The Estate of Timothy J. Bartruff and All Parties of Interest of Public Record v. Dennis C. Hain and Judith A. Hain ( 2014 )

Pursuant to Ind. Appellate Rule 65(D), this
Memorandum Decision shall not be regarded
as precedent or cited before any court except Sep 29 2014, 10:02 am
for the purpose of establishing the defense of
res judicata, collateral estoppel, or the law of
the case.
ATTORNEY FOR APPELLANT ATTORNEY FOR APPELLEES:
THE ESTATE OF TIMOTHY J.
BARTRUFF:
JEFFREY A. GOLDING FRED W. GRADY
Valparaiso, Indiana Valparaiso, Indiana
IN THE
COURT OF APPEALS OF INDIANA
THE ESTATE OF TIMOTHY J. BARTRUFF )
and ALL PARTIES OF INTEREST OF )
PUBLIC RECORD, )
)
Appellants-Respondents, )
)
vs. ) No. 64A05-1311-MI-540
)
DENNIS C. HAIN and JUDITH A. HAIN, )
)
Appellees-Petitioners. )
APPEAL FROM THE PORTER CIRCUIT COURT
The Honorable Mary R. Harper, Judge
Cause No. 64C01-1010-MI-10384
September 29, 2014
MEMORANDUM DECISION - NOT FOR PUBLICATION
KIRSCH, Judge
The Estate of Timothy J. Bartruff (“the Estate”) appeals the trial court’s denial of
its motion to vacate a judgment that granted Dennis C. Hain and Judith A. Hain a tax deed
for real property that was previously owned by Timothy J. Bartruff, but sold to the Hains
at a tax sale auction. On appeal, the Estate questions the form and manner by which
Bartruff was notified of his rights to redeem the real estate and raises the following restated
issues:
I. Whether the language of the “Notice of Tax Sale, Redemption Rights,
and Date of Application for Tax Deed” (“Redemption Notice”) and
the “Notice of Application for Tax Deed” (“Tax Deed Notice”) failed
to substantially comply with Indiana Code sections 6-1.1-25-4.5 and
4.6 and, therefore, precluded the trial court from granting the Hains a
tax deed on the Bartruff property; and
II. Whether the Redemption Notice and the Tax Deed Notice were
reasonably calculated, under all the circumstances, to apprise Bartruff
of the sale of the property and issuance of the tax deed to the Hains
and, therefore, complied with due process concerns.
We affirm.
FACTS AND PROCEDURAL HISTORY1
Bartruff owned a parcel of real estate—including a house—located at 171 East 700
South, Kouts, Indiana (“the property”), which he inherited from his father, mortgage free,
in late 2003 or early 2004. Bartruff remained current on property taxes until July 2008
when he was arrested on a federal warrant in Missouri, where he had been living for about
five years. “[A] superseding indictment in the case of “United States versus Timothy
1
The transcripts of the June 20, 2013 hearing and August 22, 2013 hearings were submitted in two
separate volumes. Because we cite to only the June 2013 hearing, we will use the designation “Tr.” for that
volume.
2
Bartruff” was filed.” Tr. at 34. “[P]art of that superseding indictment was an application
for forfeiture of this particular property by the United States Government.” Id. On April
29, 2010, Bartruff entered a plea of guilty to several counts of the indictment and, on July
11, 2011, was sentenced to thirty years in prison. A forfeiture of the property was “ordered
by Judge Moody in July of 2011.” Id. at 35. When Bartruff died three weeks later, the
forfeiture order was vacated, and the “whole case became moot and was dismissed.” Id. at
35. From his July 2008 arrest until his August 2011 death, Bartruff did not pay any taxes
on the property.
Meanwhile, Bartruff’s son, Junior,2 who was also arrested in July 2008, was released
from custody in January 2009. At that time, Junior began living with his girlfriend at the
property. Junior conceded that mail was regularly delivered to the property during the time
he lived there.
