State of New York - Department of State Division of Corporations

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1 State of New York - Department of State Division of Corporations Party Served: COVENANT AVIATION SECURITY, LLC Plaintiff/Petitioner: THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY COVENANT AVIATION SECURITY, LLC 400 QUADRANGLE DRIVE, SUITE A BOLINGBROOK, IL Dear Sir/Madam: Enclosed herewith is a legal document which was served upon the Secretary of State on 02/26/2014 pursuant to SECTION 303 OF THE LIMITED LIABILITY COMPANY LAW. This copy is being transmitted pursuant to such statute to the address provided for such purpose. Very truly yours, Division of Corporations

2 ,, (,.SUPREME COURT OF THE STATE OF NEW YORK COUNTYOF~N=EW~Y~O~~~----- THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY -against Plamtifi7Pebtioner, TULLY CONSTRUCTION COMPANY, INC., COVENANT AVIATION SECURITY, LLC, ET AL x -Y Index No, /2014 NOTICE OF COMMENCEMENT OF ACTION SUBJECT TO MANDATORY ELECTRONIC FaiNG J PLEASE TAKE NOTICE that the matter captioned above, which has been commenced by filing of the accompanying documents with the County Clerk, is subject to mandatory electronic filing pursuant to Section bb of the Uniform Rules for the Trial Courts. This notice is being served as required by Subdivision (b) (3) of that Section. The New York State Courts Electronic Filing System ("NYSCEF") is designed for the electronic filing of documents with the County Clerk and the court and for the electronic service of those documents, court documents, and court notices upon counsel and self-represented parties, Counsel and/or parties who do not notify the court of. a claimed exemption(see below) as required by Section bb( e) must immediately record their representation within thee-filed matter on the Consent page in NYSCEF. Failure to do so may result in an inability to receive electronic notice of document filings. Exemptions from mandatory e-filing are limited to: 1) attorneys who certify in good faith that they lack the computer equipment and (along with all employees) the requisite knowledge to comply; and 2) self-represented parties who choose not to participate in e-filing. For additional information about electronic filing, including access to Section bb, consult the NYSCEF website at or contact the NYSCBF Resource Center at or efile s.state.ny.us. ~Y/;';/...J.1.wJ30~o~.~oOLJ!Uilb,u;ewrty~B:UJ!!IIWidw.ln~~:~g---- (Address) Hurwitz & Fine, P,C. ~.o oo~(finn Name) Buffalo, NY =(=71:;::6::::)84=9-=89=0=0======.(Phone) laas@hurwitzfine.com. ( ) I To: Covenant Aviation LLC

3 NYSCEF!FILED: DOC. NO. NEW 68 YORK COUNTY CLERK 02/12/20141 RECEIVED INDEX NYSCEF: NO / /01/2017 J A NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 02/12/2014 STATE OF NEW YORK SUPREME COURT : COUNTY OF NEW YORK THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, 225 Park A venue South New York, New York 10003, v. Plaintiff, SUMMONS TULLY CONSTRUCTION COMPANY, INC., Northern Boulevard Flushing, New York 11368, COVENANT AVIATION SECURITY, LLC, 270 Remington Boulevard Bolingbrook, Illinois 60440, ILLINOIS NATIONAL INSURANCE COMPANY 300 South Riverside Plaza, Suite 2100 Chicago, Illinois 60606, and ZURICH AMERICAN INSURANCE COMPANY, 1400 American Lane Schaumburg, Illinois 60196, Defendants. TO THE ABOVE-NAMED DEFENDANI'S: YOU ARE HEREBY SUMMONED to answer the Complaint in this action, and to serve a copy of your Answer, or, if the Complaint is not served with a Summons, to serve a Notice of Appearance, on Plaintiffs attorneys within twenty (20) days after the service of this Summons, exclusive of the day of service, or within thirty (30) days after completion of service where service is made in any other manner than by personal delivery within the State of New York. In case of your failure to appear or answer, judgment will be taken against you by default for the relief demanded in the Complaint. New York County is designated as the place of trial on basis of the place of business of plaintiff, The Port Authority ofnew York and New Jersey. HURWITZ & FINE, P. C UBERTY BUILDINCl BUFFALO, NY 14202

