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Town of Islip v. Datre

United States District Court, E.D. New York

March 28, 2017

Town of Islip, Plaintiff,
v.
Thomas Datre, Jr., et al., Defendants.

          Plaintiff is represented by Michael J. Cahill and Guy W. Germano of Gemano & Cahill, P.C.

          Defendant COD is represented by Laurel R. Kretzing and Jeffrey D. Lebowitz of Jaspan Schle-singer LLP

          Defendant IEV is represented by Michael D. Cassell of Hogan & Cassell LLP

          The Atlas defendants are represented by John F. Carman, Esq.

          The Church Defendants were represented by Alesia J. Kantor, of the Law Offices of Joseph F. Kilada, P.C. on this motion, but Ms. Kantor has since withdrawn as counsel.

          MEMORANDUM AND ORDER

          JOSEPH F. BIANCO United States District Judge

         On April 29, 2016, plaintiff the Town of Islip (“plaintiff” or “the Town”) filed this action against Thomas Datre Jr., Thomas Datre Sr., Clara Datre, Richard Datre Jr., Christopher Grabe, Gia Gatien, Ronald Cianciulli, Joseph Montuori, Brett Robinson, Iglesia De Jesucristo Palabra Miel (the “Church”), Marco Lopez, Nancy Alvarez, William Carillo, Raul Pachecho, Walter Casasola, 5 Brothers Farming Corp., DFF Farm Corp., Datre Trucking & Farming Inc., Datre Auto & Equipment Sales Inc., Daytree at Cortland Square Inc., Daytree Custom Builders Inc., Datre Family Farms Inc., Datre Farms Realty Co. Inc., Islandia Recycling Inc., C.J. Site Development Inc., Atlas Home Improvement Corp. of Long Island d/b/a Atlas Asphalt (“Atlas”), IEV Trucking Corp. (“IEV”), COD Services Corp. (“COD”), and John Doe Nos. 1 through 10. The Complaint sets forth claims under the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. §§ 1964(c), 1962(d), and the Comprehensive Environmental Response Compensation and Liability Act (“CERCLA”), 42 U.S.C. § 9601 et seq., as well as state law claims for public nuisance, private nuisance, trespass, injury to property, joint tortfeasors, fraud and deceit, and restitution.

         These claims are based on the alleged illegal dumping of hazardous waste at Roberto Clemente Park (“the Park”) from July or August 2013 through April 2014 by defendants 5 Brothers Farming Corp., DFF Farm Corp., Datre Trucking & Farming Inc., Datre Auto 6 Equipment Sales Inc., Daytree at Cortland Square Inc., Daytree Custom Builders Inc., Datre Farms Realty Co. Inc., Thomas Datre Jr., Thomas Datre Sr., Clara Datre, Richard Datre Jr. and Gia Gatien (the “Datre defendants”), together with defendants C.J. Site Development and Christopher Grabe (the “Grabe defendants”). Defendants COD and IEV (collectively, the “arranger defendants”) allegedly acted as brokers throughout this time, arranging for the Datre and Grabe defendants to collect fill material from the John Doe defendants at various locations in Queens, Kings, Nassau, and Suffolk counties.

         According to the Complaint, prior to the dumping activities, the Church, Lopez, Alvarez, Carillo, Pachecho and Casasola (collectively, the “Church defendants”) had received permission to replace the topsoil and existing grass seed on one of the Park's soccer fields, and individuals were seen spreading soil on the field in May 2013. In August and October 2013, the Church defendants sent two letters to the Town acknowledging their work on the soccer field.

         The Complaint further alleges that the Town closed the Park in January 2014 and ordered the removal of the dumped material. The Datre and Grabe defendants removed some of the material and contracted with Atlas and Cianciulli (the “Atlas defendants”) to assist in the removal effort. Subsequently, the Suffolk County District Attorney's Office launched an investigation into the dumping activities, and, in the course of that investigation, testing revealed that the dumped material contained hazardous substances. Thomas Datre Jr. and Grabe were convicted on various charges in state court for their role in the dumping activities.

         The Complaint asserts that defendants engaged in a RICO conspiracy to fraudulently conceal the disposal of hazardous substances at the Park, setting forth underlying claims for mail and wire fraud. It also alleges CER-CLA claims, which assert that defendants are all potentially responsible parties for their roles in the illegal dumping, as well as various state law claims.

