RN & DB, LLC v. StewartRN & DB, LLC v. Stewart
For Appellee: James M. Ramlow, Ramlow & Rudbach, PLLP, Whitefish; Randall S. Ogle, Ogle & Worm, PLLP, Kalispell.
JUSTICE BAKER delivered the Opinion of the Court.
¶1 Representing herself in this appeal, Mary Barbara Evans Stewart appeals an order granting summary judgment and a decree quieting title to real property in favor of
- Whether the District Court erred in not applying the statutory homestead exemption to the tax lien sale on Stewart‘s property.
- Whether the District Court should have considered the Flathead County Tax Assessor‘s failure to investigate Stewart‘s complaints regarding irregular tax assessments on Stewart‘s property.
- Whether the District Court deprived Stewart of due process by denying her request for a hearing.
¶2 We affirm.
PROCEDURAL AND FACTUAL BACKGROUND
¶3 Stewart owned and lived on real property located at 6655 Highway 93 South, Lakeside, in Flathead County, Montana (property). The property also is known as Lots 40, 41, and 42 of the unrecorded plat of Mission View Terrace. On April 27, 2001, Stewart recorded a Declaration of Homestead for the property pursuant to
¶4 Beginning in 2006, Stewart failed to pay real property taxes on the property. As a result, on July 15, 2008, the Flathead County Treasurer (County) held а tax lien sale for the delinquent taxes. There was not a purchaser for the tax lien at the sale, so the County was listed as the purchaser of the tax lien pursuant to
¶5 On January 11, 2011, RN & DB paid $5,306.89 to the County Treasurer for the delinquent taxes, penalties, interests, and costs for the year 2007 and thereafter. On that same day, the County Treasurer assigned the County‘s interest in the tax lien to RN & DB.
¶6 On July 6, 2011, RN & DB mailed a Notice That Tax Deed May be Issued to Stewart via certified mail, return receipt requested, to the address disclosed by records at the office of the County Clerk. RN & DB also published the same Notice in the Daily Interlake newspaper.
¶7 Upon recording proof of notice, the County Clerk and Recorder advised RN & DB that it had failed to file proof of notice within 30 days of mailing or publishing the notice as required by statute. In an attempt to start the tax deed application process over, RN & DB then mailed Stewart a second Notice That Tax Deed May be Issued on August 30, 2011. The second notice included an inaccurate amount of tax due and was not published.
¶8 The County issued a tax deed to RN & DB on November 7, 2011. The initial tax deed had an incomplete property description, rendering it defective. The County issued a corrected tax deed on November 28, 2011. RN & DB subsequently filed an action to quiet title to the property. Stewart contested the action on the ground that the tax deed issued to RN & DB was void due to multiple problems with the statutory notice processes. In that action, Stewart was represented by counsel. The court found that RN & DB had failed strictly to comply with the specific statutory requirements for issuance of a tax deed. As a result, the court held that the County Treasurer was without jurisdiction to issue the tax deed and the tax deed was therefore void ab initio. The court dismissed the cause without prejudice on August 22, 2013.
¶9 After continuing to pay the delinquent taxes, RN & DB applied for a tax deed to the property again in late 2013, having paid a total amount of $13,722.69 in taxes, penalties, interest, and costs. This time, Stewart did not contest the tax deed on grounds of рroblems with the statutory notice process. Stewart did not redeem the property within 60 days of the day she received the Notice That Tax Deed May be Issued. The County issued a tax deed to RN & DB on December 9, 2013. RN & DB recorded the tax deed the following day.
¶10 RN & DB then filed a second action to quiet title to the property. Stewart was personally served with the complaint on January 22, 2014. The District Court entered default judgment against Stewart and a decree of quiet title to the property in favor of RN & DB on February 18, 2014. Several
¶11 Stewart filed an answer claiming that her property was exempt from execution or forced sale under Montana‘s homestead laws. RN & DB moved for summary judgment on the ground that there was no forced sale or execution because a tax deed extinguishes a delinquent payer‘s title and creates a fresh title granted directly by the State.
¶12 The District Court granted RN & DB‘s motion for summary judgment, finding no genuine issues of material fact, and entered a decree quieting title in favor of RN & DB on April 30, 2015. Stewart moved for a stay of judgment pending this appeal. The District Court granted the motion. Stewart appeals the judgment and decree of quiet title.