4 DATED: Buffalo, New York February 12,2014 Audrey A. Attorneys fo 'P!'aintiff, The Port Authority o New York and New Jersey 1300 Libe11y Building Buffalo, New York (716) HURWITZ & FINE, P. C liberty BUILDING BUFFALO, NY

5 STATE OF NEW YORK SUPREME COURT : COUNTY OF NEW YORK THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY, COMPLAINT vs. Plaintiff, TULLY CONSTRUCTION CO:MP ANY, INC., COVENANT AVIATION SECURITY, LLC, ILLINOIS NATIONAL INSURANCE CO:MPANY and ZURICH AMERICAN INSURANCE COMPANY, Defendants. Plaintiff, THE PORT AUTHORITY OF NEW YORK AND NEW JERSEY (hereinafter "Plaintiff' or the "Port Authority"), by and through its attorneys, HURWITZ & FINE, P.C., for its Complaint in this declaratory judgment action herein alleges, upon information and belief: 1. Plaintiff is a body corporate and politic created by Compact between the States of New Jersey and New York, with the consent of the Congress of the United States of America, with a principal place of business at 225 Park Avenue South, New York, New York Defendant, Tully Construction Company, Inc. ("Defendant Tully"), is a New York corporation with a principal place of business located at Northern Boulevard, Flushing, New York, and is authorized to transact business, and does transact business in New York. 3. Defendant Tully entered into Contract JFK-1013 with Plaintiff to provide construction-related services in various locations at John F. Kennedy International Airport HURWITZ & FINE, P. C LiBERTY BUILDING BUFFALO, NY

6 (hereinafter "JFK Airport"), including at or near Taxiway Y. 4. Defendant, Covenant Aviation Security, LLC ("Defendant Covenant"), is an Illinois limited liability corporation with a principal place of business located at 270 Remington Boulevard, Bolingbrook, Illinois, and is authorized to transact business, and does transact business in New York. 5. Defendant Covenant and/or its affiliate company entered into Contract No with Plaintiff to provide unarmed, uniformed security guard services at JFK Airport 'Jlld LaGuardia Airport. 6. Defendant, Illinois National Insurance Company ("Defendant Illinois National"), is a corporation duly organized and existing under the laws of the State of Delaware, with a principal place of business located at 300 South Riverside Plaza, Suite 2100, Chicago, Illinois. 7. Defendant Illinois National issued a commercial general liability aviation policy no. FG to Covenant through its affiliate company, CAS Holdings, Inc. 8. Defendant, Zurich American Insurance Company ("Defendant Zurich"), is a New York corporation with a principal place of business located at 1400 American Lane, Schaumburg, Illinois. 9. Defendant Zurich issued an insurance policy no. BAP for business automobile coverage to Tully. 10. Upon information and belief, Zurich issued a comprehensive general liability policy to Tully. HURWITZ & fine, P. C LIBERTY BUI~DING BUFFA~o, NY

7 THE UNDERLYING LAWSUIT Factual Background 11. This action seeks a declaration that the Port Authority is entitled to defense and indemnity for a lawsuit previously pending in the U.S. District Court in the Eastem District of New York, Korean Airlines Co.. Ltd v. The Port Authority. et al., Case No. 1:10-cv (SLT)(JO) (hereinafter the "Underlying Lawsuit"), under a business automobile policy no. BAP and/or a commercial general liability policy issued by Zurich American Insurance Company to Defendant Tully by virtue of Contract JFK1013 entered into between the Port Authority and Defendant Tully, and a commercial general liability policy no. FG issued by the Illinois National Insurance Company to Defendant Covenant's holding company, CAS Holdings, Inc., by virtue of Airport Contract No entered into between the Port Authority and Defendant Covenant (hereinafter collectively referred to as the "Subject Contracts"). 12. On June 1, 2010, Korean Airlines Co., Ltd. (hereinafter "KAL") filed an Original Complaint in the Underlying Lawsuit. 13. An Amended Complaint was thereafter filed on March 8, A true and correct copy of the Amended Complaint is attached hereto as Exhibit "A" and incorporated in its entirety herein by reference. 14. The Amended Complaint sought to recover monetary damages in an amount not less than $2,719, in cormection with property damage sustained to a KAL aircraft, a Boeing , on June 9, 2009 at JFK Airport. 15. In its Amended Complaint, KAL alleged that after landing on Runway 4R of JFK Airport, its aircraft proceeded to Taxiway Y where it collided with a parked truck owned HURWITZ & FINE, P. C LIBERTY 8UJLDING BUFFALO, NY

