199 So. 3d 1194
La. Ct. App.2016Background
- U.S. Assets purchased property at a St. Tammany Parish tax sale on August 5, 2009, and recorded a tax sale certificate and deed. The property had been conveyed by KLG Development, Inc. to Charles and Suzanne Krieger by dation en paiement in 1993, and the Kriegers paid ad valorem taxes thereafter.
- The Sheriff assessed the parcel for 2008 in KLG’s name, sent a deficiency notice to an incorrect address, and the Kriegers did not receive notice of delinquency.
- On December 12, 2012, U.S. Assets’ counsel mailed notice to the Kriegers per La. R.S. 47:2157 advising that tax-sale title had been purchased and that any interested party had six months to challenge the sale; counsel later demanded taxes, fees, interest and a $10,000 premium as a settlement alternative.
- The Kriegers filed suit on June 12, 2013 to annul the tax sale, maintain possession, and asserted a LUTPA (unfair trade practices) claim; U.S. Assets counterclaimed to quiet title and filed lis pendens.
- The Louisiana Tax Commission later declared the tax sale null due to erroneous dual assessment; U.S. Assets voluntarily dismissed its quiet-title reconventional demand. At trial the court awarded the Kriegers attorney’s fees under LUTPA and declared the tax sale a nullity; the court later modified to a relative nullity. U.S. Assets appealed.
Issues
| Issue | Krieger's Argument | U.S. Assets' Argument | Held |
|---|---|---|---|
| Whether U.S. Assets’ conduct violated LUTPA | U.S. Assets engaged in deceptive/unfair practices by sending misleading notice, threatening Mrs. Krieger, refusing to investigate defects, keeping lis pendens, and persisting after LTC decision | U.S. Assets relied on presumptively valid tax deed, followed statutory notice procedures, had no duty to independently investigate, and voluntarily dismissed when LTC nullified the sale | Court of Appeal: No LUTPA violation; trial court erred — reversed award of attorney’s fees |
| Validity and effect of the December 12, 2012 notice | Notice was inaccurate/misaddressed and misleading (addressed to Kriegers rather than KLG; lacked street address) | Notice complied with La. R.S. 47:2157 and was accurate when sent, based on presumptively valid tax certificate | Notice was legally sufficient and accurate at time sent; omission of physical address (raised on appeal) would not by itself support a LUTPA claim |
| Whether purchaser has duty to investigate tax-sale validity after put on notice | Kriegers argued purchaser should investigate when presented with public-record defects | U.S. Assets argued law places burden on party attacking the sale to file annulment; purchaser has no affirmative duty to investigate | Court: Law places burden on attackant to annul; purchaser had no legal duty to investigate; trial court erred in imposing such duty |
| Whether counsel’s settlement demand constituted a threat or deception under LUTPA | Kriegers characterized demand (taxes + premium) as coercive, misleading them to believe redemption remained possible | U.S. Assets maintained it accurately explained redemption was no longer available and offered settlement as alternative to litigation | Court: Statements were legally correct and not threatening; upset recipient’s reaction insufficient for LUTPA finding |
Key Cases Cited
- Newton v. Brenan, 166 So.3d 285 (La. App. 5th Cir.) (discusses LUTPA scope and that exercising legal rights is not necessarily an unfair trade practice)
- Quality Environmental Processes, Inc. v. I.P. Petroleum Co., Inc., 144 So.3d 1011 (La. 2014) (defines narrow scope of LUTPA: fraud, misrepresentation, similar conduct; not mere negligence; not meant to police attorney cooperation)
- Smitko v. Gulf South Shrimp, Inc., 94 So.3d 750 (La. 2012) (tax deed is prima facie evidence of valid sale; burden shifts to party attacking sale)
- Cressionnie v. Intrepid, Inc., 879 So.2d 736 (La. App. 1st Cir.) (same principle: presumption of validity of tax sale)
- Board of Commissioners for Sunset Drainage District v. Rivet, 921 So.2d 1046 (La. App. 5th Cir.) (public policy favors validity of tax sales)
- Cheramie Services, Inc. v. Shell Deepwater Production, Inc., 35 So.3d 1053 (La.) (LUTPA requires conduct that offends public policy and is immoral, unethical, oppressive, unscrupulous, or substantially injurious)