Trial Perspectives

Condominium’s Declaration is a Contract

Posted by David Adelstein on June 28, 2018
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A condominium’s declaration is a contract.  As a unit owner, it serves as your contract and will govern your rights with your condominium association.  Just like any contract, disputes arise between a unit owner and the association regarding the interpretation of the declaration.  And, no different than any contract, the interpretation of a declaration is reviewed under a de novo standard of appellate review.  See Lenzi v. The Regency Tower Ass’n, 43 Fla.L.Weekly D1397a (Fla. 4th DCA 2018).

Lenzi serves as an example of a dispute involving a condominium unit owner and his association regarding the interpretation of a provision in the condominium’s declaration. In this case, the unit owner wanted the court to interpret a word used in the declaration restrictively, which the trial court rejected and the appellate court affirmed. 

When it comes to terms in a declaration (or any contract), terms are to be given their plain and ordinary meaning such that terms are construed in their ordinary sense.  See Lenzi, supra.  Unless a specific word is a defined term in the declaration (or contract), words are to be construed by their generally understood definition. Id.

If you are in a dispute with your condominium association regarding a provision or the interpretation of your declaration, make sure to consult with counsel to make sure your interpretation or basis of your dispute is colorable.   

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Equitable Estoppel Circumstances to Allow Non-Signatory to Compel Arbitration

Posted by David Adelstein on June 23, 2018
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Arbitration is a creature of contract, meaning if you want your disputes to be resolved by arbitration through an arbitrator (as opposed to litigation with a judge and/or jury), you need to include an arbitration provision in your contract.   A trial court granting or denying a party’s motion to compel arbitration is a non-final order that is immediately appealableSee Fla.R.App.P. 9.130(a)(3)(C)(iv).

There are times that a non-signatory to a contract with an arbitration provision wants to compel arbitration.  For example, a signatory to a contract (with an arbitration provision) files suit against a non-party and the non-party moves to compel arbitration based on the contract.  A dispute arises because the non-party is not a party to that contract, and thus, it needs a legal basis to compel arbitration under that contract.  That legal basis to allow a non-party to a contract to compel arbitration against a signatory to the contract is equitable estoppel: 

Courts have recognized that this [compelling arbitration] can be appropriate (1) when the signatory’s claims [against the non-party to the contract] allege “substantially interdependent and concerted misconduct” by the signatory and the non-signatory or (2) when the claims relate directly to the contract and the signatory is relying on the contract to assert its claims against the non-signatory

Beck Auto Sales, Inc. v. Asbury Jax Ford, LLC, 43 Fla.L.Weekly D1380a (Fla. 1st DCA 2018).

However, “even when a non-signatory can rely on equitable estoppel ‘to access [the arbitration] clause,’ the non-signatory can compel arbitration only if the dispute at issue ‘falls within the scope of the arbitration clause.’”  Beck Auto Sales, Inc., supra (citation omitted).  Even if one of the above equitable estoppel circumstances apply, the non-signatory still will not be able to compel arbitration if the scope of its dispute falls outside of the arbitration provision.

An example of the first circumstance was raised in Beck Auto Sales where a car dealership sued its former employee and the former employee’s new dealership/employer for a number of theories relating to their concerted effort to prevent the car dealership from winning a contract with a public entity. 

The former employee had an employment agreement with the car dealership that included an arbitration provision.  The trial court granted arbitration between the car dealership and former employee.  The new employer/dealership, a non-signatory to the employment contract, moved to compel the car dealership’s claims against it to arbitration under the employment contract.  It argued that the car dealership’s claims against it and the former employee (a signatory to the contract) allege substantially interdependent and concerted misconduct by the former employee (signatory) and it (non-signatory). The problem for the new dealership/employer, however, was that the arbitration provision in the employment contract was limited to disputes between the parties to the arbitration agreement.  The scope of the arbitration provision would not cover disputes involving the new dealership/employer; hence, it was unable to take advantage of an equitable estoppel argument to compel arbitration as a non-signatory to the employment contract.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Value of Severability Clause

Posted by David Adelstein on June 16, 2018
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Severability clauses have become fairly commonplace in contracts.  Cut and paste provisions.  However, these clauses can provide tremendous value.  A sample of a severability clause is as follows:

If any provision of this Agreement, the deletion of which would not adversely affect the receipt of any material benefit by or in favor of any party or substantially increase the burden of any party to this Agreement, shall be held to be invalid or unenforceable to any extent, the same shall not affect in any respect whatsoever the validity or enforceability of the remainder of this Agreement.