8 by Defendant Tully (hereinafter "Tully Truck"), near an area where construction was being performed (hereinafter "Underlying Occurrence"). KAL claimed that the collision resulted in damage to its aircraft's engine, diminution in value of the aircraft, and interruption of business. 16. KAL's Amended Complaint named the Port Authority, Defendant Tully, Defendant Covenant, and Kamall A. McLean, in an individual capacity, as defendants. KAL alleged that McLean was an employee of Defendant Tully at the time of the accident and operated and/or controlled the Tully Truck when the collision occurred. 17. Answers to the Amended Complaint were interposed by the Port Authority (March 24, 2011), Defendant Covenant (March 28, 2011), Defendant Tully and McLean (March 28, 2011). Causes of Action 18. The first six (6) Counts set forth in the Amended Complaint were directed against the Port Authority. KAL asserted causes of action for the following: (1) breach of contract; (2) negligence; (3) gross negligence; (4) negligence per se; (5) common law indemnity; and (6) common law contribution. 19. KAL alleged that the Port Authority negligently performed its duties as operator of JFK Airport, specifically in connection with the use of Taxiway Y, proximately causing the collision with the Tully Truck and KAL's damages. 20. Counts seven (7) through eleven (11) of the Amended Complaint were directed against Defendant Tully. KAL asserted causes of action for the following: (1) negligence; (2) gross negligence; (3) negligence per se; (4) common law indemnity; and (5) common law contribution. HURW!n & FINE, P. C LIBERTY BUILDING BUFFALO, NY

9 21. KAL alleged that Defendant Tully negligently operated the Tully Truck encroaching upon Taxiway Y and its Object Free Area resulting in the collision with its aircraft and proximately causing the damages sustained. 22. Counts twelve (12) through sixteen (16) of the Amended Complaint were directed against Defendant Covenant. KAL asserted causes of action for the following: (1) negligence; (2) gross negligence; (3) negligence per se; (4) common law indemnification; and (5) common law contribution. 23. KAL alleged that Defendant Covenant was negligent in failing to ensure the safety of the construction site at JFK Airport, in-and around Taxiway Y, resulting in the collision of its aircraft and the Tully Truck and proximately causing its damages. 24. Counts seventeen (I 7) and eighteen (18) of the Amended Complaint were directed against McLean. KAL asserted causes of action for the following: (1) negligence; and (2) gross negligence. 25. KAL alleged that McLean's negligent conduct in operating and/or parking the Tully Truck to encroach upon Taxiway Y and its Object Free Area proximately caused the collision with its aircraft and its damages. PLAINTIFF'S CONTRACT WITH DEFENDANT TULLY 26. The Port Authority retained Defendant Tully pursuant to Contract JFK 1013 to perform certain construction-related work at various locations at JFK Airport including the location on or near Taxiway Y. 27. Contract JFK 1013 was in effect at the time of the Underlying Occurrence on or about June 9, HURWITZ & FINE, P. C LiBERTY BUILOING BUFFALO, NY

10 28. Under Section 58 of Contract JFK 1013 entitled "RISKS ASSUMED BY THE CONTRACTOR", Defendant Tully agreed: The Contractor assumes the following distinct and several risks, whether they arise from acts or omissions (whether negligent or not) of the Contractor, of the Authority, or of third persons, or from any other cause, and whether such risks are within or beyond the control of the Contractor, excepting only risks which arise solely from affirmative acts done by the Authority subsequent to the opening of Proposals on this Contract with actual and willful intent to cause the loss, damage and injuries described in paragraphs A through D below: * * * C. The risk of claims, fines or penalties, just or unjust, made by third persons or assessed by courts or governmental agencies or entities against the Contractor or the Authority on account of injuries (including wrongful death), loss, damage or liability of any kind whatsoever arising or alleged to arise out of or in connection with the performance of Work (whether or not actually caused by or resulting from the performance of the Work) or out of or in connection with the Contractor's operations or presence at or in the vicinity of the construction site or Authority premises, including claims against the Contractor or the Authority for payment of workers' compensation, whether such claims, fines or penalties are made or assessed and whether such injuries, damage, loss and liability are sustained at any time both before and after the rendition of the Certificate affinal Completion. * * * The Contractor shall indemnify the Authority against all claims described in subparagraphs C and D above and for all expenses incurred in the defense, settlement or satisfaction thereof, including expenses of attorneys, except where indemnity would be precluded by New Y ark State HURWITZ & FINE, P. C LIBERTY BUILDING BUFFALO, NY