         Before the Court are motions to dismiss filed by the arranger, Atlas, and Church defendants. As set forth in more detail below, the Court concludes, inter alia, that the Complaint fails to allege facts from which it could be plausibly inferred that these defendants knew, or should have known, that the material dumped at the Park by the Datre and Grabe defendants contained hazardous substances. Absent such allegations regarding knowledge, plaintiff cannot plausibly assert that the arranger, Atlas, and Church defendants engaged in mail or wire fraud by misrepresenting or concealing material information (i.e., the hazardous nature of the material).

         In addition, the Court concludes that, for “arranger” liability to apply under CERCLA, the Complaint must allege that an arranger knew, or should have known, that the material in question was hazardous. Given the current allegations, the Complaint fails to state plausible CERCLA claims for arranger liability against COD, IEV, and the Atlas defendants. The Complaint also fails to state a plausible claim against the Church defendants for “operator” liability because it does not allege that they exercised the requisite degree of control over the Park or the hazardous substances for such liability to apply.

         Finally, the Complaint does not plausibly allege state law claims against the arranger, Atlas, or Church defendants for (1) nuisance because it does not adequately allege intent or negligence, (2) trespass because the illegal dumping was not an immediate or inevitable consequence of these defendants' actions, (3) injury to property because the underlying nuisance and trespass claims fail, (4) fraud and deceit because the Complaint fails to allege knowledge of the material's hazardous nature, and (5) restitution because the Complaint fails to allege that these defendants had a duty to assist in the remediation of the Park.

         Accordingly, the Court grants the arranger, Atlas, and Church defendants' motions to dismiss. However, the Court gives the Town leave to re-plead to attempt to address thse pleading defects with additional allegations, if plaintiff can do so.

         I. Background

         A. Facts

         The following facts are taken from the Complaint (“Compl.”). (ECF No. 1.) The Court assumes them to be true for purposes of deciding this motion and construes them in the light most favorable to plaintiff, the non-moving party.

         The Town owns the Park, which consists of designated parkland located in Brentwood, New York. (Compl. ¶ 70.) In April 2013, Lopez, the Church's pastor, and Alvarez, a member of the Church, contacted the Town on behalf of the Church and requested permission to replace the topsoil and existing grass seed on one of the Park's soccer fields at the Church's own cost and with volunteer labor. (Id. ¶ 72.) Defendant Montuori, the Commissioner of the Parks Department, granted the Church defendants' request on behalf of the Town. (Id. ¶ 73.) Shortly thereafter in May 2013, several individuals were seen spreading topsoil and grass seed over roughly two-thirds of the soccer field. (Id.) On May 13, Alvarez sent an email to defendant Robinson, Secretary to Commissioner Montuori, asking for additional topsoil to complete the project. (Id.) The Church stopped working on the field in May 2013. (Id. ¶ 82.)

         In June or August 2013, the Datre and Grabe defendants began trucking in thousands of tons of construction and demolition (“C&D”) debris, contaminated fill, and other solid wastes to the Park, dumping it over the topsoil and seed the Church defendants had deposited in May. (Id. ¶ 74.) On August 24, 2013, the Parks Department held a press conference at the Park where attendees saw trucks marked “Datre” delivering fill to the site of the soccer field. (Id. ¶ 76.)

         Subsequently, Town Board members and officers not employed by the Parks Department asked about the dumping activity. (Id. ¶ 77.) Commissioner Montuori and Robinson informed them that the Church defendants were volunteering to repair the soccer field, and the Town determined that they needed a permit to clear and grade the park, as well as consent and approval from the Town Board for any improvements by the Church defendants. (Id.) Commissioner Montuori and Robinson asked the Church to provide information for a land clearing permit and a letter from the Church describing the work it planned to complete. (Id.) On August 29, 2013, the Church faxed the Town a letter (the “August letter”) signed by Lopez, stating that the Church had been working on the soccer field without pay since April 2013. (Id. ¶ 81.) The letter provided no other information. (See id.)

