012, the Phase Two jury trial took place. POZ asserted the claims were
barred by the statute of limitations, but the trial court found the claims were not time-

                                               6
barred. The jury found for United on its breach of fiduciary duty claim and against
United on its breach of contract claim. The jury awarded United no damages for the
breach of fiduciary duty. United filed a Motion for Judgment Notwithstanding the
Verdict and a Motion for New Trial challenging the jury’s award of no damages. The
trial court granted both motions on August 6, 2012, and found that United was damaged
in the amount of $195,677.
       On August 6, 2012, the court issued a document entitled Judgment After Phase
One and Phase Two Trials. The document contained no reference to the appraisal award,
which had been vacated by the court, and which was the subject of a pending appeal.
       On August 31, 2012, we issued our opinion reversing the trial court’s orders
concerning the appraisal. (Case No. B237721.)
       On September 21, 2012, United filed a notice of appeal from the judgment after
the court trial.3 United attached the court’s August 6 Judgment in the Phase One and
Phase Two Trials to the Civil Case Information Statement. POZ and Bedford did not file
a cross-appeal. (Case No. B244108.)
       On November 20, 2012, remittitur issued in the appraisal appeal, and pursuant to
our direction, the trial court reinstated its August 3, 2009 Interlocutory Judgment
concerning appraisal.
       On November 1, 2012, POZ filed a Motion for Entry of Final Judgment. POZ
pointed out that Code of Civil Procedure section 1287.4 mandates an enforceable
judgment for arbitration awards and that no such judgment had been entered in this case.
The only judgment concerning the appraisal award was labeled “interlocutory.” POZ
contended that all the issued tried and resolved in this case should be incorporated into
one final judgment. In addition, POZ again contended that the judgment should order the
buy-out to be completed and United to pay POZ and Bedford the appraised value of their
partnership interests.


3
       United contends POZ was required to appeal at that same time and raise any
claims that existed then or lose the right to appeal. We do not agree.
                                             7
       On February 8, 2013, the court entered its Final Judgment in this matter. This
judgment contained three paragraphs. The first paragraph stated that the value of POZ’s
partnership interest was $4,891,658 and Bedford’s $3,052,554. The second paragraph
stated that United took nothing on its causes of action for rescission. The third paragraph
stated that “POZ and Bedford must pay United $195,677 together with prejudgment
interest in the amount of $109,766.76, a total of $305,443.76, and its costs of suit in the
amount of $13,284.”
       On March 7, 2013, POZ filed its Notice of Appeal in this matter. On April 15,
2013, United filed a Motion to Dismiss POZ’s appeal. On May 2, 2013, we denied this
Motion. We stated that “at this stage it is impossible to determine that there are no issues
[that] can be lawfully litigated.” We instructed the parties to discuss the issue in their
briefs. United has added no new facts or arguments concerning appealability in its brief.
There is no reason to reconsider our previous ruling.4
       On October 17, 2013, we affirmed the trial court’s judgment in the court trial,
which denied United’s rescission claims. (Case No. B244108.)


                                         Discussion
       1. Judgment – Buy-out
       As we discuss above, the interlocutory judgment which the court entered
following completion of the appraisal process simply stated the dollar value of POZ’s and
Bedford’s partnership interests, as did the final judgment in this matter. POZ contends
the trial court erred in refusing to enter a judgment ordering United to complete its buy-




4
        United has claimed the August 6, 2012 Judgment was the final judgment in this
matter, and the court’s February 8, 2013 Final Judgment was either the correction of a
clerical error or a separately appealable collateral order. The addition of the appraisal
award to the February 8 judgment was a substantial modification to the judgment. (See
Torres v. City of San Diego (2007) 154 Cal.App.4th 214 [when amended judgment
results in a substantial modification of a judgment, the amended judgment supersedes the
original and becomes the one final appealable judgment in the action].)
                                              8
out of POZ’s partnership interest by paying POZ the appraised value of the partnership
interest. We see no error.
       Generally, a judgment must be confined to the issues raised by the pleadings.
(King v. King (1971) 22 Cal.App.3d 319, 324; J.R. Norton Co. v. Agric. Labor Relations
Bd. (1987) 192 Cal.App.3d 874, 888.)
       The judgment at issue arises from the declaratory relief cause of action brought by
United in its original complaint.5 That cause of action requested (1) a declaration that
POZ and Bedford had been removed as general partners and their partner interests
converted to limited partners; (2) a declaration “determining the rights and
responsibilities of POZ and Bedford with respect to the Partnership, including a
determination that the buyout called for by the Partnership Agreement resolves any
obligations owed to POZ and Bedford;” and (3) an order compelling POZ and Bedford to
appoint an appraiser . . . to determine the fair market value of the general partner interests
of the defendants.”
       There is nothing in United’s cause of action which would have permitted, much
less required, the trial court to order United to complete the buy-out and/or the pay the
amount of the appraisal. United did not seek such relief. POZ did not file, or attempt to
file, a cross-complaint to the original complaint seeking affirmative relief.6
       POZ argues that because an appraisal is a form of arbitration, Code of Civil
Procedure section 1287.4 requires a judgment that makes the buy-out election final and
enforceable.