STANDARDS OF REVIEW
¶13 We review summary judgment rulings de novo, applying the criteria of
¶14 We review a district court‘s decision to deny a hearing on a summary judgment motion for an abuse of discretion. Miller v. Goetz, 2014 MT 150, ¶ 9, 375 Mont. 281, 327 P.3d 483. A court abuses its discretion when it acts arbitrarily, without employment of conscientious judgment, or exceeds the bounds of reason resulting in substantial injustice. Dollar Plus Stores, Inc., v. R-Mont. Assocs., L.P., 2009 MT 164, ¶ 15, 350 Mont. 476, 209 P.3d 216 (citation omitted).
DISCUSSION
¶15 1. Whether the District Court erred in not applying the statutory homestead exemption to the tax lien sale on Stewart‘s property.
¶16
A homestead is subject to execution or forced sale in satisfaction of judgments obtained:
(1) on debts secured by construction or vendor‘s liens upon the premises;
(2) on debts secured by mortgages on the premises, executed and acknowledged by the husband and wife or by an unmarried claimant; or
(3) on debts secured by mortgages on the premises, executed and recorded before the declaration of homestead was filed for record.
¶17 The District Court concluded that the homestead exemption provides no protection from the sale of a tax lien. Based on
¶18 In concluding that the homestead exemption did not protect Stewart from a tax lien sale, the District Court cited
¶19 Stewart argues that because property tax liens are not explicitly excepted from the homestead exemption by
¶20 Stewart argues that the District Court erred in applying Collier because Collier concerned a party who had a lifе estate instead of a homestead declaration. Stewart posits that there is “no genuine causal relationship” between homestead law and life estate law because a homestead “provides specific and exact exemptions from execution or forced sale,” while a life estate “provides no immunity under law to execution upon the property.”
¶21 RN & DB supports the District Court‘s observation that “it makes sense” not to grant exemptions for tax debts, asserting that the purpose of tax lien statutes is to provide for a reliable method of collecting property taxes. RN & DB argues that the Legislature could not have intended to allow property owners “to opt out of the property tax system simply by filing homestead claims.” RN & DB emphasizes that nothing in the homestead statutes’ legislative history mentions an intent to abrogate the enforcement of property tax liens, RN & DB also points out that nothing in the tax lien statutes’ legislative history suggests an intent to exempt homestead property from tax liens.
¶22 Title 15, Chapters 16 through 18, of the Montana Code set forth Montana‘s property tax lien and tax deed enforcement procedures. This Court has held that the statutory procedures for the issuance of a tax deеd require strict technical compliance. Showell v. Brosten, 2008 MT 261, ¶ 14, 345 Mont. 108, 189 P.3d 1210 (citation omitted).
¶23 A person purchases a tax lien by paying the delinquent taxes, together with penalties, interest, and costs.
¶24 Sections
(1) Not more than 60 days prior to and not more than 60 days following the expiration of the redemption period provided in
15-18-111 , a notice must be given as follows:...
(b) for each property for which there has been issued a tax lien sale certificate to a purchaser other than the county or for which an assignment has been made, the purchaser or assignee, as appropriate, shall notify all persons considered interested parties in the property, if any, that a tax deed will be issued to the purchaser or assignee unless the property tax lien is redeemed prior to the expiration date of the redemption period.
(4)(a) The notice required under subsections (1) and (2) must be made by certified mail, return receipt requested, to each interested party and the current occupant, if any, of the рroperty ....
¶25 If a tax lien is not redeemed in the time allowed, “the county treasurer shall grant the purchaser a tax deed for the property.”
¶26 In a quiet title action, a tax deed purchaser may obtain an order from the court directed to the “true owner“—the person who owns the property; has an interest in or lien upon the property; has a right to redeem the property; or has rights hostile to the tax title.
(A) the amount of all taxes, interest, penalties, and costs that would have accrued if the property had been regularly and legally assessed and taxed as the property of the true owner and was about to be redeemed by the true owner; and
(B) the amount of all sums reasonably paid by the purchaser following the order and after 3 years from thе date of the tax lien sale to preserve the property or to make improvements on the property while in the purchaser‘s possession, as the total amount of the taxes, interest, penalties, costs, and improvements is alleged by the plaintiff and as must appear in the order; or
(ii) show cause on a date to be fixed in the order, not exceeding 30 days from the date of the order, why the payment should not be made.
