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Properties v. Fairway Gardenhomes, LLC

Supreme Court of Louisiana

June 27, 2017

CENTRAL PROPERTIES
v.
FAIRWAY GARDENHOMES, LLC, ET AL. HUSKER PARTNERS/US BANK D/B/A HUSKER PARTNERS
v.
FAIRWAY GARDENHOMES, LLC, ET AL. HUSKER PARTNERS/US BANK D/B/A HUSKER PARTNERS
v.
FAIRWAY GARDENHOMES, LLC, ET AL.

         ON WRIT OF CERTIORARI TO THE COURT OF APPEAL, FIRST CIRCUIT, PARISH OF ST. TAMMANY

          Guidry, Justice. [*]

         In this consolidated case, the tax sale purchasers of three condominium units brought actions to quiet title following the tax debtor's failure to pay ad valorem taxes on the units. The district court found the tax sale purchasers had provided insufficient notice of the right to redeem to the mortgagee for the units, denied the petitions to quiet title, and afforded the defendant mortgagee thirty days to redeem the properties. A majority of the court of appeal affirmed on different grounds, finding that the failure of the tax collector to provide post-sale written notice of the tax sale to the mortgagee required the tax sales to be set aside, whether or not the tax sale purchaser had effected such post-sale notice on the mortgagee. Essentially the court held that a private actor could not duly notify an interested party of its redemption rights, but that the tax collector itself, lest the tax sale be deemed null and void, must effect such post-sale notice given the mandatory language of the statute. Thus, the issue presented is whether the post-sale notice required by La. Rev. Stat. 47:2122(4) may be effectuated either by the tax collector under La. Rev. Stat. 47:2156(B) or by the tax sale purchaser under La. Rev. Stat. 47:2156(A). We granted the writ application to answer this narrow question under the 2008 revisions to Title 47 of the Louisiana Revised Statutes governing the collection of ad valorem taxes, more specifically the statutes governing tax sales and redemptions, La. Rev. Stat. 47:2141 et seq. After our review of the applicable statutes, we find the court of appeal erred in finding the failure of the tax collector, though mandated to do so by La. Rev. Stat. 47:2156(B), to mail or attempt to mail post-sale written notice of the tax sales to the mortgagee required the tax sales to be set aside. Instead, we find the plain language of the governing statutes allows post-sale notice to the interested tax party to be provided by a tax sale purchaser in accordance with La. Rev. Stat. 47:2156(A), and thus the requirement that the interested party must be duly notified of the tax sale under La. Rev. Stat. 47:2122(4) could be satisfied by the tax sale purchaser. Accordingly, we reverse the judgment of the court of appeal, and remand the case to that court for consideration of the issues pretermitted by the court of appeal's reasoning.[1]

         FACTS AND PROCEDURAL HISTORY

         The underlying facts relevant to our decision today are not in dispute. The subject properties, Units 13, 14, and 15, were owned by Fairway Gardenhomes, L.L.C. ("Fairway"), and located in Covington, Louisiana. In January 2009, the mortgagee, Resource Bank, granted a loan to Laporte Family Properties, L.L.C. ("Laporte"), which was secured by a mortgage covering the subject properties. The mortgage was recorded in the St. Tammany Parish public records on January 9, 2009.

         In 2009, Fairway failed to pay the ad valorem taxes due on the three properties. As a result of the tax delinquency, a tax sale was conducted by the Sheriff and Ex-Officio Tax Collector for St. Tammany Parish (the tax collector) on June 23, 2010. The properties were sold to tax sale purchasers, Central Properties ("Central") and Husker Partners/U.S. Bank, d/b/a Husker Partners ("Husker"), for the amount of taxes, interest, and costs due on each condominium unit. Individual tax sale certificates were issued to Central for unit 14, and Husker for units 13 and 15.

         The tax sale certificates, recorded in the St. Tammany Parish public records on July 8, 2010, stated the owner, Fairway, had three years from the date of recordation, or until July 8, 2013, to redeem the subject properties. The tax sale certificates did not refer to the mortgagee's, Resource Bank's, interests in the subject properties. The tax collector mailed pre-sale and post-sale notices to Fairway, but those notices were returned unclaimed. The parties stipulated the tax collector did not send any pre-sale or post-sale notices to the mortgagee, Resource Bank.