         Meanwhile, claiming that he was working on behalf of the Church, defendant Grabe spoke with an architect and asked him for a site drawing of the soccer fields to submit to the Town with the land clearing permit information. (Id. ¶¶ 78-79.) The architect prepared the drawing, which did not include specifications of fill material, and provided it to Grabe. (Id. ¶ 80.) Grabe submitted the site drawing to the Town, and the Planning and Parks Departments reviewed it in the preparation of an application for a land clearing and grading permit. (Id. ¶ 83.) The Town Board subsequently granted the Church permission to spread topsoil and reseed the soccer fields at the Park. (Id. ¶¶ 84-85.) The Parks Department then submitted an application to the Planning Department for a Land Clearing and Grading permit, which the Planning Department issued on September 12, 2013. (Id. ¶ 87.)

         Around this time, deliveries of fill material ceased, and the entire area of the soccer field was buried under a layer of material, which extended into the wooded areas bordering the field. (Id. ¶ 89.) No additional work was performed to seed or otherwise restore the area for use as a soccer field. (Id.)

         In October 2013, Alvarez met with Commissioner Montuori and Robinson about the work at the soccer field. (Id. ¶ 90.) Later, on November 18, 2013, Church members Ca-rillo, Pacheco, and Casasola faxed a letter dated October 22, 2013 (the “October letter”) to Commissioner Montuori in which they stated that the Church had worked on the field since April, but the work had ended due to lack of irrigation. (Id. ¶¶ 91-93.) The Church offered to resume work if the Town would agree to provide water to the site. (Id. ¶ 93.)

         Dumping resumed at the soccer field and expanded into a new area in the Park shortly after the Town received the October letter. (Id. ¶ 94.) On November 21, 2013, a park ranger noticed that someone had deposited approximately 70 piles of “rocky dirt” on the soccer field, and a public safety report indicated that this dirt was unscreened and contained large boulders. (Id. ¶ 95.) A truck driver responsible for the dumping reported to the ranger that he was employed by Datre. (Id.) On November 30, 2013, the same park ranger saw additional debris deposited on the “recharge” area in the Park south of the soccer field, which, up to that time, had not been a site of previous dumping. (Id. ¶ 96.) In January 2014, Town personnel confirmed the presence of brick, metal, rebar, and other debris in this area, as well as heavy earth moving equipment. (Id. ¶ 97.) The Town closed the Park on January 23, 2014. (Id.)

         The Town then sent a letter to Lopez and the Church ordering them to cease and desist all work in the recharge area. (Id. ¶ 98.) The Church defendants did not reply, but the Datre and Grabe defendants responded by removing most of the fill and depositing it in locations outside the Park. (Id. ¶ 99.) The Atlas defendants joined in this removal effort, removing a portion of the fill from the Park and depositing it at 117 Brook Avenue, Deer Park, New York, property owned by the Atlas defendants. (Id. ¶ 100.) The Atlas defendants then moved this debris from their property to other property that they used and occupied at 175 Brook Avenue in Deer Park (the “Maisie Property”). (Id.) The owner of the Maisie Property did not give the Atlas defendants permission to deposit this fill there. (Id.) On January 27, 2014, Commissioner Montuori reported that some C&D debris, contaminated fill, and other waste remained in the recharge area after the removal. (Id. ¶ 101.)

         Dumping continued in the spring of 2014. (Id. ¶¶ 103-04.) On March 24, 2014, while opening the Park gate, a park ranger observed five Datre tractor trailers waiting on the road outside the Park. (Id. ¶ 103.) Once the gate was open, the trucks proceeded to the soccer field and dropped what appeared to be topsoil over previously deposited material, which contained large quantities of broken glass, crushed cement, and large stones. (Id.) Town employees saw Datre dump trucks operating in the Park as late as April 9, 2014. (Id. ¶ 104.)

         In April 2014, the Suffolk County District Attorney's Office launched an investigation into the dumping of the C&D debris and illegal fill at the Park and other locations in Suffolk County.[1] (Id. ¶ 105.) Soil tests of samples taken from the Park in the course of this investigation revealed the presence of hazardous substances, including asbestos, pesticides, and heavy metals. (Id. ¶ 106.) In response to this report, the Town undertook a removal action under the supervision of the New York State Department of Environmental Conservation. (Id. ¶ 107.) The Town's removal plan was approved, and removal activities commenced in June 2015. (Id. ¶¶ 107, 109.) In the end, a total of 39, 932.44 tons of C&D debris and unacceptable fill were removed from the Park, costing the Town over $4 million. (Id. ¶ 110.)