There are numerous ways to draft this type of clause with the essence being that if anything in the contract is deemed invalid or unenforceable, the balance of the provision and contract shall remain in full force and effect.  Such a provision, regardless of how it is worded, is known as a severability clause. 

An example of the application of the severability clause can be found in Premier Compounding Pharmacy, Inc. v. Larson, 43 Fla. L. Weekly D1340a (Fla. 4th DCA 2018), dealing with a non-compete agreement between a pharmacy and pharmacist. 

The non-compete agreement in the case contained language that the pharmacy (employer) could obtain injunctive relief without posting an injunction bond.  Requiring a temporary injunction to be posted without a bond is contrary to Florida Statute s. 542.335(j) which states in relevant part, “No temporary injunction shall be entered unless the person seeking enforcement of a restrictive covenant gives a proper bond, and the court shall not enforce any contractual provision waiving the requirement of an injunction bond or limiting the amount of such bond.”

Based on this statute, the language in the non-compete agreement that allowed the employer to move for a temporary injunction without posting a bond was not legal. 

Without going into all of the details of the case, the appellate court maintained that the language in the non-compete agreement that allowed the employer to move for a temporary injunction without posting a bond can be eliminated from the provision, with valid legal obligations remaining in the agreement, i.e., the temporary injunction can be  issued while requiring the employer to post a bond pursuant to Florida law.  

Additionally, the provision also allowed the employer to recover attorney’s fees in obtaining the injunctive relief.  The trial court denied the employer’s request for fees (although the injunction was entered) finding the provision unenforceable because of the preceding invalid sentence that allowed the employer to obtain an injunction without posting a bond.  No different than the appellate court eliminating the “without a bond” from the provision, the court held that, “because the extent of unenforceability of the provision goes solely to the ‘no bond’ requirement of the injunction, the remainder of the provision and the agreement is still enforceable, including the attorney’s fees provision.” Premier Compounding Pharmacy, Inc., supra.

Hence, while the provision at-issue was contrary to Florida law, the severability provision provided value in simply eliminating the invalid language and enforcing the remainder of the provision.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Risk in Purchasing Property Subject to a Pending Foreclosure and Lis Pendens

Posted by David Adelstein on June 09, 2018
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When real property is the subject to a pending foreclosure action where there is a lis pendens, a buyer that purchases the property outside of the foreclosure “does so at his own risk because he is on notice that the property is subject to the foreclosure action [through the lis pendens].”  Bymel v. Bank of America, N.A., 159 So.3d 345, 346 (Fla. 3d DCA 2015).   The buyer is not permitted to intervene in the pending foreclosure action.  See id. at 346-47. 

In a recent case, The Bank of New York Mellon v. HOA Rescue Fund, LLC, 43 Fla.L.Weekly D1312b (Fla. 2d DCA 2018), the bank (mortgagee) filed a foreclosure action and lis pendens.  After the bank’s action was pending, the mortgagor’s homeowner’s association foreclosed an unpaid assessment lien.  A buyer obtained the property at the foreclosure sale of the assessment lien and then moved to intervene into the bank’s previously filed foreclosure action, which the trial court allowed.  (It appeared the bank, although its action was previously filed, did not aggressively prosecute the foreclosure and was fine with allowing its action to sit idle.)

Two issues were addressed on appeal. 

First, the buyer that purchased the property through the homeowner’s association’s foreclosure of an assessment lien should NOT have been allowed to intervene.  “A purchaser of property that is the subject of a pending foreclosure action in which a lis pendens has previously been recorded is not entitled to intervene in that foreclosure action.”  The Bank of New York Mellon, supra.  This language is the reason why filing a lis pendens is powerful!  The lis pendens puts the subsequent buyer on notice that he is purchasing the property at his own risk knowing the title to the property is subject to a pending lawsuit.

Second, even if the buyer could intervene, the buyer purchased the property subject to a superior interest.  In other words, the mortgage was superior to the homeowner’s association’s assessment lien so when the buyer purchased the property at the foreclosure sale of the assessment lien, the purchase was always subject to the superior mortgage.   Even if intervention was proper, the buyer still would not be able to participate in the bank’s foreclosure action as if the buyer were a party to the original note and mortgage. 