11 General Obligations Law, Section applicable law... or other 29. Defendant Tully further agreed to procure Automobile Liability Insurance naming the Port Authority as an additional insured under Section 61 of Contract JFK 1013 entitled "INSURANCE PROCURED BY CONTRACTOR", which provides the following: The Contractor, in its own name as insured, shall maintain and pay the premiums on the policy or policies of insurance coverage(s) as hereinafter described, which shall cover its operations hereunder, shall be effective throughout the effective period of this contract, and shall afford coverage(s) in not less than the amounts set forth below: 1) Automobile Liability Insurance: covering any auto(s) $25 Million combined single limit per accident for bodily injury and property damage liability. The Authority shall be named as an additional insured in the liability policy or policies and evidenced by the certificate(s) of insurance set forth above. The liability policy(ies) and the certificates(s) of insurance shall show coverage for cross-liability/severability of interests as provided under the standard ISO "separation of insureds' condition". PLAINTIFF'S CONTRACT WITH DEFENDANT COVENANT 30. The Port Authority retained Defendant Covenant pursuant to Contract No to provide unarmed, uniformed security guard services at JFK Airport including at or near Taxiway Y. 31. The term of Contract No was for a four (4) year period commencing on February 1, 2007 and unless sooner terminated, revoked or extended, was to expire on January 31, HURWITZ & FINE, P. C LIBERTY BuiLDING BUFFALO, NY

12 32. Contract No was in effect at the time of the Underlying OcculTence on or about June 9, Part of Defendant Covenant's contractual duties under Contract No was to provide, inter alia, construction escorts. Section 26. Position Duties A. Airport Security Agent Duties The Contractor's Airport Security Agents shall perform guard services at all Parking Lots, aeronautical guard access areas, construction sites, fire watch and other posts and other areas as shall be directed by the Manager from time to time. Their duties shall include but shall not be limited to, the following: * * * 7) Provide construction escorts. Escorts entering the AOA must have completed the SIDA driving class. * * * 12) Monitor vehicles and personnel m secured/restricted areas. 34. Section 20 of Part II Contract No contains a provision in which Defendant Covenant agreed to indemnify and hold harmless the Port Authority for any claims arising out of the Contract. 20. Indemnification and Risks Assumed By The Contractor To the extent permitted by law, the Contractor shall indemnify and hold harmless the Port Authority, its Commissioners, officers, representatives and employees from and against all claims and demands, just or unjust, of third persons (including employees, officers, and agents of the Port Authority) arising out of or in any way connected or alleged to arise out of or alleged to be in any way HURWITZ & fine, P. C LIBERTY BUILDING BUFFALO, NY

13 connected with the Contract and all other services and activities of the Contractor under this Contract and for all expenses incuned by it and by them in the defense, settlement or satisfaction thereof, including without limitation thereto, claims and demands for death, for personal injury or for property damage, direct or consequential, whether they arise from the acts or omissions of the Contractor, of the Port Authority, of third persons, or from the acts of God or the public enemy, or otherwise, including claims and demands of any local jurisdiction against the Port Authority in connection with this Contract. The Contractor assumes the following risks, whether such risks arise from acts or omissions (negligent or not) of the Contractor, the Port Authority or third persons or from any other cause, excepting only risks occasioned solely by affirmative willful acts of the Port Authority done subsequent to the opening of proposals on this Contract, and shall to the extent permitted by law indemnify the Port Authority for all loss or damage incurred in coimection with such risks: d. The risk of clams for injuries, damage or loss of any kind just or unjust of third persons arising or alleged to arise out of the performance of work hereunder, whether such claims are made against the Contractor or the Port Authority Insurance Procured by the Contractor The Contractor shall take out, maintain and pay the premiums on Commercial General Liability Insurance, including but not limited to personal injury, premisesoperations, products-completed operations, broad form property damage and independent contractors coverage, with a contractual liability endorsement covering the obligations assumed by the Contractor under this Contract, and, if vehicles are to be used to carry out the performance ofthis Contract, the Contractor shall take out, maintain, and pay the premiums on the Automobile Liability Insurance covering owned, non-owned, and hired vehicles in the following limits: HURWllZ & FINE, P. C LIBERTY BUILDING BUFFALO, NY

