Opinion
08-21-2013
NOT TO BE PUBLISHED IN OFFICIAL REPORTS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 This opinion has not been certified for publication or ordered published for purposes of rule 8.1115.
(Alameda County
Super. Ct. No. RG12641860)
Defendants Lauri Abrahamsen and Donald Driscoll appeal from the denial of their special motion to strike, as a strategic lawsuit against public participation (SLAPP), the malicious prosecution action brought against them by plaintiff Sarah Woodard. The parties agree that the action satisfies the first prong of the analysis under Code of Civil Procedure section 425.16, as it arises from conduct in furtherance of the right of petition or free speech, but disagree as to whether plaintiff carried her burden of establishing her ability to prevail. For the reasons set forth in the trial court's carefully articulated analysis, which we shall incorporate in full, we agree that Woodard has satisfied her burden and that the motion was properly denied.
All statutory references are to the Code of Civil Procedure unless otherwise noted.
At the outset we reject appellants' request that the matter be remanded to a different trial court judge. The judge here is not the only member of the judiciary who has questioned the wisdom of the extended reach of the anti-SLAPP statute, as going far beyond the types of suits that were originally contemplated when the statute was enacted. His views in this regard do not indicate bias or an inability to fairly consider issues arising under the statute.
Background
Abrahamsen previously worked for Keene Builders, Plumbers & Consultants, Inc. (KB), a corporation the shares of which in 2004 were owned one-half by Woodard and one-half by her husband Charles Keene. In December 2004 Abrahamson purchased from Woodard a 20 percent interest in the corporation and in December 2007 she purchased an additional 10 percent interest from her. At some point, the timing being in dispute, promises allegedly were made to Abrahamsen that as a shareholder she would receive a discount on services provided by KB in the construction of a new home, and that she would have the right to purchase the remainder of Woodard's stock in the corporation. In April 2006 a contract was entered under which KB agreed to build a home for Abrahamsen. Several years later KB sued Abrahamsen for amounts allegedly due both in connection with construction of the home and for other matters. Woodard also filed a small claims action against Abrahamsen for the balance due for the purchase of her stock, which the small claims court declined to decide, believing that the matter was included within the scope of the KB suit. In that suit, Abrahamsen, represented by Driscoll, filed and amended cross-complaints, which did not initially name Woodard as a cross-defendant. However, following the filing of Woodard's small claim action against her, Abrahamsen filed fifth and sixth amended cross-complaints naming Woodard in several causes of action, based on allegations that she was responsible for the failure of KB to have extended the construction discounts that Woodard promised and that Woodard, having sold the final 20 percent of her interest in KB to another person, breached her agreement to sell the remainder of her shares to her. Ultimately, the trial court granted summary judgment to Woodard on those causes of action and Woodard then filed the present action against Abrahamsen and Driscoll claiming that the prosecution of those claims constituted malicious prosecution. The two defendants filed a special motion to dismiss this action under section 425.16 which the court denied on the ground that Woodard had carried her burden of establishing her ability to prevail in the action. Defendants have timely appealed from that denial.
Discussion
With only stylistic changes, the following is the opinion of the trial court which we adopt and endorse as our own.
A. Defendants Met Their Initial Burden of Showing that This Lawsuit Arises from Conduct Covered by Section 425.16.
A party bringing a special motion to strike under section 425.16 has the initial burden of demonstrating that each challenged cause of action is one "arising from any act of that person in furtherance of the person's right of petition or free speech . . . in connection with a public issue" as further defined in that statute. (See § 425.16, subds. (b)(1).) Defendants satisfied this initial burden by demonstrating that this lawsuit arises from the filing of the fifth amended cross-complaint (5ACC) and sixth amended cross-complaint (6ACC) against Woodard in the prior lawsuit (the prior action), which is protected activity under section 425.16. (See, e.g., § 425.16, subd. (e); Jarrow Formulas, Inc. v. LaMarche (2003) 31 Cal.4th 728, 741.) Woodard acknowledges this in her opposition memorandum.