It is extremely important in situations like this that you get a Foreclosure Lawyer involved to go through the case with you. It is a very complex situation to be in, and I would recommend not doing it alone.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Account Stated and Open Account — Separate Causes of Action

Posted by David Adelstein on June 03, 2018
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There are two different causes of action known as account stated and open account.  Although these are separate causes of action, and have different burdens of proof, they are oftentimes pled together and confused for one another.   These are causes of action that would be asserted when a party / creditor claims another party / debtor owes it money from a transaction.  

 

ACCOUNT STATED

 

An account stated is a cause of action when there is an “agreement between persons who have had previous transactions, fixing the amount due in respect of such transactions, and promising payment.”  Farley v. Chase Bank, U.S.A., N.A., 37 So.3d 936, 937 (Fla. 4th DCA 2010) (quotation and citation omitted).  An “account stated requires an express or implied agreement between the parties that a specified balance is correct and due and an express or implied promise to pay the balance.”  Id.; see also Mercado v. Lion’s Enterprise, Inc., 800 So.2d 753, 755 (Fla. 5th DCA 2001) (“Where there is no such [express or implied agreement that a certain balance is correct] between the parties, there can be no recovery on this theory.” ); Robert C. Malt & Co. v. Kelly Tractor Co., 518 So.2d 991, 991 (Fla. 4th DCA 1988) (“Generally, an account stated is established where a debtor does not object to a bill from his creditor within a reasonable time.”).

Florida has a standard form, Form 1.933, regarding how to properly plead a cause of action for account stated.

 

OPEN ACCOUNT

 

An open account is an unsettled debt arising from items of work and labor, with the expectation of further transactions subject to future settlements and adjustments.”  Id. (quotation and citation omitted).  In an action on an open account, the claimant must actually attach a copy of the itemized account, unlike an account stated action.  Id.  An open account “should not include express contracts or other obligations that have been reduced to writing…An obligation does not become an ‘open account’ simply because the amount due under a contract requires calculation.” H&H Design Builders, Inc. v. Travelers’ Indem. Co., 639 So.2d 697, 699 (Fla. 5th DCA 1994). 

Florida has a standard form, Form 1.932, regarding how to properly plead a cause of action for open account.

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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General Understanding of Collateral Estoppel and Res Judicata

Posted by David Adelstein on May 28, 2018
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There are two similarly related legal doctrines known as collateral estoppel and res judicata.   The doctrines are designed to prevent a party from re-litigating either a prior issue (collateral estoppel) or claim (res judicata).  These doctrines are generally discussed below regarding the elements (in the case of collateral estoppel) or the identities (in the case of res judicata) required to support their application.   Keep in mind that these are nuanced legal doctrines and a party should consult with counsel to determine the application of these doctrines which are typically raised as an affirmative defense in a lawsuit.

 

Collateral Estoppel = Issue Preclusion

 

The doctrine of collateral estoppel is also generally known as issue preclusion. 

Collateral estoppel applies when the following five elements are satisfied: “(1) the identical issues were presented in a prior proceeding; (2) there was a full and fair opportunity to litigate the issues in the prior proceeding; (3) the issues in the prior litigation were a critical and necessary part of the prior determination; (4) the parties in the two proceedings were identical; and (5) the issues were actually litigated in the prior proceeding.”  Pearce v. Sandler, 219 So.3d 961, 965 (Fla. 3d DCA 2017) quoting Topps v. State, 865 So.2d 1253, 1255 (Fla. 2004).  

When these elements are satisfied, “[c]ollateral estoppel precludes re-litigating an issue where the same issue has been fully litigated by the parties or their privies, and a final decision has been rendered by a court.”  Id. quoting Mtge. Elec. Registration Sys., Inc. v. Badra, 991 So.2d 1037, 1039 (Fla. 4th DCA 2008).   The underlined phraseology “or their privies” refers to one who is in privity with a party to a lawsuit.  “To be in privity with one who is a party to a lawsuit, or for one to have been virtually represented by one who is a party to a lawsuit, one must have an interest in the action such that she will be bound by the final judgment as if she were a party.”  Pearce, 219 So.3d at 965.

A trial court’s ruling regarding the application of collateral estoppel is reviewed under a de novo standard of appellate review.   PNC Bank, Nat. Ass’n v. Inlet Village Condominium Ass’n, Inc., 204 So.3d 97 (Fla. 4th DCA 2016).

 

Res Judicata = Claim Preclusion

 

The doctrine of res judicata is also generally known as claim preclusion.