5
       United initially brought two causes of action, one for declaratory relief and one for
dissociation. The dissociation cause of action was later dismissed without prejudice.
6
        In its answer to the First Amended Complaint filed by United, POZ did request the
trial court to “do all steps necessary to finalize the dispute between plaintiff and
defendant including the payments of all sums due from the partnership” to POZ and
Bedford. Affirmative relief may not be claimed in an answer. (Code Civ. Proc, § 431.30,
subd. (c).)

                                              9
       Section 1287.4 requires a judgment to be entered in conformity with the confirmed
arbitration award. The scope of any arbitration, including the award, is determined by the
parties’ agreement to arbitrate. Here, the parties did not agree that any disputes arising
from a buy-out would be resolved by arbitration; they agreed only that any disputes about
the value of partnership interests would be submit to limited arbitration in the form of an
appraisal.7 To the extent POZ contends we held otherwise in our opinion in B237721,
POZ is mistaken.
       The appraiser properly determined only the value of the partnership interests, and
issued an award giving his valuation of those interests. The court confirmed the award
and, in accordance with section 1287.4, entered a judgment stating the dollar value of
POZ’s and Bedford’s partnership interests. (See Devonwood Condominium Owners
Assn. v. Farmers Ins. Exchange (2008) 162 Cal.App.4th 1498, 1505-1506 [appraisal is a
limited form of arbitration which determines value and confirmation of an appraisal
award is “limited to the issuance of a judgment which brought finality to the dollar
amount of [the thing appraised] and nothing more.”].)


       2. Estoppel
       POZ argues that United was equitably and judicially estopped from claiming that
it was not obligated to buy-out the appraised interest and objecting to a judgment which
ordered them to complete the buy-out.8 We do not agree.




7
       Section 9.01(b) of the Agreement provides: “The withdrawing General Partner
shall appoint an appraiser. Within 15 days after receiving notice of such appointment, the
Successor General Partner shall appoint an appraiser. If the two appraisers so appointed
shall be unable to agree on the fair market value of the withdrawing General Partner’s
General Partner Interest within 30 days, they shall appoint a third appraiser. The
decision, in writing, of the third appraiser shall be binding and conclusive . . . . ”
8
       United contends POZ did not raise the issue of estoppel in the trial court and so
cannot raise them on appeal. United is mistaken. POZ did raise estoppel in the trial
court.
                                             10
       POZ’s claim of estoppel is based on the trial court’s requirement that United make
a clear election to buy-out POZ and Bedford before the court would compel an appraisal,
and on United’s agreement that it would make such an election. United followed through
on this agreement and served a notice of buy-out election.
       United did not object to POZ’s proposed judgment on the ground that United had
not elected to buy-out the appraised interests. United objected on procedural grounds.
United contended that all issues raised by the pleadings had been resolved. United also
argued that POZ’s proposed judgment was, in effect, seeking specific performance of the
buy-out, but POZ did not have a cross-claim for specific performance and could not seek
affirmative relief in their answer. United further contended that in accordance with our
decision on appeal, the court could only reinstate the interlocutory judgment which
simply stated the value of defendants’ partnership interests, as determined by the
appraisal. There is no reason United should be estopped from making these arguments.


       3. Cross-complaint
       POZ contends that if United’s pleadings did not permit the entry of a judgment
ordering the buy-out to be completed, then the trial court erred in refusing to allow POZ
leave to file a cross-complaint seeking such relief.
       The trial court made no express finding as to whether the proposed cross-
complaint was compulsory or permissive, but appears to have treated the cross-complaint
as compulsory. In its statement of decision, the court quoted the provisions of Code of
Civil Procedure section 426.50 concerning leave to file compulsory cross-complaints and
also the legal definition of a compulsory cross-complaint. Further, the court made a
finding of bad faith, which is relevant in ruling on motions to file compulsory cross-
complaints. The trial court erred in treating the cross-claims as compulsory.
       Code of Civil Procedure section 426.60 provides that article 2 governing
compulsory cross-complaints does not apply “where the only relief sought is a
declaration of the rights and duties of the respective parties in an action for declaratory


                                             11
relief.” (Code Civ. Proc., § 426.60, subd. (c).) 9 Section 426.50, which was quoted by
the trial court, is found in article 2. Since the cross-complaint which POZ sought to file
contained only a claim for declaratory relief, the provisions of section 426.50 did not
apply.
         Although we find the trial court erred, there is no need for a remand of the matter
to permit the trial court to reconsider POZ’s request to file a cross-complaint for
declaratory relief. POZ has filed a separate action seeking specific performance of the
Agreement, and so now has an accrued cause of action for breach of contract.
Declaratory relief would no longer be appropriate. (See Canova v. Trustees of Imperial
Irrigation Dist. Employee Pension Plan (2007) 150 Cal.App.4th 1487, 1497
[“Declaratory relief operates prospectively to declare future rights, rather than to redress
past wrongs”].)


