MARION COUNTY AUDITOR, and McCord Investments, LLC, Appellants-Petitioners, v. SAWMILL CREEK, LLC a/k/a Saw Creek Investments, LLC, Appellee-Respondent.
No. 49S02-1106-CV-364.
Supreme Court of Indiana.
March 21, 2012.
Because Governor Daniels‘s testimony is not relevant or material to any issue in this case, I concur in the result of the Court‘s opinion.
R.C. Richmond, III, Taft Stettinius & Hollister LLP, Indianapolis, IN, Attorney for Appellee.
Nicole R. Kelsey, Office of Corporation Counsel, Indianapolis, IN, Attorney for Appellant, Marion County Auditor.
DICKSON, Justice.
This appeal challenges a judgment setting aside a tax deed. The deed had been issued to McCord Investments, LLC, upon the petition of the Marion County Auditor following the one-year redemption period after a tax sale. But, in response to a motion to set aside the tax deed filed on behalf of Sawmill Creek, LLC, the trial court conducted an evidentiary hearing, ultimately setting aside the tax deed on grounds that the Auditor‘s effort to notify Sawmill Creek of the tax sale was constitutionally deficient for failing to meet the requirements of due process. We granted transfer and now reverse the trial court.
Sawmill Creek, LLC (“Sawmill“), is a Wyoming entity managed by E.J. “Bill” Simpson. In late 2001, Simpson, on behalf of Sawmill, purchased a four acre tract of unimproved land on Rockville Road in Marion County (“the Property“). There was, however, a miscommunication during the negotiations which resulted in the closing statement, the general warranty deed, and the title insurance policy naming the purchaser as “Saw Creek Investments, L.L.C.” (“Saw Creek“), instead of the proper name “Sawmill Creek, LLC.”1 Tr. at 18, 20, 40; Sawmill‘s Exs. 6, 7, 8. None of the documents related to the Property referenced Sawmill, and Simpson did not
In late 2002 through early 2003, Simpson moved his operations from the Dandy Trail address to Northfield Drive in Brownsburg (“Northfield Drive address“). At that time, Simpson sent a letter to the Marion County Clerk providing notice of the address change. That letter referenced Sawmill and Cripple Creek Investments, LLC, but not Saw Creek. Consequently, the mailing address for the Rockville Road property was not updated, and tax bills continued to be sent to the Dandy Trail address. Sawmill did not notice that it was not receiving the tax bills for the Property, and the taxes became delinquent. In the summer of 2005, the Marion County Auditor (“the Auditor“) set the Property for tax sale.
The Auditor sent the pre-sale notice, as required by the statute in effect at the time,2 via certified mail to the Dandy Trail address.3 The notice was returned, stamped “NOT DELIVERABLE AS ADDRESSED, UNABLE TO FORWARD.” Tr. at 75-76; Sawmill‘s Ex. 17. Additionally, the Auditor published the list of properties set for sale in the newspaper, on the Auditor‘s website, and on a list posted outside of the Marion County Clerk‘s office. The Property was sold at tax sale in October 2005 to McCord Investments, LLC (“McCord“), and the one year statutory redemption period began at that time. The Auditor then employed a title company to research the Property. This search included not only the chain of title and potential lien-holders but also an attempt to locate Saw Creek through the records of the Indiana Secretary of State and the phonebook. The title company was unable to locate Saw Creek because that entity did not exist. Nor did the search reveal Sawmill as the true owner. The title company did, however, locate two addresses for the previous owner, Cloverleaf Properties (“Cloverleaf“), one on Professional Circle and the other on Rockville Road (the location of the Property). Following the title search, the Auditor sent a post-sale notice4 via certified mail to Saw Creek at the Dandy Trail address. The notice was again returned, stamped “NOT DELIVERABLE AS ADDRESSED, UNABLE TO FORWARD.” Tr. at 84; Sawmill‘s Ex. 20. The Auditor also sent notice to Cloverleaf at the addresses located in the title search: to the Professional Circle address via certified mail and to the Rockville Road address via first class mail. The certified letter to Cloverleaf was returned, stamped “NOT DELIVERABLE AS ADDRESSED, UNABLE TO FORWARD.” Tr. at 84; Sawmill‘s Ex. 20. The first class letter was not returned. At
Simpson, through Sawmill, filed a motion to set aside the tax deed. The trial court granted Sawmill‘s motion, concluding in relevant part,
that the notices of the tax sale of the Property and of Sawmill‘s right to redeem that were issued by the Auditor in connection with the October 2005 tax sale were constitutionally deficient, so that the issuance of the Tax Deed to McCord violated due process. As in [Jones v. Flowers, 547 U.S. 220, 126 S.Ct. 1708, 164 L.Ed.2d 415 (2006)], there were additional reasonable steps that the Auditor practicably could have taken to attempt to provide notice to Sawmill before selling the Property. In particular, the Auditor could have posted a notice on the Property, which the United States Supreme Court noted in Flowers is a “singularly appropriate and effective way of ensuring that a person is actually apprised of proceedings against him,” and/or the Auditor could have telephoned the number listed on the “For Sale” sign that was posted on the property.