Res judicata applies when the following four identities are satisfied: “(1) identity of the thing sued for; (2) identity of the cause of action; (3) identity of persons and parties to the action; and (4) identity of the quality of the persons for or against whom the claim is made.”  Professional Roofing and Sales, Inc. v. Flemmings, 138 So.3d 524, 527 (Fla. 3d DCA 2014) quoting Topps v. State, 865 So.2d 1253, 1255 (Fla. 2004).

An identity of the cause of action refers to “whether the facts or evidence necessary to maintain the suit are the same in both actions.”  Tyson v. Viacom, Inc., 890 So.2d 1205, 1209 (Fla. 4th DCA 2005) quoting Albrecht v. State, 444 So.2d 8, 12 (Fla. 1984).   

Another way to consider res judicata has been stated as follows: “A judgment on the merits rendered in a former suit between the same parties or their privies, upon the same cause of action, by a court of competent jurisdiction, is conclusive not only as to every matter which was offered and received to sustain or defeat the claim, but as to every other matter which might with propriety have been litigated determined in that action.”  Tyson, 890 So.2d at 1209 quoting Huff Groves Trust v. Caulkins Indiantown Citrus Co., 810 So.2d 1049, 1050 (Fla. 4th DCA 2002). 

A trial court’s ruling regarding the application of res judicata is also reviewed under a de novo standard of appellate review.  Philadelphia Financial Management of San Francisco, LLC v. DJSP Enterprises, Inc., 227 So.3d 612 (Fla. 4th DCA 2017). 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Injunctive Relief + Attorney’s Fees Awarded in Favor of an Owner and Against Her Association

Posted by David Adelstein on May 12, 2018
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Here is a case that may give associations some degree of consternation.  I think it should because it supports permanent injunctive relief against an association to comply with its governing documents when managing or maintaining a surface water management system / stormwater management system.   This case, discussed below, would extend beyond a surface water management system to any covenant in the governing documents.  

In Coconut Creek Homeowner’s Association, Inc. v. Gonzalez,  43 Fla.L.Weekly D1045a (Fla. 4th DCA 2018), a homeowner sued her homeowner’s association for failing to manage the association’s surface water management system.  The homeowner sued the association for breach of the governing documents (Declaration, bylaws, etc.) and for a permanent / mandatory injunction to compel the association to comply with its governing documents to fix the swales and drainage system (common elements owned by the association).   The lack of management of the surface water management system caused flooding problems and damage to the homeowner’s home.

The jury found that the association breached its governing documents in failing to manage the surface water management system, but awarded the homeowner $0 caused by the breach associated with her claimed damages.  But, the trial court, as affirmed by the appellate court, granted a mandatory / permanent injunction against the association to enforce restrictive covenants in the governing documents. Specifically, the injunctive relief was issued to order the association to fix the swales and drainage system and comply with its governing documents.  

Now, the association perhaps thought this was not all that bad because it did not owe the homeowner any monetary damages based on the jury’s verdict of $0.  However, the appellate court found that because the homeowner prevailed on the significant issues of her case, she is entitled to her attorney’s fees and costs.  Thus, a mandatory / permanent injunction is issued against the association requiring it to comply with the governing documents and it is liable for the homeowner’s attorney’s fees and costs, which are likely significant after a trial.  Please check out this article for more information relating to the attorney’s fees aspect of this case. 

If you live in a community governed by an association (whether a homeowner’s association or condominium association), make sure you seek counsel that appreciates the issues associated with your governing documents.  And, an association needs to likewise consider the issues so it understands its responsibilities under the governing documents and potential outcomes associated with owner disputes.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Mid-litigation Monetary Settlement with Co-Defendant

Posted by David Adelstein on May 05, 2018
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I recently discussed a doctrine that applies in negligence cases known as the undertaker’s doctrine.  Some may also call this the no good deed goes unpunished doctrine.  Just kidding; but, this undertaker’s doctrine maintains that if you undertake a service, i.e., a good deed, you must do so with reasonable care as you assumed a duty to prevent the beneficiary of that service from harm.  

For instance, a tenant sued the owner of the condominium he (and his family) was renting and his real estate agent for water intrusion and mold problems in the unit.  The tenant claimed the real estate agent was negligent because the agent agreed to fix the problems with the unit but neglected to do so.  This is where the undertaker’s doctrine comes into play–the agreement to undertake a service exposed the real estate agent to a duty to use reasonable care with that service.  