         4. Judgment - interest
         POZ contends the court erred in failing or refusing to award interest on the
appraisal award amount. POZ contends that since the Developer’s Notes call for interest,
and the Notes are included in the appraisal valuation, interest has been accruing and
should be added in the Judgment to the appraised value of the interests. POZ cites no
legal authority to support this claim.
         The appraisal award determined the value of the partnership interests at the time of
the appraisal. This value was based on both the amount of the Developer’s Note
(including interest accrued to that time) and the value of the partner’s equity interest in
the partnership. There is no way to know what, if any, effect the accrued interest might
have on the value of the equity interest. Accordingly, there is no merit to POZ’s claim
that any accrued interest should simply be added to the awards.



9
       Additionally, Code of Civil Procedure section 1062 provides that “no judgment
under this chapter [pertaining to declaratory relief] shall preclude any party from
obtaining relief upon the same facts.”
                                              12
        5. Statute of limitations and JNOV ruling
        POZ “briefly” raises two other issues. POZ contends the trial court erred in
finding that United’s claims were not barred by the statute of limitations. POZ also
contends the trial court erred in granting United’s motion for judgment notwithstanding
the verdict.
        a. Statute of limitations
        POZ contends, correctly, that the statute of limitations for a breach of contract
action is four years from the date of the breach. The trial court was mistaken in finding
otherwise.
        The statute of limitations for breach of a written contract is four years. (Code Civ.
Proc, § 337(1).) “While incurring a loss has always been a prerequisite to accrual of a
cause of action in tort, it has never been a requirement in contract law.” (Tabachnick v.
Ticor Title Ins. Co. (1994) 24 Cal.App.4th 70, 76.) A cause of action for breach of
contract generally “accrues at the time of breach regardless of whether any substantial
damage is apparent or ascertainable.” (Menefee v. Ostawari (1991) 228 Cal.App.3d 239,
246.)
        United acknowledges on appeal that POZ’s and Bedford’s breaches occurred no
later than 1996. United did not file its first complaint in this matter until 2006, more than
four years after the 1996 breaches, and so well outside the statute of limitations for a
breach of contract claim. United did not prevail on its breach of contract cause of action,
however, so no relief would appear to be warranted for POZ.
        POZ contends, correctly, that the statute of limitations for breach of fiduciary duty
is also four years. (Code Civ. Proc., § 343; see Stalberg v. Western Title Ins. Co. (1991)
230 Cal.App.3d 1223, 1230.) POZ does not dispute that this cause of action accrues only
when the plaintiff suffers harm.
        POZ argues, without citation to legal authority, that United’s cause of action for
breach of fiduciary duty arose when the breaches occurred and thus no later than 1996,
the last year POZ and Bedford caused the residual rent receipts to be paid to themselves
rather than the CRA. POZ also argues, without citation to legal authority, that United

                                              13
was a “volunteer” and that a time-barred claim cannot be revived by one who voluntarily
pays out money on account of another’s breach of a duty, and then claims to be injured
by that payment.
         In addition to lacking legal authority, POZ’s argument is factually inaccurate.
United did not claim that it suffered harm because it had some right to the money POZ
and Bedford took. If POZ had taken money United claimed as its own, POZ would have
a good argument that United’s claim accrued when it became aware that the money had
been taken. If United was somehow directly liable for payments to the CRA in the event
the Partnership failed to pay the CRA, POZ might have a good argument that United’s
claim accrued when it learned the money had not been paid to the CRA. But United has
not made those claims of harm. United claimed it was not harmed until 2004, when the
CRA filed a notice of foreclosure and the Partnership did not have the $195,677 needed
to pay off the debt underlying the foreclosure. United’s expert explained at trial that
United would be harmed if foreclosure took place because United would then have to
repay millions of dollars in tax credits and penalties. United, in effect, “mitigated” those
damages by paying off the debt and stopping the foreclosure. POZ does not explain why
United’s claim that it would be damaged by foreclosure would be time-barred.


         b. JNOV
         It is an appellant’s burden to prove error, and appellant has completely failed to do
so in its claim concerning the JNOV. POZ has cited no legal authority at all on this issue
and has failed to support his limited and incomplete factual argument with citations to the
record.
         “[E]very brief should contain a legal argument with citation of authorities on the
points made. If none is furnished on a particular point, the court may treat it as waived,
and pass it without consideration.” (People v. Stanley (1995) 10 Cal.4th 764, 793.) We
do so.




                                              14
                                        Disposition


       The judgment is affirmed. Plaintiffs are to recover costs on appeal. Pursuant to
stipulation of counsel and this Court’s November 13, 2013 order, each party is to bear its
own costs on the dismissed cross-appeal in this matter.




                            NOT TO BE PUBLISHED IN THE OFFICIAL REPORTS




                            MINK, J.


We concur:




       TURNER, P.J.




       KRIEGLER, J.





      Retired judge of the Los Angeles Superior Court, assigned by the Chief Justice
pursuant to article VI, section 6 of the California Constitution.
                                            15
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