156 So. 3d 1143
La.2014Background
- 2004 tax sale: Parcel in New Orleans sold to Mooring Tax Asset Group after Browns became tax-delinquent; tax deed recorded April 26, 2005.
- Subsequent transfers: Browns sold to NARA (Apr. 17, 2007); NARA sold to Roderick James (June 9, 2008). James acquired property subject to recorded tax deed.
- Mooring sought to quiet title (May 21, 2010); James countered and moved for summary judgment, arguing the 2004 tax sale was absolutely null for insufficient pre-sale notice/advertisement.
- Trial court declared the tax sale absolutely null and ordered cancellation of the tax deed; it later denied Mooring’s claim for reimbursement of taxes, interest and costs.
- Louisiana Supreme Court granted review to decide (1) whether a tax-sale purchaser is entitled to reimbursement of costs when the sale is declared absolutely null, and (2) who must pay those costs before annulment is effective.
Issues
| Issue | Plaintiff's Argument (Mooring) | Defendant's Argument (James) | Held |
|---|---|---|---|
| Whether a tax purchaser may recover taxes, interest and costs where the tax sale is declared absolutely null | Mooring: Article VII, §25(C) requires payment of price, taxes, interest and costs before annulment becomes effective; thus Mooring is entitled to reimbursement | James: An absolute nullity never existed legally, so the constitutional reimbursement provision does not apply; Mooring gets nothing | Held: Article VII, §25(C) applies; Mooring is entitled to reimbursement prior to effect of annulment |
| Whether the court erred by immediately canceling the tax deed without fixing/ordering payment of costs | Mooring: Trial court should delay cancellation until Mooring’s costs are fixed and paid | James: Immediate cancellation proper because absolute nullity leaves Mooring with no remedy | Held: Court erred; judgment of nullity cannot be given effect until costs are fixed/paid per Art. VII, §25(C) |
| Who must reimburse the tax purchaser before annulment takes effect | Mooring: Current owner (James) seeking to clear title should pay costs; he was subrogated to prior owner’s rights/obligations | James: Liability should be on City (for defective notice) or on the original tax debtors (the Browns); he was not owner at sale and thus not liable | Held: The current owner (James) is responsible to reimburse Mooring; he holds the rights/obligations and bought subject to recorded tax deed |
| Applicability/retroactivity of La. R.S. 47:2291 to 2004 sale | Mooring: statutory framework supports awarding costs and procedure for fixing them | James: 47:2291 is substantive, effective 1/1/2009, so it should not apply retroactively | Held: Court resolved the case on Article VII, §25(C) and expressly pretermitted the retroactivity question of La. R.S. 47:2291 |
Key Cases Cited
- Westwego Canal & Terminal Co. v. Pitre, 1 So. 2d 550 (La. 1941) (recognized requirement that purchaser’s costs be paid before annulment of tax sale)
- Lewis v. Succession of Johnson, 925 So. 2d 1172 (La. 2006) (annulment subject to Article VII, §25(C) reimbursement requirement)
- Smitko v. Gulf South Shrimp, Inc., 94 So. 3d 750 (La. 2012) (absolute nullity concept; due-process defect means sale is void and not cured by prescription)
- Mennonite Bd. of Missions v. Adams, 462 U.S. 791 (U.S. 1983) (property owner with significant interest is entitled to notice reasonably calculated to apprise of pending tax sale)
- Fransen v. City of New Orleans, 988 So. 2d 225 (La. 2008) (tax collection and lien principles; delinquent tax collection via tax sale)