         On October 25, 2012, through certified and regular First Class mail, the tax sale purchasers, Central and Husker, mailed multiple notices of the right to redeem the tax sales of the properties to Fairway, Laporte, and Resource Bank. Fairway and Laporte each received by certified mail the notices of the right to redeem, through their registered agent for service of process, Leroy J. Laporte, Jr., on October 29, 2012. The return receipts for right to redeem notices sent to Resource Bank were signed by a person with the initials "JL" on October 27, 2012, and the notices were mailed to Resource Bank's main office address as noted on the recorded mortgage documents. Resource Bank, however, disputed receipt of the notices and denied there was any employee working at Resource Bank in 2012 who had the initials of "JL".

         None of the subject properties was timely redeemed by the July 8, 2013 deadline for redemption. Thereafter, on December 18, 2013, Central and Husker filed petitions to quiet their tax titles on the properties, alleging Fairway, Laporte, and Resource Bank were all duly notified of their statutory rights to redeem the subject properties more than six months prior to the expiration of the three-year redemptive period. Resource Bank timely answered the petitions and filed reconventional demands against Central and Husker, seeking to invalidate the tax sale certificates as nullities due to the lack of pre-sale notices, as well as insufficient or unreasonable post-sale notices of its right to redeem. Resource Bank further alleged that, to the extent the 2008 revision to the law governing tax sale notices may have limited its right to annul the sales for lack of pre-sale notice, the law was unconstitutional.

         At the bench trial, the parties entered certain stipulations, including that: (1) the subject properties had not been timely redeemed, (2) Resource Bank made no formal statutory request for notice, and (3) no pre-sale notice of either the tax delinquencies or tax sales was given to Resource Bank. Thereafter, the district court concluded Central and Husker's post-sale notices of the right to redeem mailed to Resource Bank were insufficient. The district court, as the court of appeal majority acknowledged, seemingly focused on the credibility of Resource Bank's vice president's testimony that there was no record of the notices ever being received by Resource Bank. Specifically, the district court reasoned:

[T]he Court is of the opinion that notice was not sufficient in this case. Specifically, the Court gave great consideration to the property rights held by Resource Bank through its security interest evidenced by the mortgage. Bearing in mind that the state of the law at the time required no pre-sale notice be given, the Court feels that Plaintiffs' efforts to notify Defendants of the tax sale and redemption were not reasonable. Though Plaintiffs had no duty to seek out Resource Bank's registered agent, that person's identity was easily discoverable either online or by a simple phone call. The Court also found the testimony of Mr. Ferrer persuasive as to lack of notice. The Court is of the opinion that the initials "J.L." – and nothing else – as is displayed on the return receipts of the notice letters, could be used just as easily to prove that the letters were not received by Resource Bank. Therefore, the Court attaches little or no weight to the "green cards" in the record as evidence of notice.

         The district court declined to make a ruling on the constitutionality of the 2008 revision as it related to the lack of pre-sale notification to Resource Bank. Ultimately, the district court denied Central and Husker's petitions to quiet tax title and allowed Resource Bank thirty days to redeem the subject properties. [2]

         Central and Husker suspensively appealed, maintaining the district court legally erred when it focused on whether Resource Bank had actually received the post-sale notices of the right to redeem. Resource Bank answered the appeal, challenging the district court's failure to grant its reconventional demands seeking to annul the tax sales on the basis it was undisputed Resource Bank was not given any pre-sale notice. Further, Resource Bank argued that Central and Husker's efforts to provide post-sale notice of Resource Bank's right to redeem were unreasonable or insufficient. Central and Husker maintained on appeal that, under the 2008 statutory revision, which became effective January 1, 2009, any issues with pre-sale notice requirements may be cured by the sending of post-sale redemption notices. Resource Bank countered that, if the 2008 revision is interpreted to have eliminated pre-sale notice requirements for mortgagees, the revision violates due process of law. Resource Bank further argued that post-sale notice of the right to redeem cannot cure the lack of pre-sale notice.

         The court of appeal majority affirmed the district court's judgment, but did not do so based on any of the arguments made by the parties. Central Properties v. Fairway Gardenhomes, LLC, 16-0111 (La. App. 1 Cir. 9/16/16), 204 So.3d 240. Instead, with regard to post-sale notice, the court relied on La. Rev. Stat. 47:2156, entitled "Post-sale notice," which requires that the post-sale notice be sent by the tax collector to tax sale parties, including any mortgagees identified in the public records, so long as the mortgagee's interest was filed prior to the filing of the tax sale certificates. The majority focused on La. Rev. Stat. 47:2156, and the version effective at the time of the 2010 tax sales provided in pertinent part:

A. Within the applicable redemptive period, the tax sale purchaser may send a written notice to any or all tax sale parties notifying ...

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