         Throughout this time (i.e., between June 2013 and April 2014), COD and IEV acted as brokers to supply material for disposal at the Park. (Id. ¶ 124.) Specifically, these defendants would arrange for trucks owned or directed by the Datre and Grabe defendants to collect material at various locations owned or operated by the John Doe defendants in Kings, Queens, Nassau or Suffolk counties. (Id.) The Datre trucks would then transport that material to the Park for disposal. (Id.) During this period, the arranger defendants paid over $600, 000 to various Datre defendants for the pickup and removal of over 1, 200 separate loads of material, which totaled over 43, 000 cubic yards. (Id.) IEV paid the Datre defendants over $417, 000 for 759 loads of material, and COD paid them over $245, 000 for 476 loads. (Id.) Telephone records show that, from January 1, 2013 until December 31, 2014, IEV had 151 calls with Datre Jr. and 1, 331 with Grabe, while COD had 163 calls with Datre Jr. and 825 calls with Grabe. (Id. ¶¶ 131-32.) The purpose of these calls was to arrange pickup and delivery of the material. (Id.)

         B. Procedural History

         The Town filed the Complaint on April 29, 2016 against all defendants. (ECF No. 1.) The Church defendants answered on June 24, 2016 (ECF No. 23), IEV answered on June 29, 2016 (ECF No. 27), and the Atlas defendants answered on July 22, 2016 (ECF No. 42). Motions to dismiss were filed by COD on August 22, 2016 (ECF No. 48), IEV on September 21, 2016 (ECF No. 52), the Church defendants on December 15, 2016 (ECF No. 63), and the Atlas defendants on December 16, 2016 (ECF No. 64). The Town filed oppositions to all these motions (ECF Nos. 53, 66, 67), and each defendant except the Atlas defendants filed a reply (ECF Nos. 56, 57, 68). Oral argument took place on February 28, 2017. (See ECF No. 69.) The Court has fully considered the parties' submissions.

         II. Standard of Review

         In reviewing a motion to dismiss pursuant to Rule 12(b)(6), the Court must accept the factual allegations set forth in the complaint as true and draw all reasonable inferences in favor of the plaintiff. See, e.g., Cleveland v. Caplaw Enters., 448 F.3d 518, 521 (2d Cir. 2006); Nechis v. Oxford Health Plans, Inc., 421 F.3d 96, 100 (2d Cir. 2005). “In order to survive a motion to dismiss under Rule 12(b)(6), a complaint must allege a plausible set of facts sufficient ‘to raise a right to relief above the speculative level.'” Operating Local 649 Annuity Trust Fund v. Smith Barney Fund Mgmt. LLC, 595 F.3d 86, 91 (2d Cir. 2010) (quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). This standard does not require “heightened fact pleading of specifics, but only enough facts to state a claim to relief that is plausible on its face.” Twombly, 550 U.S. at 570.

         The Supreme Court clarified the appropriate pleading standard in Ashcroft v. Iqbal, setting forth two principles for a district court to follow in deciding a motion to dismiss. 556 U.S. 662 (2009). First, district courts must “identify[ ] pleadings that, because they are no more than conclusions, are not entitled to the assumption of truth.” Id. at 679. “While legal conclusions can provide the framework of a complaint, they must be supported by factual allegations.” Id. Second, if a complaint contains “well-pleaded factual allegations, a court should assume their veracity and then determine whether they plausibly give rise to an entitlement to relief.” Id.

         III. Discussion

         Plaintiff brought federal claims against defendants for violations of RICO, 18 U.S.C. §§ 1964(c), 1962(d), and CERCLA, 42 U.S.C. § 9601 et seq. It has also brought state law claims for public nuisance, private nuisance, trespass, injury to property, joint tort-feasors, fraud and deceit, and restitution. The arranger, Church, and Atlas defendants move to dismiss all claims against them.[2] For the reasons discussed below, these motions are granted, but plaintiff is given leave to re-plead its claims.