14 Commercial General Liability Insurance - $5 million combined single limit per occurrence for bodily injury and property damage liability. Automobile Liabilitv Insurance - $5 million combined single limit per accident for bodily injury and property damage liability. The vehicles shall also carry collision and comprehensive (other than collision) coverage with a maximwn deductible of $1,000. The Port Authority shall be included as a loss payee and the Contractor shall be responsible for the deductible. In addition, the liability policies shall name The Port Authority of New York and New Jersey, as additional insured, in the policies set forth above. Moreover, the Commercial General Liability Policy shall not contain any provisions for exclusions from liability other than provisions for exclusions from liability forming part of the standard, basic unamended and unendorsed Commercial General Liability policy. The liability policies and certificate of insurance shall include a cross liability endorsement providing severability of interests so, that coverage will respond as if separate policies were in force for each insured. 36. The Underlying Lawsuit since resolved at mediation without the Port Authority contributing to the settlement. The Port Authority did however expend substantial sums of money in defense of the matter. 37. Pursuant to the terms of the Port Authority issued Contracts JFK 1013 and , the defendants are obligated to pay, in full, the fees, costs and expenses ofthe Port Authority's defense of the Underlying Lawsuit. COUNT I DECLARATORY JUDGMENT: DEFENDANT TULLY HAD A DUTY TO DEFEND AND INDEMNIFY THE PORT AUTHORITY 38. The allegations asserted in paragraphs 1 through 37 of the Complaint are HURWilZ & FINE, P. C LIBERTY BUILDING BUFFALO, NY

15 repeated and re-alleged with the same force and effect as if set out at length herein. 39. The Port Authority undertook the defense of the Underlying Lawsuit covering the cost of all legal fees, costs, and disbursements. 40. Based upon provisions set forth in Contract JFK 1013, Defendant Tully had a duty to defend and indemnify the Port Authority in the Underlying Lawsuit previously pending in the Eastern District. 41. Pursuant to the terms of Contract JFK 1013, Defendant Tully is liable to the Port Authority for any and all damages that the Port Authority has sustained as a result of any judgments or settlements in the Underlying Lawsuit. 42. Based on the foregoing, the Port Authority is entitled to reimbursement of its defense costs in the Underlying Lawsuit. COUNT II DECLARATORYJUDGMENT: DEFENDANTCOVENANT HAD A DUTY TO DEFEND AND INDEMNIFY THE PORT AUTHORITY 43. The allegations asserted in paragraphs 1 through 42 of the Complaint are repeated and re-alleged with the same force and effect as if set out at length herein. 44. Based on the terms of Contract No set forth above, Defendant Covenant had a duty to defend and indemnify the Port Authority in the Underlying Lawsuit previously pending in this District. 45. Pursuant to Contract No , Defendant Covenant is liable to the Port Authority for any and all damages that the Port Authority has sustained as a result of any judgments or settlements in the Underlying Lawsuit. 46. Based on the foregoing, the Port Authority is entitled to reimbursement of HURWITZ & FINE, P. C LIBERTY BuiLDING BuFFALO, NY