Although the Auditor also advertised the tax sale in the newspapers, as noted by the Court in Flowers: merely publishing notice in the newspaper, when additional steps could have been reasonably taken, is constitutionally inadequate since “‘[c]hance alone’ brings a person‘s attention to ‘an advertisement in small type inserted in the back pages of a newspaper.‘” For the same reason, the posting of the Property within the list of the properties to be sold at tax sale on the Auditor‘s website and on a bulletin board outside the Clerk‘s office was also constitutionally inadequate under the specific facts of this case.
Findings of Fact, Conclusions of Law, and Judgment, Appellants’ App‘x at 21-22. (footnotes omitted) (citations omitted). McCord and the Auditor appealed, and the Court of Appeals affirmed the trial court. Marion Cnty. Auditor v. Sawmill Creek, LLC, 938 N.E.2d 778 (Ind.Ct.App.2010). We granted transfer and now reverse the trial court.
The trial court entered special findings and conclusions according to
When an owner of real estate fails to pay property taxes, the property may be subject to sale in settlement of the delinquent taxes.
In Flowers, the State of Arkansas sought to recover the unpaid property taxes on a house owned by Gary Jones. Id. at 223-24, 126 S.Ct. at 1712-13, 164 L.Ed.2d at 424. Jones was sent notice by certified mail to the address of the house. Id. Jones, however, was not living in the house, having separated from his wife (who still resided there). Id. The certified letter was returned, stamped “unclaimed.” Id. The notice was later published in the newspaper. Id. When a bid was submitted for the purchase of the home, the notice was again sent to the house via certified mail addressed to Jones. Id. The notice was again returned, stamped “unclaimed.” Id. This was the extent of the effort to notify Jones of the delinquent taxes and pending sale. See id. The house was sold, the redemption period expired, and the purchaser, Linda Flowers, “had an unlawful detainer notice delivered to the property.” Id. This notice was apparently executed by personal service on Jones’ daughter who then conveyed the news to Jones. Id. Jones brought suit alleging a violation of due process. Id.