¶27 Tax deed proceedings require strict compliance with statutory requirements because they implicate an owner‘s fundamental interests. Hansen Trust v. Ward, 2015 MT 131, ¶ 26, 379 Mont. 161, 349 P.3d 500. In Hansen Trust, although the property at issue was not hоmestead property, we
¶28 In contrast, a tax imposed on real property and unpaid when due becomes a lien against the property.
¶29 The owner is given notice and has the opportunity to redeem the lien at multiple steps throughout the process. Sections
¶30 We analyzed the effect of a tax deed on former titles to property in Collier. In Collier, a life estate holder failed to pay his property taxes and Rosеbud County acquired a tax deed to the property. This Court held that Rosebud County‘s title was complete and eliminated the remainder interests held by the life estate holder‘s children. We held that the “tax deed created a new title, extinguishing all former titles and liens not expressly exempted from its operation ....” Collier, ¶ 16. Accord McDonald v. Grassle, 228 Mont. 25, 30, 740 P.2d 1122, 1125 (1987) (stating, “a tax deed is not derivative but creates a new title in the nature of an independent grant from the sovereign, extinguishing all former titles and liens not expressly exempted from its operation“). Here, Stewart similarly failed to pay property taxes and the County acquired a tax lien on her property. The tax lien salе certificate did not grant title to the property either to the County or to RN & DB; as such, there
¶31 Based on the foregoing discussion, we conclude that the homestead exemption statutes set forth in
¶32 A tax is “an enforced contribution from the people” for the purpose of raising “the necessary revenue for the support of the government and the consequent security of the people in the possession of their property.” State ex rel. Tillman, 101 Mont. at 181, 53 P.2d at 110. “Failure to pay taxes is a serious breach of an individual‘s social obligations. Public policy requirements for prompt payment of taxes assessed against property give rise to drastic measures to enforce collection of taxes that are delinquent.” Powell, supra, at 39-37. Through the Legislature‘s enactment of property tax lien laws, it has established the policy of the state “to collect the taxes, not to divest the owner of the property to which the lien for taxes attachеs.” State ex rel. Billings, 91 Mont. at 79, 5 P.2d at 564. “Yet, if the tax is not paid promptly, the taxing authority may enforce its lien by a legal taking of the property or by sale of the property. Clearly the need for the individual to pay its obligations is strong, so the remedy, if such obligations are not paid, is powerful.” Powell, supra, at 39-37. Montana law reflects this principle:
The sale of property for taxes is a device to compel the owner to pay his share of the burden of government. If he does not pay within the time allowed, his property will be sold subject to redemption, but with added burdens consisting of penalties, interest and costs.
State ex rel. Billings, 91 Mont. at 79, 5 P.2d at 564. The effect of these statutes may seem harsh when applied, as here, to deprive a hоmesteader of the full value of her property over the non-payment of a relatively small amount of tax liability. In a tax deed case, however, “a citizen‘s right to own property is challenged by the government and the assignee of a tax sale certificate, almost always for a payment by the assignee to the government of far less than the property‘s full value.” Isern v. Summerfield, 1998 MT 45, ¶ 9, 287 Mont. 461, 956 P.2d 28. By the same token, “[p]ayment of the underlying tax delinquency terminates the lien as well as sale of the property in a tax lien enforcement action.” Powell, supra, at 39-42.
¶33 The imposition of taxes and the administration of tax deeds are exclusively creatures of statute.
¶35 Stewart claims that RN & DB made erroneous reports to the County Tax Assessor‘s Office resulting in “an exorbitant increase” in her property taxes. Stewart contends that in or around May 2013, she reported these alleged “irregular” assessments to the County but that the Tax Assessor‘s Office “disregarded her request.” Stewart states that she reported her assessment disрute to the County Tax Assessor‘s Office, rather than to the Montana Department of Revenue, because the taxes in dispute were issued by the County. Stewart argues that the County should not have issued a tax deed “while the irregular assessment was under contest.”
