83 So. 3d 105
La. Ct. App.2011Background
- Appeal concerns the validity of the November 10, 2003 tax sale by the City of New Orleans to Allen Borne for 4121 and 4121 1/2 State Street.
- Two district-court cases were consolidated: ODRC sought to quiet tax title against Ocwen as mortgage servicer for Lehman Brothers; Lehman sought to annul the tax sale against ODRC and Borne.
- Tax deed issued January 12, 2004 conveying title to Borne; redemption period allowed for three years.
- Stafford, record owner, obtained title in 1995; mortgage chain progressed to Lehman Brothers by 2007, after the sale.
- OCWen and Lehman argued pre-sale notice issues; trial court held the sale cured by peremptive period; appellate court reversed for due process violations.
- Court concluded the tax sale was an absolute nullity due to failure to provide notice to the mortgagee of record and the delinquent owner.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the tax sale violated due process due to insufficient notice | ODRC/Lehman: proper notice required; City failed to notify Stafford and Firstar Bank | City/OCWen: statutory mailing/notice adequate or cured by subsequent actions | Yes, notice failure renders the sale nullities (absolute) per Mennonite and subsequent Louisiana cases |
| Whether Ocwen has standing to appeal as Lehman’s servicing agent | Lehman’s rights are represented by Ocwen; appeal properly brought | ODRC lacks standing to challenge actions of Lehman via Ocwen | Ocwen may appeal as Lehman's agent |
| Whether the sale could be saved by peremption or prescription | Not sufficient; due process violation voids sale | Sale cured by time limits under prior law | Sale is an absolute nullity; cannot be saved by peremption/prescription |
Key Cases Cited
- Mennonite Board of Missions v. Adams, 462 U.S. 791 (U.S. Supreme Court 1983) (mortgagee entitled to notice reasonably calculated to apprise of sale)
- C & C Energy, L.L.C. v. Cody Investments, 41 So.3d 1134 (La. 2010) (tax sale nullity for failure to provide required notice)
- Lewis v. Succession of Johnson, 925 So.2d 1172 (La. 2006) (tax sales absolved when notice deficient; absolute nullity recognized)
- Welsch v. Carmadelle, 264 So.2d 341 (La.App. 4th Cir. 1972) (notice deficiencies and prescription considerations in tax sales)
- Padilla v. Schwartz, 11 So.3d 6 (La.App. 4th Cir. 2009) (addressed due process notice to mortgagees)