The Court ruled in favor of Jones, holding that, “when mailed notice of a tax sale is returned unclaimed, the State must take additional reasonable steps to attempt to provide notice to the property owner before selling his property, if it is practicable to do so.” Id. at 225, 126 S.Ct. at 1713, 164 L.Ed.2d at 425. The Court stated that “[i]n response to the returned form suggesting that Jones had not received notice that he was about to lose his property, the State did nothing.” Id. at 234, 126 S.Ct. at 1718, 164 L.Ed.2d at 430-31. This, the Court opined, violated due process because “there were several reasonable steps the State could have taken.” Id. Given that the “notice required will vary with circumstances and conditions,” id. at 227, 126 S.Ct. at 1714, 164 L.Ed.2d at 426 (quoting Walker v. City of Hutchinson, 352 U.S. 112, 115, 77 S.Ct. 200, 202, 1 L.Ed.2d 178, 182 (1956)) (internal quotation marks omit-
The Court relied on Mullane for the standard: “when notice is a person‘s due . . . [t]he means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it.” Id. at 229, 238, 126 S.Ct. at 1715, 1721, 164 L.Ed.2d at 427, 433 (alteration in original) (quoting Mullane, 339 U.S. at 315, 70 S.Ct. at 658, 94 L.Ed. at 874) (internal quotation marks omitted). Under this imperative, the Court concluded “that someone who actually wanted to alert Jones that he was in danger of losing his house would do more when the attempted notice letter was returned unclaimed, and there was more that reasonably could be done.” Id. at 238, 126 S.Ct. at 1721, 164 L.Ed.2d at 433. But that “[w]hat steps are reasonable in response to new information depends upon what the new information reveals.” Id. at 234, 126 S.Ct. at 1718, 164 L.Ed.2d at 431. The Court thus reiterated that “[i]t is not our responsibility to prescribe the form of service that the [government] should adopt.” Id. at 234, 238, 126 S.Ct. at 1718, 1721, 164 L.Ed.2d at 430, 433 (alteration in original) (quoting Greene v. Lindsey, 456 U.S. 444, 455 n. 9, 102 S.Ct. 1874, 1880 n. 9, 72 L.Ed.2d 249, 258 n. 9 (1982)) (internal quotation marks omitted). Rather, “[i]t suffices for present purposes that we are confident that additional reasonable steps were available,” id. at 238, 126 S.Ct. at 1721, 164 L.Ed.2d at 433, and “the State did—nothing,” id. at 234, 126 S.Ct. at 1718, 164 L.Ed.2d at 430.
The Court‘s decision in Flowers was based upon the analytical framework provided by Mullane and reinforced by Dusenbery v. United States, 534 U.S. 161, 122 S.Ct. 694, 151 L.Ed.2d 597 (2002). Flowers, 547 U.S. at 223, 226, 229, 238, 126 S.Ct. at 1712, 1713-14, 1715, 1720-21, 164 L.Ed.2d at 423, 425, 427, 433; see also Dusenbery, 534 U.S. at 167, 122 S.Ct. at 699, 151 L.Ed.2d at 605 (“We think Mullane supplies the appropriate analytical framework.“). In fact, the Court specifically “disclaim[ed] any new rule that is contrary to Dusenbery and a significant departure from Mullane.” Flowers, 547 U.S. at 238, 126 S.Ct. at 1720-21, 164 L.Ed.2d at 433 (internal quotation marks omitted) (responding to the dissenting opinion of Justice Thomas). The Court‘s decision in Flowers thus informs the rule provided by Mullane but does not alter it. Due process, therefore, “requires balancing the ‘interest of the State’ against ‘the individual interest sought to be protected by the Fourteenth Amendment.‘” Id. at 229, 126 S.Ct. at 1715, 164 L.Ed.2d at 427 (quoting Mullane, 339 U.S. at 314, 70 S.Ct. at 657, 94 L.Ed. at 873). The notice must be “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Mullane, 339 U.S. at 314, 70 S.Ct. at 657, 94 L.Ed. at 873. “The means employed must be such as one de-
In the present case, regarding the Auditor‘s attempt to notify Sawmill (Saw Creek), the trial court found, in sum: (1) that three certified letters were mailed to the Dandy Trail address each of which were returned; (2) that a title search was conducted on the Property and neither the Indiana Secretary of State nor “any business listing” revealed Saw Creek; and (3) that notice was published “in the newspaper, on the Auditor‘s website and on a bulletin board outside the Clerk‘s office.” Findings of Fact, Conclusions of Law, and Judgment, Appellants’ App‘x at 18-19. Based upon this, the trial court concluded “that the notices of the tax sale of the Property and of Sawmill‘s right to redeem . . . were constitutionally deficient, so that the issuance of the Tax Deed to McCord violated due process” because “there were additional reasonable steps that the Auditor practicably could have taken to attempt to provide notice to Sawmill before selling the Property.” Id. at 21. We disagree.