¶36
¶37 RN & DB contends that Stewart‘s arguments on the value of the tax assessments cannot be the basis for denying the validity of the tax lien and tax deed because she “fail[ed] to follow the statutory and administrative procedure for objecting to appraisals and property classifications.” RN & DB further contends that
¶38 The District Court concluded that Stewart had not properly reported irregular tax assessments. The court relied on the affidavit of Holly Dale, Lead Property Valuation Specialist for the Office of the Montana Department of Revenue, who testified that the assessments for the property were in accordance with Montana law and with other tax assessment notices for all other property in the County and in the State of Montana. Dale testified that Stewart “has never filed a request for informal review or an appeal on the property ....”
¶39 Based on our review of the record, we conclude that Stewart failed to object timely or properly to the tax assessment on her property. There is no evidence that Stewart submitted an objection on written or electronic forms provided by the Department of Revenue within 30 days after receipt of the notice of appraisal pursuant to
¶40 3. Whether the District Court deprived Stewart of due process by denying her request for a hearing.
¶41 Stewart argues that the District Court deprived her of due process when it “deliberately disregarded” her request for a
¶42 RN & DB argues that the District Court did not deny Stewart‘s right to due process because 1) Stewart failed to comply with Rule 56(c)(2) hearing request requirements and 2) because the testimony Stewart sought to introduce “could not have affected the validity of the County‘s tax lien purchase, its subsequent assignment to [RN & DB], or the tax deed issued to [RN & DB].” RN & DB argues that Stewart‘s hearing request was untimely because she failed to follow the District Court‘s specific instructions—requiring parties to include a proposed Order and self-addressed, stamped envelope—for making a hearing request. RN & DB also points out that Rule 56 “does not authorize live testimony” and argues that the most favorable testimony the County Tax assessor could have offered “would be the same as what Exhibit B to [Stewart‘s] Brief avers: That she appeared at [the County Tax Assessor‘s] office in May 2013 to complain of some ‘fees assigned to her tax bill.‘”
¶43
¶44 A district court may grant a motion for summary judgment without first holding a hearing. Chapman v. Maxwell, 2014 MT 35, ¶ 11, 374 Mont. 12, 322 P.3d 1029 (citing SVKV L.L.C. v. Harding, 2006 MT 297, ¶ 37, 334 Mont. 395, 148 P.3d 584). We have held that “there may be an occasion where the movant is so ‘clearly entitled’ as a matter of law to summary judgment that the district court may dispense with the need for a hearing.” Richards v. Cnty. of Missoula, 2009 MT 453, ¶ 17, 354 Mont. 334, 223 P.3d 878 (citing Cole, 236 Mont. at 419, 771 P.2d at 101). Thus, we will not put a district court in error for failing to hold a summary judgment hearing if the hearing testimony would not raise any issue of material fact. Richards, ¶¶ 25-26 (holding that a summary judgment hearing was not necessary аnd “would not have added anything to the proceedings” because defendant‘s “one lone memorandum” would not raise an issue of material fact); Dollar Plus, ¶ 39 (holding that the district court did not abuse its discretion in granting summary judgment without first holding a hearing because defendant gave “no indication of what
evidence it would have presented at the hearing that would have helped it establish a genuine issue of material fact“).
¶45 RN & DB filed its motion and brief for summary judgment on December 18, 2014. On December 22, 2014, the District Court ordered a briefing schedule, requiring briefs and affidavits from Stewart by January 12, 2015, and reply briefs and affidavits by RN & DB by January 27, 2015. Stewart filed a response brief and affidavit on January 12, 2015, objecting to the summary judgment motion and requesting a hearing.
¶46 Although we agree with Stewart that she did not waive her right to request a hearing, we conclude that the District Court did not abuse its discretion in denying her request because there was “no indication that the evidence [Stewart] would have presented at the hearing would have helped [her] establish a genuine issue of material fact.” Dollar Plus, ¶ 39. Stewart claims that testimony from the County Tax Assessor‘s Office would have raised an issue of material fact by showing that she had disputed the irregular assessments to that office. But, even if Stewart‘s
¶47 The testimony Stewart sought to introduce raised no genuine issue of material fact and RN & DB was “clearly entitled” to judgment as a matter of law. Richards, ¶ 17 (citing Cole, 236 Mont. at 419, 771 P.2d at 101). Accordingly, the District Court did not abuse its discretion in granting summary judgment without holding a hearing.
CONCLUSION
¶48 For the foregoing reasons, the District Court‘s judgment and decree of quiet title are affirmed.
CHIEF JUSTICE MCGRATH, JUSTICES COTTER, WHEAT and RICE concur.