         A. RICO Claims

         Under RICO, it is “unlawful for any person employed by or associated with any enterprise engaged in, or the activities of which affect, interstate or foreign commerce, to conduct or participate, directly or indirectly, in the conduct of such enterprise's affairs through a pattern of racketeering activity or collection of unlawful debt.” 18 U.S.C. § 1962(c). Section 1962(d) makes it “unlawful for any person to conspire to violate . . . the provisions of subsection . . . (c).” 18 U.S.C. § 1962(d). Furthermore, “[w]hen § 1962 is violated, in addition to criminal penalties, the RICO statutes also authorize civil lawsuits, which, if successful, can entitle a plaintiff to treble damages, costs, and attorney's fees.” DLJ Mortg. Capital, Inc. v. Kontogiannis, 726 F.Supp.2d 225, 236 (E.D.N.Y. 2010) (citing 18 U.S.C. § 1964(c)). Specifically, RICO provides a private cause of action for “[a]ny person injured in his business or property by reason of a violation of section 1962 of this chapter.” 18 U.S.C. § 1964(c).

         Courts have described civil RICO as “‘an unusually potent weapon-the litigation equivalent of a thermonuclear device.'” Katzman v. Victoria's Secret Catalogue, 167 F.R.D. 649, 655 (S.D.N.Y. 1996) (quoting Miranda v. Ponce Fed. Bank, 948 F.2d 41, 44 (1st Cir. 1991)), aff'd, 113 F.3d 1229 (2d Cir. 1997). “Because the ‘mere assertion of a RICO claim . . . has an almost inevitable stigmatizing effect on those named as defendants, . . . courts should strive to flush out frivolous RICO allegations at an early stage of the litigation.'” Id. (quoting Figueroa Ruiz v. Alegria, 896 F.2d 645, 650 (1st Cir. 1990)); see DLJ Mortg. Capital, 726 F.Supp.2d at 236. Indeed, although civil RICO may be a “potent weapon, ” plaintiffs wielding RICO almost always miss the mark. See Gross v. Waywell, 628 F.Supp.2d 475, 479-83 (S.D.N.Y. 2009) (conducting survey of 145 civil RICO cases filed in the Southern District of New York from 2004 through 2007, and finding that all thirty-six cases resolved on the merits resulted in judgments against the plaintiffs, mostly at the motion to dismiss stage). Accordingly, courts have expressed skepticism toward civil RICO claims. See, e.g., DLJ Mortg. Capital, 726 F.Supp.2d at 236 (“[P]laintiffs have often been overzeal-ous in pursuing RICO claims, flooding federal courts by dressing up run-of-the-mill fraud claims as RICO violations.”).

         Although civil RICO presents many hurdles for a plaintiff to overcome, the Supreme Court has also “made clear that it would not interpret civil RICO narrowly.” Attorney Gen. of Canada v. R.J. Reynolds Tobacco Holdings, Inc., 268 F.3d 103, 139 n.6 (2d Cir. 2001) (citing Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479 (1985)). In Sedima, the Supreme Court rejected an interpretation of civil RICO that would have confined its application to “mobsters and organized criminals.” 473 U.S. at 499. Instead, the Court held: “The fact that RICO has been applied in situations not expressly anticipated by Congress does not demonstrate ambiguity. It demonstrates breadth.” Id. (citation omitted); see also Anza v. Ideal Steel Supply Corp., 547 U.S. 451, 479 (2006) (Breyer, J., concurring in part and dissenting in part) (“RICO essentially seeks to prevent organized criminals from taking over or operating legitimate businesses. Its language, however, extends its scope well beyond those central purposes.”). Thus, a court should not dismiss a civil RICO claim if the complaint adequately alleges all elements of such a claim, even if the alleged conduct is not quintessential RICO activity.

         Here, defendants argue that the Town lacks standing to proceed under RICO because it has failed to exhaust its other remedies for seeking reimbursement for its cleanup costs. They also argue that the Town has failed to state a RICO claim for mail or wire fraud because the Complaint alleges no facts from which a jury could infer fraudulent intent. As set forth below, the Court agrees that the Town has failed to state a claim on which relief can be granted and, therefore, grants defendants' motions to dismiss the RICO claims. See Fed. R. Civ. P. 12(b)(6).