As observed above, the attempt to provide notice must be “reasonably calculated, under all the circumstances” in order to be constitutionally sufficient. Mullane, 339 U.S. at 314, 70 S.Ct. at 657, 94 L.Ed. at 873. (emphasis added). Consequently, the review of whether notice efforts satisfied this standard is a fact-intensive process that requires consideration of every relevant fact. See Flowers, 547 U.S. at 227, 126 S.Ct. at 1714, 164 L.Ed.2d at 426 (quoting Walker, 352 U.S. at 115, 77 S.Ct. at 202, 1 L.Ed.2d at 182) (“[W]e have explained that the ‘notice required will vary with circumstances and conditions.’ “); Dusenbery, 534 U.S. at 168-69, 122 S.Ct. at 700, 151 L.Ed.2d at 605-06 (asking whether the notice was “reasonably calculated under all the circumstances” and then reciting the steps taken by the government in an effort to provide notice (internal quotation marks omitted)); Mullane, 339 U.S. at 314-15, 70 S.Ct. at 657, 94 L.Ed. at 873 (“But if with due regard for the practicalities and peculiarities of the case these [notice] conditions are reasonably met, the constitutional requirements are satisfied.“); see also Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 803, 103 S.Ct. 2706, 2714, 77 L.Ed.2d 180, 190 (1983) (O‘Connor, J., dissenting) (discussing the Mullane standard as requiring consideration of the “totality of circumstances“). Thus, every fact relevant to whether the Auditor acted or failed to act “as one desirous of actually informing” Sawmill of the pending tax sale must be considered.
Applying these considerations, we note that the trial court characterized the notices sent to Sawmill as returned “unclaimed,” Findings of Fact, Conclusions of Law, and Judgment, Appellants’ App‘x at 18-19, when they were returned “NOT DELIVERABLE AS ADDRESSED, UNABLE TO FORWARD.”6 Tr. at 75-76,
Under the “practicalities and peculiarities of the case,” Mullane, 339 U.S. at 314, 70 S.Ct. at 657, 94 L.Ed. at 873, we think the Auditor satisfied the due process requirement articulated in Mullane, Dusenbery, and Flowers. When the Auditor mailed the pre-sale notice of tax delinquency and pending tax sale to Sawmill at the address that Sawmill had provided, it was returned, stamped “NOT DELIVERABLE AS ADDRESSED, UNABLE TO FORWARD.” Sawmill Creek‘s Ex. 17. The new information thus presented to the Auditor made re-mailing the notice by first class mail unreasonable. See Flowers, 547 U.S. at 234, 126 S.Ct. at 1718, 164 L.Ed.2d at 431 (“What steps are reasonable in response to new information depends upon what the new information reveals.“). In compliance with the statute in effect at that time, the Auditor also published the notice in multiple ways and mailed the
The Auditor engaged Valley Title to conduct a search that included the chain of title, the records of the Indiana Secretary of State, and the phonebook. Such a search exceeded the constitutional requirements of Mullane and Flowers. See Flowers, 547 U.S. at 236, 126 S.Ct. at 1719, 164 L.Ed.2d at 431 (stating that the government was not “required to go this far” in response to the argument that the phonebook and government records should be searched). Sawmill argues that this search was not sufficient to satisfy due process because there is a difference between “trying to find Sawmill” and “efforts to actually notify Sawmill.” Appellee‘s Br. at 15. But this presumes that the search was conducted for no other purpose than to gather information—that the Auditor would have done nothing with any new information garnered by the search. On the contrary, the Auditor took further action based entirely upon the results of the search: the Auditor mailed three notices to the previous owner of record, Cloverleaf.8 Sawmill contends that because the Auditor knew that Cloverleaf was no longer the owner of record, mailing notice to Cloverleaf “could [not] possibly constitute notice to Sawmill.” Id. at 17. We would, perhaps, agree if the Auditor‘s only attempts at giving notice were sent to Cloverleaf or if the Auditor had otherwise discontinued sending notices to Sawmill (Saw Creek), but this was not the case. The notices mailed to Cloverleaf were sent in addition to the notices sent to Sawmill. Under the unique circumstances of this case, we find the Auditor‘s actions were reasonably calculated to provide notice to Sawmill.