B. Woodard Showed that the Cause of Action is Legally Sufficient and Supported by a Prima Facie Showing of Facts.
Defendants' satisfaction of their initial burden shifted the burden to Woodard to demonstrate a probability that she will prevail on her sole cause of action for malicious prosecution. (§ 425.16, subd. (b).) To meet this burden, Woodard " 'must demonstrate that the complaint is both legally sufficient and supported by a sufficient prima facie showing of facts to sustain a favorable judgment if the evidence submitted by [her] is credited.' " (Wilson v. Parker, Covert & Chidester (2002) 28 Cal.4th 811, 821.) The showing must be supported by competent, admissible evidence. (Mann v. Quality Old Time Service, Inc. (2004) 120 Cal.App.4th 90, 105.) In making its assessment, it is " 'the court's responsibility . . . to accept as true the evidence favorable to the plaintiff . . . .' " (Soukup v. Law Offices of Herbert Hafif (2006) 39 Cal.4th 260, 291 (Soukup).) The anti-SLAPP procedure may not be used to eliminate or strike those parts of a single cause of action that a plaintiff cannot substantiate. Instead, " 'once a plaintiff shows a probability of prevailing on any part of [her] claim, the plaintiff has established that [her] cause of action has some merit and the entire cause of action stands.' " (Oasis West Realty, LLC v. Goldman (2011) 51 Cal.4th 811, 820, quoting Mann, supra, 120 Cal.App.4th at p. 106.)
1. Elements of Malicious Prosecution
A cause of action for malicious prosecution requires a plaintiff to allege and prove " 'that the prior action (1) was commenced by or at the direction of the defendant and was pursued to a legal termination in . . . plaintiffs . . . favor [citations]; (2) was brought without probable cause [citations]; and (3) was initiated with malice [citations].' " (Sheldon Appel Co. v. Albert & 0liker (1989) 47 Cal.3d 863, 871.)
2. Favorable Termination
Woodard obtained a judgment of dismissal in her favor in the prior action after prevailing on a summary judgment motion directed to each of the causes of action asserted against her by Abrahamsen. That is sufficient to support the "favorable termination" element of her cause of action, and defendants do not assert otherwise. (See, e.g., Casa Herrera, Inc. v. Beydoun (2004) 32 Cal.4th 336, 341-342.)
3. Lack of Probable Cause
"The question of probable cause is 'whether, as an objective matter, the prior action was legally tenable or not.' " (Soukup, supra, 39 Cal.4th at p. 292.) " 'A litigant will lack probable cause for his action either if he relies upon facts which he has no reasonable cause to believe to be true, or if he seeks recovery upon a legal theory which is untenable under the facts known to him.' " (Ibid.) "To make a prima facie case of a lack of probable cause in response to the anti-SLAPP motion, [the plaintiff] must submit substantial evidence showing no reasonable attorney would have thought the [prior] action was tenable in light of the facts known to [the litigants] at the time the suit was filed [citations], or that [the litigants] continued pursuing the lawsuit after they had discovered the action lacked probable cause." (Mendoza v. Wichmann (2011) 194 Cal.App.4th 1430, 1449, citing Zamos v. Stroud (2004) 32 Cal.4th 958, 966-970.) " 'Only those actions that any reasonable attorney would agree are totally and completely without merit may form the basis for a malicious prosecution suit.' " (Ibid.) " '[W]here there is no dispute as to the facts upon which an attorney acted in filing [or prosecuting] the prior action, the question of whether there was probable cause to institute [or continue prosecuting] that action is purely legal. [Citations.] If there is a dispute as to such facts, that dispute must be resolved by the trier of fact before the objective standard can be applied by the court." (Id. at p. 1450.)
As discussed below, the court determines that there is a dispute as to the facts known to Abrahamsen and Driscoll at the time they filed the 5ACC and 6ACC in the prior action, which, if resolved in favor of Woodard, could support the element of lack of probable cause as to one or more of the causes of action in the 5ACC and 6ACC.
a. Fifth Cause of Action in 6ACC (promissory estoppel)
The complaint in this lawsuit asserts a single cause of action for malicious prosecution based on the filing of five causes of action against Woodard in the 5ACC (filed on July 23, 2011) and in the 6ACC (filed on December 23, 2011) in the prior action. In the fifth cause of action in the 6ACC, a similar version of which was asserted as the eighth cause of action in the 5ACC, brought against Woodard, her husband Charles Keene (Keene) and Keene Builders, Plumbers & Consultants, Inc. (KB), Abrahamsen alleged that "Keene and Woodard, acting on behalf of [KB], made a clear and unambiguous promise to Abrahamsen that if she purchased an interest in [KB] and used [KB] for any construction project, she would receive a 15 percent discount on labor and materials." Abrahamsen alleged that, in reliance on the promise, she bought shares in KB from Woodard an engaged KB on a construction project, but was "not given the full promised discounts and was thereby injured."
