Security State Bank & Trust v. Bexar County, 2012 Tex. App. LEXIS 10557

Bank held a recorded first lien on the Property; delinquent taxes were foreclosed and a tax sale occurred in 2009, with Nikmaram purchasing the Property for $55,000 and a tax deed filed in 2009; Bank was not served with notice of the delinquent tax suit or the tax sale; the Bank filed suit seeking to void the tax sale as to its lien and to quiet title after foreclosing foreclosure; trial court granted summary judgments for Taxing Authorities and Nikmaram, denying Bank’s relief; on appeal, the court held the Bank’s due process rights were violated due to lack of notice and joinder, voiding the sale as to Bank and remanding for quiet title issues; the case involves complex interaction between due process and tax-code limitations provisions (Tex. Tax Code Ann. §§ 33.54, 34.08).

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether lack of notice to the Bank violated due process and voided the tax sale as to the Bank	Bank argues it was a pre-existing lienholder entitled to notice and joinder	Taxing Authorities/Nikmaram contend due process was not violated and other limitations apply	Yes; lack of notice rendered the sale void as to the Bank
Whether the Bank was required to be joined in the delinquent tax suit	Bank should be joined as a party with an interest in the Property	Rule 39(a) joinder not essential to collateral attack; limited by Tax Code	Yes; lienholder must be joined to protect its interests and to give due process
Whether the Bank could bring a collateral attack independent of the Tax Code provisions	Collateral attack permissible to vindicate due process violations	Tax Code limitations preclude such attack if not timely or properly deposited	Yes; collateral attack permissible; due process violation makes sale void as to Bank, so collateral attack provincial to Tax Code limits
What is the remedy for the Bank’s due process violation	Remedy is to void the tax judgment and sale as to Bank and remand for quiet title issues	Remedy limited by other parties’ rights and unresolved factual issues	Remand for quiet title proceedings; judgment vacated as to Bank’s lien and sale; Nikmaram takes subject to Bank’s lien

Mennonite Bd. of Missions v. Adams, 462 U.S. 791 (U.S. 1983) (lienholder's due process rights require notice before affecting property interests)
Peralta v. Heights Med. Ctr., Inc., 485 U.S. 80 (U.S. 1988) (lack of notice to interested party voids judgment per due process)
Rivera v. PNS Stores, 379 S.W.3d 267 (Tex. 2012) (collateral attack for lack of notice; void judgment rule)
Strauss v. 221 S.W.3d 791, 221 S.W.3d 791 (Tex. App.—Beaumont 2007) (birth of voidable judgment concept; joinder of interested parties)
Jordan v. Bustamante, 158 S.W.3d 29 (Tex. App.—Houston [14th Dist.] 2005) (necessity of joining lienholders in tax foreclosure)
Murphee Prop. Holdings, Ltd. v. Sunbelt Sav. Ass’n of Tex., 817 S.W.2d 850 (Tex. App.—Houston [1st Dist.] 1991) (joinder and priority of liens in tax foreclosures)
Brooks v. Northglen Ass’n, 141 S.W.3d 158 (Tex. 2004) (Rule 39(a) necessity of joining persons with interests)