16 its defense costs in the Underlying Lawsuit. COUNT III DECLARATORY JUDGMENT: THE PORT AUTHORITY IS ENTITLED TO ADDITIONAL INSURED STATUS UNDER DEFENDANT ILLINOIS NATIONAL'S POLICY 47. The allegations asserted in paragraphs 1 through 46 of the Complaint are repeated and re-alleged with the same force and effect as if set out at length herein. 48. Defendant Illinois National issued a commercial general liability policy no. FG (hereinafter "Illinois National Policy") to Defendant Covenant with a coverage period from November I, 2008 through November 1, OccuiTence on June 9, The Illinois National Policy was in effect at the time of the Underlying 50. In accordance with the terms of Contract No with the Port Authority, Defendant Covenant agreed to indemnify and hold hannless the Port Authority for any claims in any way connected to or arising out of said Contract and all other services and activities of Defendant Covenant pursuant to the Contract. 51. Additionally, Defendant Covenant agreed to name the Port Authority as an additional insured on a policy of Commercial General Liability Insurance. 52. The Illinois National Policy contained a provision to include as an "Additional Insured" any person or organization "as required by written contract". 53. Based on the foregoing, the Port Authority is entitled to additional insured status under the Illinois National Policy for any and all damages that the Port Authority sustained as a result of any judgments or settlements in the Underlying Lawsuit. HURWITZ & FINE, P. C LIBERTY BUILDING BUFFALO, NY

17 COUNT IV DECLARATORY JUDGMENT: THE PORT AUTHORITY IS ENTITLED TO INSURANCE COVERAGE UNDER DEFENDANT ZURICH'S POLICY 54. The allegations asserted in paragraphs 1 through 53 of the Complaint are repeated and re-alleged with the same force and effect as if set out at length herein. 55. Defendant Zurich issued a business automobile coverage, policy no. BAP , to Defendant Tully with a coverage period from March 31, 2009 through March 31, liability policy to Tully. Occurrence on June 9, Upon information and belief, Zurich also issued a comprehensive general 57. The Zurich policies were in effect at the time of the Underlying 58. The terms of JFK 1013 including but not limited to Clause 58 set forth above contain an agreement by Defendant Tully to indemnify the Port Authority for all claims and expenses, whether they arise from acts or omissions of Defendant Tully, the Port Authority or third persons. 59. Additionally, in accordance with JFK 1013 including but not limited to Clause 61 set forth above, Defendant Tully was required to procure Automobile Liability Insurance, under which the Port Authority was to be named as an "Additional Insured". 60. Based on the foregoing, the Port Authority is entitled to insurance coverage under the Zurich Policy for any and all damages that the Port Authority sustained as a result of any judgments or settlements in the Underlying Lawsuit. HURWITZ & fine, P. C LiBERTY BUILDING BUFFALO, NY

18 WHEREFORE, Plaintiff prays that this Court enter judgment finding and declaring the rights of the parties as follows: ASTOCOUNTI 1. That Defendant Tully had a duty to defend the Port Authority in the Underlying Lawsuit; 2. That the Port Authority is entitled to reimbursement of all legal fees, costs, and disbursements it expended defending itself in the Underlying Lawsuit; and 3. That this Court grant the Port Authority such other and further relief it deems just and equitable under the circumstances, including an award of costs to enforce the Port Authority's rights under the Subject Contracts. AS TO COUNT II 4. That Defendant Covenant had a duty to defend the Port Authority in the Underlying Lawsuit; 5. That the Port Authority is entitled to reimbursement of all legal fees, costs, and disbursements it expended defending itself in the Underlying Lawsuit; and 6. That this Court grant the Port Authority such other and further relief it deems just and equitable under the circumstances, including an award of costs to enforce the Port Authority's rights under the Subject Contracts. AS TO COUNT III 7. That the Port Authority is entitled to Additional Insured status under Defendant Illinois National's Policy. 8. That this Court grant the Port Authority such other and further relief it deems just and equitable under the circumstances, including an award of costs to enforce the Port HURWITZ & FINE, P. C LIBERTY BuiLDING BuFFALO, NY

19 Authority's rights under the Subject Contracts. AS TO COUNT IV 9. That the Port Authority is entitled to insurance coverage under Defendant Zurich's policies. 10. That thls Court grant the Port Authority such other and fiuther relief it deems just and equitable under the circumstances, including an award of costs to enforce the Port Authority's rights under the Subject Contracts. DATED: Buffalo, New York February 12, 2014 HURWITZ & FINE, P.C. Audrey A. e le Es I Attorneys for R ntiff, The Port Authority of New York and New Jersey 1300 Liberty Building Buffalo, New York (716) HURWITZ & FINE, P. C UBERTY BUILiliNG BUFFALO, NY

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