Woodard obtained summary adjudication on this cause of action in the prior action after Abrahamsen did not oppose it. Defendants now assert that they had supporting evidence but, for unspecified "personal reasons" unrelated to the merits, Driscoll failed to present it to oppose the summary adjudication motion. If defendants were to show that such supporting evidence existed at the time they prosecuted this cause of action, this could support the "legal tenability" of the cause of action even though Abrahamsen did not present it in opposition to the motion. (See, e.g., Jarrow Formulas, Inc. v. LaMarche, supra, 31 Cal.4th at p. 742 [grant of summary judgment based on insufficient evidence does not in itself establish lack of probable cause].)
Woodard does not allege or introduce evidence that she never told Abrahamsen she would receive a 15 percent "owner's" discount on labor and materials on personal projects. (See, e.g., Decl. of Sarah Woodard, ¶ 10 [attesting that the KB owners took a vote in December 2004 and decided that the 15 percent discount would apply regardless of ownership percentage].) Instead, Woodard alleges in the complaint that the cause of action "sought no performance from Ms. Woodard, and failed to state a proper cause of action against her." Woodard introduced evidence on this motion that she "did not participate regularly in the management or operation" of KB, and was not involved in the "application of discounts on invoices." She also introduced evidence that Abrahamsen "did get a 15 percent owner discount," but that the policy "changed for all owners in late 2006." Woodard argues that she was not a proper cross-defendant because the statement or promise was allegedly made on behalf of KB and did not seek performance from her individually.
Citing Toscano v. Greene Music (2004) 124 Cal.App.4th 685, defendants assert that, even though the promise was allegedly made "on behalf of" KB, Woodard was a proper defendant because the "remedies available for promissory estoppel are the same as the remedies for breach of contract." (Id. at pp. 692-693 [promissory estoppel differs from breach of contract in that the detrimental reliance on the promise substitutes for consideration].) Defendants argue that Woodard "breached her promise, as a shareholder in KB, to give [Abrahamsen] the owner's discount," and thus may be individually liable for KB's failure to perform the promise.
The court determines that defendants' argument is incorrect as a matter of law, and that this cause of action for promissory estoppel was not legally tenable against Woodard individually. As reflected above, Abrahamsen alleged that Woodard made the alleged promise "on behalf of KB. "One who assumes to act as an agent is responsible to third persons as a principal for his acts in the course of his agency, in any of the following cases, and in no others: [¶] 1. When, with his consent, credit is given to him personally in a transaction; [¶] 2. When he enters into a written contract in the name of his principal, without believing, in good faith, that he has authority to do so; or, [¶] 3. When his acts are wrongful in their nature." (Civ. Code, § 2343.) There is no evidence or argument in this case that subsections (1) or (2) could apply here. As to subsection (3), the 6ACC did not allege that Woodard committed acts that were "wrongful in their nature" with respect to the allegedly broken promise on behalf of KB, nor did defendants introduce any evidence that could support any such allegation had it been made. There is no allegation or evidence, for example, that Woodard knew at the time she made the alleged promise that K.B would not fully perform it at some later point in time, and Abrahamsen did not bring a fraud cause of action against Woodard in this regard. (Cf. Shafer v. Berger, Kahn, Shafton, Moss, Figler, Simon & Gladstone (2003) 107 Cal.App.4th 54, 68 [agent may be individually liable for committing a "tort, such as . . . fraud"]; Mottola v. R.L. Kautz & Co. (1988) 199 Cal.App.3d 98, 108 [same].) Thus, there is no basis in the allegations or evidence to hold Woodard individually liable under Civil Code section 2343, subdivision (3).