The Auditor was presented with a situation in which the Property was unimproved, bare land, and the owner could not be found. The notices mailed to the address provided by Sawmill were returned with no information as to a new forwarding address. And a search of the chain of title, the records of the Indiana Secretary of State, and the phonebook could not locate a new or alternative address. In fact, the search returned no results, other than the Property, for the entity Saw Creek. Valley Title thus provided the Auditor with the known addresses for the previous owner of record. Concluding that Saw Creek may have existed in name only9 for the purpose of holding the Property for Cloverleaf,10 the Auditor then sent notice to Cloverleaf as well as continuing the attempt to send notice to Sawmill.
Sawmill contends that the additional steps taken by the Auditor were inadequate and that the only reasonable step was to post notice on the Property. In this regard, Sawmill argues that because of the misnomer on the documents relating to the Property, there was only one method of providing notice that was reasonable when the mailed notice was returned. Or, in other words, that because the named owner of record did not exist and was thus untraceable, that the Auditor must post notice on the Property. We cannot agree for two reasons.
First, under the unique circumstances of this case, posting notice on the property was not a reasonable or practicable step for the Auditor to take, and in such circumstances due process does not require the government to do more. See Flowers, 547 U.S. at 234, 126 S.Ct. at 1718, 164 L.Ed.2d at 430-31 (“[I]f there were no reasonable additional steps the government could have taken upon return of the unclaimed notice letter, it cannot be faulted for doing nothing.“). The Auditor knew, from reviewing the tax records, that the Property was unimproved, bare land, thus making posting a suspect form of notice. See Greene, 456 U.S. at 452-53, 102 S.Ct. at 1879, 72 L.Ed.2d at 257 (noting that the efficacy of posting notice is dependent upon the nature of the property posted). The property at issue in Flowers was a residence, and thus posting was “a singularly appropriate and effective way” of providing notice. Flowers, 547 U.S. at 236, 126 S.Ct. at 1720, 164 L.Ed.2d at 432 (quoting Greene, 456 U.S. at 452-53, 102 S.Ct. at 1879, 72 L.Ed.2d at 257) (internal quotation marks omitted). The trial court‘s reliance on this observation from Flowers was misplaced. The Court in Greene stated that “[t]he empirical basis of the presumption that notice posted upon property is adequate to alert the owner or
Second, the notices for approximately 1,800 properties were returned to the Auditor in 2005 alone. The burden of posting notice on that many properties is significant.12 In fact, the Auditor testified that it is not done because it is cost prohibitive: “Going to each of those properties, mapping them out, and getting the signage for each of those properties wouldn‘t be really possible time wise or financially.” Tr. at 94. Were we to accept Sawmill‘s contention that notice must be posted on the property when the owner of record cannot be located through any reasonable means, the Auditor would be placed in an untenable position. This we cannot do.
Conclusion
For the foregoing reasons the judgment of the trial court is reversed. Sawmill‘s motion to set aside the tax deed is denied.
SHEPARD, C.J., and SULLIVAN and DAVID, JJ., concur.
RUCKER, J., dissents with separate opinion.
RUCKER, J., dissenting.
Due in part to the owner‘s inadvertence and lack of attention to detail a four acre lot, for which the owner paid $450,000.00, was sold at a tax sale for $20,000.00. Applying Jones v. Flowers, 547 U.S. 220, 126 S.Ct. 1708, 164 L.Ed.2d 415 (2006) the trial court determined that the Auditor‘s tax sale notice was constitutionally deficient. The Court Appeals agreed and affirmed the trial court. I also agree and would likewise affirm. Therefore I respectfully dissent.
HUNT CONSTRUCTION GROUP, INC., and Mezzetta Construction, Inc., Appellants (Defendants below), v. Shannon D. GARRETT, Appellee (Plaintiff below).
No. 49S02-1106-CT-365.
Supreme Court of Indiana.
March 22, 2012.