The owner of the unit settled with the tenant for $82,000 resulting in a final judgment against the owner.  The real estate agent argued that the negligence claim against him should be deemed moot in light of this settlement since the agent was being sued for the same damages.  The appellate court disagreed because there was nothing in the record to reflect that the settlement amount with the owner included ALL of the tenant’s damages.

Mid-litigation monetary settlements are often less than the total amount of damages that the plaintiff was claiming. Each side gives up something when they settle, including some of the plaintiff’s potential monetary damages award.”  Muchnick v. Goihman, 43 Fla.L.Weekly D986b (Fla. 3d DCA 2018).   The settlement amount would serve as a set-off from any judgment amount or verdict awarded against the agent to avoid any windfall to the tenant; however, the agent does not get to put the cart before the horse and argue the case against him is moot because the plaintiff settled with the co-defendant. 

 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Florida’s Uniform Trade Secrets Act cannot be used to Restrict Competition

Posted by David Adelstein on April 30, 2018
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Florida’s Uniform Trade Secrets Act is contained in Florida Statutes Chapter 688.  This Act authorizes  courts to take reasonable steps to preserve the confidentiality of trade secrets including ordering injunctive relief to prevent a party (such as a former employee) from misappropriating trade secrets.  Norton v. American LED Technology, Inc., 43 Fla.L.Weekly D951a (Fla. 1st DCA 2018).   However, as confirmed by the First District in Norton, Florida’s Uniform Trade Secrets Act cannot be used as a sword to restrict or stifle direct competition.  In other words, it is improper for a trial court to issue a temporary injunction restricting direct competition based on Florida’s Uniform Trade Secrets Act.  Norton, supra.

Please make sure to consult with counsel if you have an issue dealing with trade secrets or the preservation of the same.  This includes your rights when you believe a party is misappropriating your trade secrets. 

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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Summary Judgment Entered in Favor of Defendant on Equitable Subrogation Claim

Posted by David Adelstein on April 22, 2018
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I recently wrote an article how there are times when a party is seeking reimbursement for solely economic losses, their best recourse is an equitable subrogation claim.   The article also discusses the application of equitable subrogation dealing with an actual fact pattern.

Equitable subrogation, you say?  In an equitable subrogation claim, a party pays for damages (or a debt) it believes were caused by another party.  The party then pursues reimbursement against the party it believes primarily responsible for the damages or debt.  No one wants to pay for damages or a debt it believes were caused by a third party!

There are five (5) elements to an equitable subrogation claim that the subrogee, the party that paid off the damages or debt, must prove:

  1. The party (subrogee) made the payment to protects its own interests;
  2. The party (subrogee) did not volunteer the payment — it was not making the payment as a volunteer;
  3. The party (subrogee) was not primarily liable for the damages or debt it seeks reimbursement for; 
  4. The party (subrogee) paid off the entire debt it seeks reimbursement for; and
  5. Subrogation would not work any injustice, i.e., it would not be unfair.

Tank Tech, Inc. v. Valley Tank Testing, L.L.C., 43 Fla.L.Weekly D868a (Fla. 2d DCA 2018) quoting Dade Cty. Sch. Bd. v. Radio Station WQBA, 731 So.2d 638, 646 (Fla. 1999).

Notably, in Tank Tech, Inc., the trial court granted summary judgment against the party pursing equitable subrogation. Summary judgment was granted in favor of the defendant.  The appellate court reversed for the factual reasons discussed in the article.  

As you may know from reading this blog, a motion for summary judgment is reviewed on appeal under a de novo standard of appellate review.  Summary judgment is only proper if there are no genuine issues of material fact and the party moving for summary judgment is entitled to a judgment as a matter of law.

Where the defendant is the party moving for summary judgment, as here, ‘neither the trial court nor this court determines whether the plaintiff can prove [its] case; our function solely is to determine whether the pleadings, depositions, and affidavits conclusively show that the plaintiff cannot prove [its] case.’”  Tank Tech, Inc., supra, quoting Crandall v. S.W. Fla. Blood Bank, Inc., 581 So.2d 593, 595 (Fla. 2d DCA 1991).  The takeaway is that a plaintiff is NOT required to prove its entire case when responding to a defendant’s motion for summary judgment and the court’s job is not to determine whether the plaintiff can prove its case at trial.  Rather, the job is to determine whether the the undisputed material facts “conclusively show that the plaintiff cannot prove its case.”  Id.

Please contact David Adelstein at dadelstein@gmail.com or (954) 361-4720 if you have questions or would like more information regarding this article. You can follow David Adelstein on Twitter @DavidAdelstein1.

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