Further, even if there were such evidence as to support a tort cause of action against Woodard based on the alleged promise, the fifth cause of action was not such a cause of action. As defendants themselves argue, promissory estoppel is in the nature of a contractual theory with contractual remedies. As is often restated, promissory estoppel is " 'a doctrine which employs equitable principles to satisfy the requirement that consideration must be given in exchange for the promise sought to be enforced.' " (Kajima/Ray Wilson v. Los Angeles County Metropolitan Transportation Authority (2000) 23 Cal.4th 305, 310.) Under that principle, a promise that is reasonably expected to and does induce detrimental reliance " 'is binding if injustice can be avoided only by enforcement of the promise.' " (Ibid.) The remedy for breach of the promise is thus generally " 'enforcement of the promise,' " but " 'may be limited as justice requires.' " (Ibid.) Thus, the theory and remedies thereunder are essentially contractual in nature. (See, e.g., Cooper v. State Farm Mutual Automobile Ins. Co. (2009) 177 Cal.App.4th 876, 892 [referring to the "contract principle of promissory estoppel."].) Thus, as a corporate agent is not individually liable for the corporation's breach of a contract, the same is true where enforcement of a corporate promise is sought under a theory of promissory estoppel. (Cf. Stoiber v. Honeychuck (1980) 101 Cal.App.3d 903, 929 ["While Civil Code section 2343 and Bayuk [v. Edson (1965) 236 Cal.App.2d 309] indicate that the agent will be held liable for his torts despite the fact that he acts for a principal, nothing in Bayuk suggests that the agent should be held liable under contractual theories."].)
Because Woodard has asserted a single cause of action for malicious prosecution based in part on the filing and prosecution of the fifth cause of action, a lack of probable cause as to that cause of action supports this required element as to the entire cause of action. (See Soukup, supra, 39 Cal. 4th at p. 292 [" '[A]n action for malicious prosecution lies when but one of alternate theories of recovery is maliciously asserted.' "].)
b. Sixth and Seventh Causes of Action in the 6ACC
In the sixth cause of action (promissory estoppel) and seventh cause of action (fraud) in the 6ACC, similar versions of which were included in the 5ACC as the ninth and tenth causes of action, Abrahamsen alleged that Keene and Woodard made a promise to Abrahamsen that if she purchased 20 percent of the shares from Woodard she could thereafter acquire Woodard's remaining 30 percent interest and all but a nominal amount of Keene's shares. As with the fifth cause of action, Abrahamsen did not oppose summary adjudication on these causes of action, but she and Driscoll now assert that they had supporting evidence they failed to submit. Because there is a dispute as to the facts upon which they acted in filing and maintaining the prior action, however, this "dispute must be resolved by the trier of fact'' before the court can determine whether there was probable cause to file and maintain these causes of action. (See Mendoza v. Wichmann, supra, 194 Cal.App.4th at p. 1450.)
Woodard alleges that the sixth and seventh causes of action were untenable as a matter of law for two reasons: (1) Abrahamsen admitted in deposition that the alleged promise was made after she acquired her 20 percent interest in KB and thus could not have induced her purchase of those shares; and (2) Abrahamsen admitted that the alleged promise to sell the remaining 30 percent interest had no agreed price term, no agreed time limit, and no consideration. The evidence presented by both sides in this regard is in conflict in many respects.
At her deposition on December 14, 2011, which took place several months after the filing of the 5ACC but prior to the filing of the 6ACC, Abrahamsen responded to the question "when was it that you were told you could purchase [Woodard's] additional 30 percent ownership shares?" by stating "[i]t was after the initial purchase." Defendants introduced other evidence, however, that Abrahamsen's husband Thomas told Driscoll prior to the filing of the 5ACC that he was present in a discussion between Abrahamsen, Woodard and Keene, prior to Abrahamsen's purchase, in which Woodard "promised that if my wife purchased a 20 percent interest in KB from her that she would thereafter sell the remainder of her stock to my wife." Abrahamsen submits a declaration stating that even though she believed Woodard's promise "was made shortly after her initial sale of stock to me," she was aware of her husband's "conflicting recollection" as to the timing of the conversation, and thus based her allegation of reliance on that recollection. Abrahamsen's declaration also attests that at the time she responded to the question about timing at her deposition, she was responding based on her own recollection and not disclosing that of her husband. Nevertheless, Abrahamsen never corrected her deposition transcript to clarify that she purportedly meant "my recollection is that the promise was after the initial purchase but my husband has a recollection that it was before." She also did not amend her causes of action in the 6ACC, filed over a week after her deposition, to take into account her deposition testimony admitting as to her recollection of the timing of the statement.