         1. Standing

         To establish standing under RICO, a plaintiff must allege “(1) a violation of section 1962; (2) injury to business or property; and (3) causation of the injury by the violation.” First Nationwide Bank v. Gelt Funding Corp., 27 F.3d 763, 767 (2d Cir. 1994) (quoting Hecht v. Commerce Clearing House, Inc., 897 F.2d 21, 23 (2d Cir. 1990)). Pursuant to the second requirement, “‘[a] RICO plaintiff only has standing if, and can only recover to the extent that, he has been injured in his business or property by the conduct constituting the RICO violation, and only when his or her actual loss becomes clear and definite.'” Denney v. Deutsche Bank AG, 443 F.3d 253, 266 (2d Cir. 2006) (quoting First Nationwide, 27 F.3d at 767-69) (brackets omitted); see also Motorola Credit Corp. v. Uzan, 322 F.3d 130, 135 (2d Cir. 2003) (where amount of damages was not “clear and definite, ” holding that “Plaintiffs lack statutory standing under RICO because their claims are unripe”). Under this rule, a claim will be dismissed for lack of statutory standing “where the extent of damages are still unknown, [and therefore] a RICO injury remains speculative and unprovable.” DLJ Mortg. Capital, 726 F.Supp.2d at 237 (citations omitted).

         Defendants argue that the Town has not shown a “clear and definite” injury under RICO because it has not exhausted its other remedies for the $4 million it incurred in clean-up costs, given that the Town's other claims seeking relief for this injury (i.e., its CERCLA and state law claims) are still pending. Citing Commercial Union Assurance Co., plc v. Milken, 17 F.3d 608, 612 (2d Cir. 1994), Bankers Trust Co. v. Rhoades, 859 F.2d 1096, 1106 (2d Cir. 1988), Stochastic Decisions, Inc. v. DiDomenico, 995 F.2d 1158, 1166 (2d Cir. 1993), DLJ Mortgage Capital, 726 F.Supp.2d at 237, and Sky Medical Supply Inc. v. SCS Support Claims Services, Inc., 17 F.Supp.3d 207, 231 (E.D.N.Y. 2014), defendants contend that such exhaustion is required in the Second Circuit before a plaintiff may bring RICO claims.

         The Court disagrees. All of the cases cited by defendants (except Commercial Union) involved situations where the amount of damages suffered was directly dependent on either a separate, ongoing proceeding-the results of which would determine whether or to what extent the plaintiff suffered an in-jury-or a debt recoverable via foreclosure. None of them stand for the broad principle that, before bringing a RICO claim, all plaintiffs must exhaust every alternative means of recovery.[3] At the outset, the Court concludes that Commercial Union is inapposite. In that case, the Second Circuit simply held that the plaintiff investors could not maintain a RICO action after receiving the amount they lost in investments via settlement. Commercial Union, 17 F.3d at 612. The Second Circuit thus held that the plaintiffs failed to state damages recoverable under RICO. Id. (“Hence, in the instant case, without provable damages, no viable RICO cause of action may be maintained.”). This case says nothing about RICO standing where, as here, a plaintiff has not recovered anything for an injury suffered as a result of a RICO enterprise.

         Similarly, DLJ Mortgage Capital does not support defendants' position because it simply applied the well-established rule that, where a creditor-plaintiff alleges an injury from a fraudulently-induced mortgage, the plaintiff must pursue foreclosure remedies provided by the mortgage before filing a RICO claim for the lost debt. See 726 F.Supp.2d at 237; see also First Nationwide, 27 F.3d at 769 (“[T]he loss [the plaintiff] would suffer as to those loans [the plaintiff] has not finally foreclosed cannot yet be determined. Only when [the plaintiff's] actual loss becomes clear and definite will the claims be ripe for suit.”); In re Merrill Lynch Ltd. P'ships Litig., 154 F.3d 56, 59 (2d Cir. 1998) (“[W]hen a creditor alleges he has been de-frauded[, ] RICO injury is speculative when contractual or other legal remedies remain which hold out a real possibility that the debt, and therefore the injury, may be eliminated or significantly reduced.” (citing Bankers Trust, 859 F.2d at 1106; First Nationwide, 27 F.3d at 769)). Only after the plaintiff pursues this remedy could a court determine the extent of the injury resulting from ...


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