The court notes that Abrahamsen and Thomas were instructed in their depositions not to testify as to confidential communications between them on the basis of the marital privilege. If in fact Abrahamsen intended to base her allegation of reliance on Thomas's recollection of the timing of the conversation about the stock purchase, it is not clear how she could have done so without revealing her knowledge of that conversation in the prior action. The fact that Abrahamsen has chosen to waive the privilege as to the purported discussion in the context of this lawsuit, while choosing not to provide discovery as to it in the prior action, appears inconsistent and raises a dispute as to the veracity of her current testimony.
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Defendants' evidence as to Thomas's recollection of the timing of Woodard's alleged "promise" about selling her remaining 30 percent interest was never brought out at any time prior to the summary judgment in favor of Woodard and is directly disputed by Woodard, who attests that there never was such a conversation. Woodard also introduced Thomas's deposition testimony from December 13, 2011, in which Thomas was asked to describe the "agreement to transfer shares to Abrahamsen" and responded that there was a conversation with Keene and Abrahamsen about the sale of shares to Craig Erickson, in which Keene said "that Abrahamsen would be able to take ownership of another 10 percent because Sarah didn't want to have anything to do with the company, which would allow us to have more shares than [Erickson]." Thomas did not mention the purported earlier conversation prior to the sale of the 20 percent interest to Abrahamsen in 2004.
In light of the conflicts in the evidence as to the timing of Woodard's alleged promise to sell her remaining 30 percent interest to Abrahamsen, including the fact that defendants never presented evidence of Thomas's purported recollection during discovery or the summary judgment motion in the prior action, the court determines that such conflicts and possible competing inferences (see Evid. Code, §§ 413 and 600, subd. (b)) make it appropriate for a jury to determine the facts upon which defendants acted in filing and maintaining the sixth and seventh causes of action before the court can determine defendants' probable cause for maintaining the claims. (See Mendoza v. Wichmann, supra, 194 Cal.App.4th at p. 1450.)
The court recognizes that even if the alleged promise was made after Abrahamsen purchased the 20 percent interest, the causes of action also allege that Woodard and Keene "intended to induce Abrahamsen to put in effort on behalf of Keene Builders beyond that required by her job, and did induce that effort," and that she was injured thereby by working for reduced or no pay and otherwise. Woodard did not introduce evidence that defendants had no evidentiary support in this regard. Instead, she introduced evidence that any promise was not sufficiently definite (as to timing, price and consideration) to be enforceable, and that it was not breached because Woodard was willing to sell the stock to Abrahamsen, because Abrahamsen did not have funds to pay for the shares, because Abrahamsen encouraged a sale of the shares to Erickson, and because it was up to the "remaining partners" whether to sell to Abrahamsen or Erickson. (Abrahamsen Depo., p. 144 ["There was no promise made how much I would pay for it."].) Woodard also submitted a declaration by Erickson that Abrahamsen "encouraged me to think about buying stock" in KB, told him that Woodard still had shares in KB that Erickson could purchase, and "expressed many times how much she wanted to have another partner in the company."
Despite Abrahamsen's recollection that there was no specific promise made as to the price for the remaining shares, defendants submit a declaration by Thomas to the effect that his recollection was that "the price would remain the same as for the initial share of stock." Defendants also point to Abrahamsen's deposition testimony in which she testified that she objected to the sale to Erickson and wished to purchase the shares but was outvoted by Keene. On the other hand, Woodard attests that Abrahamsen's assertion that she never offered her remaining shares to Abrahamsen is a "blatant falsehood," that "[a]t any time, up to my selling my last shares to Craig Erickson, about which she did not object, Abrahamsen could have purchased my final shares of stock from me," that Woodard "stated repeatedly, it did not matter to me who bought them," and that Abrahamsen participated in "brokering of my shares to Craig Erickson. . . ."
In assessing whether Woodard has met her burden of making a "prima facie showing of facts" that could support a judgment if believed, it is " 'the court's responsibility . . . to accept as true the evidence favorable to the plaintiff . . . .' " (Soukup, supra, 39 Cal.4th at p. 291.) Given Abrahamsen's admission in her deposition that there was no definite price agreed for the sale of the remaining stock, that Thomas's attestation otherwise was not disclosed in the prior action in discovery or at the summary judgment stage, and crediting Woodard's testimony that she offered and was willing to sell the shares to Abrahamsen, this would defeat the required element of the sixth and seventh causes of action that there was a "clear and unambiguous promise" that was breached, and that the promise was made without intention to perform it, and would support a lack of probable cause as to those causes of action. The court therefore cannot determine the probable cause element as a matter of law at this stage. (Mendoza v. Wichmann, supra, 194 Cal.App.4th at p. 1450.)
c. Tenth and Eleventh Causes of Action in 6ACC
These causes of action, similar versions of which were included in the eighteenth and nineteenth causes of action in the 5ACC, alleged that Woodard (along with Keene and Erickson) breached the "duty of good faith and inherent fairness" owed to a minority shareholder and engaged in unfair business practices under Business and Professions Code section 17200. As the court determined in its summary adjudication order of March 27, 2012, the causes of action "fail[ed] to state facts sufficient to constitute a cause of action against Woodard" because they did not specify how Woodard breached the duty of good faith or committed unfair practices.
In the present motion, defendants introduced evidence that — while the causes of action were general in nature — they were intended to be based on the same allegations of misconduct set forth in the fifth through seventh causes of action and that their evidence in support of those causes of action supported these as well. Woodard characterizes the causes of action as "derivative" of the fifth through seventh causes of action and argues that they lacked probable cause for the same reasons discussed as to those claims.
As discussed above, " 'once a plaintiff shows a probability of prevailing on any part of [her] claim, the plaintiff has established that [her] cause of action has some merit and the entire cause of action stands.' " (Oasis West Realty, LLC v. Goldman, supra, 51 Cal. 4th at p. 820.) Given the court's determination that Woodard made a sufficient "prima facie showing" of facts that could support a lack of probable cause as to the fifth through seventh causes of action, and the parties' contentions that the tenth and eleventh are "derivative" in nature, it is unnecessary for the court to address the probable cause element separately as to the latter claims.
Malice
" 'The "malice" element . . . relates to the subjective intent or purpose with which the defendant acted in initiating the prior action.' " (Soukup, supra, 39 Cal.4th at p. 292.) "The malice required in an action for malicious prosecution is not limited to actual hostility or ill will toward plaintiff but exists when the proceedings are instituted primarily for an improper purpose." (Ibid.) Malice "may range anywhere from open hostility to indifference," and "may also be inferred from the facts establishing lack of probable cause." (Ibid.)
Here, as discussed above, the court determines that there is a sufficient basis upon which, if the facts introduced by Woodard are credited, the court could make a determination that there was a lack of probable cause at least as to one of the causes of action in the 5ACC and 6ACC. Such a lack of probable cause could support an inference of malice. (Soukup, supra, 39 Cal.4th at p. 292.) In addition, Woodard introduced additional evidence that, if credited (as the court must do on this motion), could support an inference of malice. Such evidence includes: (1) that Woodard was not named as a defendant in the prior action, or included as an individual defendant in the causes of action discussed above, .until after she brought a small claims action against Abrahamsen seeking to collect payment on the shares of stock that Abrahamsen previously purchased from Woodard; and (2) that Driscoll took Woodard's counsel aside on several occasions during Woodard's deposition "and offered that he may be able to obtain a dismissal for Ms. Woodard to if her testimony during the deposition was favorable to Ms. Abrahamsen" and "noted that the law suit was probably hard on Ms. Woodard and hard on her marriage and that he could end it if she could be prevailed upon to suggest a favorable resolution to her husband." (See Albertson v. Raboff (1956) 46 Cal.2d 375, 383 [suits brought with improper purposes include those in which " 'the proceedings are initiated for the purpose of forcing a settlement which has no relation to the merits of the claim.' "].)
Whether or not the above and other evidence in Woodard's opposition papers would likely persuade a jury that the causes of action were brought against Woodard with ill will or for an improper purpose, it is sufficient to constitute a "prima facie showing" of facts that, if credited by a jury, could support the malice element.
Disposition
The order is affirmed.
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Pollak, Acting P.J.
We concur: ____________
Siggins, J.
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Jenkins, J.