On October 1, 2010, the trial court issued a judgment for unpaid taxes, penalties,
and interest on the property and listed it for tax sale in Porter County. The Hains,
represented by attorney Fred Grady, purchased the property at public sale on October 20,
2010 and were issued a tax sale certificate. At the time of the sale, the Porter County
Auditor listed Bartruff as the property’s owner of record. Notwithstanding Bartruff’s
incarceration, the Auditor’s records listed his address as the property’s address. In
November 2010, Junior and his girlfriend turned off the utilities, left no forwarding
address, and moved from the property to Kentucky.
2
Father and son were both named Timothy J. Bartruff. While the Estate refers to the son as Junior,
we note that this is not a legal designation because the two men have different middle names. Tr. at 5.
3
On March 18, 2011, the Hains sent the Redemption Notice to Bartruff at the property
address. The Notice provided that the property had been sold due to unpaid taxes, that the
Hains had purchased the property on October 20, 2010, and that the owner could pay and
redeem the property prior to October 20, 2011.3 The Redemption Notice contained two
defects—an incomplete parcel number and inconsistent redemption dates.
The Redemption Notice was sent by certified mail, and the post office made two
attempts to deliver it. On April 11, 2011, the Hains’ attorney Grady received a “return
receipt,” which noted, “Return to Sender, Unclaimed, Unable to Forward.” Id. at 51. On
May 31, 2011, the Hains sent the Redemption Notice a second time to the same address;
this time, it was sent first class mail. There is no evidence in the record before us that the
Redemption Notice sent by first class mail was returned.
According to the records of the Porter County Auditor, Bartruff was the owner of
record of the property during the redemption period which ran from October 20, 2010—
the date the Hains purchased the property—until October 20, 2011, when the redemption
period expired. During the one-year redemption period, the Auditor’s records were not
updated to reflect that Bartruff had been in federal custody since July 2008 or that he died
in federal custody in August 2011—a date that fell two months prior to the end of the
redemption period.
3
Every notice that the Hains sent to Bartruff was also sent to Medical Specialists P.C., c/o Scot L.
Burke; Paul Timmons, c/o David A. Foelber; Porter County Clerk; and State of Indiana, Clerk’s Office.
While the latter three received the notices, Medical Specialists’ was returned marked “Not Deliverable.”
Appellant’s App. at 55, 59, 65, 71. On appeal, the Estate discusses only the notices sent to Bartruff.
4
On October 28, 2011, the Hains, filed with the trial court a document entitled,
“Verified Petition for Tax Deed.” Id. at 44-47. That same day, they sent the Tax Deed
Notice to Bartruff at the Kouts address via certified mail and also by first class mail.4
Appellee’s App. at 7-11. After the United States Post Office was unsuccessful in its two
attempts to deliver the certified letter, it was returned to attorney Grady as “unclaimed.”
Id. at 9. The first class letter was likewise returned to Grady with the notations, “moved
left no address,” “unable to forward,” and “return to sender.” Id. at 11.
The Hains paid all the taxes, assessments, penalties, and costs accrued against the
property. On December 9, 2011, the trial court ordered the Porter County Auditor to issue
the Hains a tax deed for the property. Id. at 23. The Auditor executed the tax deed (“Tax
Deed”) on January 19, 2012, which conveyed the property to the Hains. The Tax Deed
was recorded in the Porter County Recorder’s Office on February 6, 2012.
In July 2012, a friend informed Junior, via Facebook, that the Kouts property was
for sale. Junior contacted Jeffrey A. Golding to serve as Junior’s attorney in this matter.
On August 1, 2012, the Estate was opened by its personal representative, Clark Holesinger.
This case commenced on August 8, 2012, when the Estate filed a Motion to Vacate
Judgment. In that motion, the Estate maintained that merely mailing the Redemption
Notice to Bartruff was not adequate to inform him about the sale and redemption rights
when Bartruff was in prison and died before the end of the redemption period.
4
The Tax Deed Notice contained effectively the same language as the Redemption Notice.
5
On May 16, 2013, the Hains filed a Response to the Motion to Vacate Judgment. 5
Evidence was submitted during a June 20, 2013 hearing. The parties filed stipulated facts
and exhibits, and a supplemental hearing was held on August 22, 2013. On October 3,
2013, the trial court denied the Estate’s Motion to Vacate Judgment, finding: (1) the Hains
had sent the notices to the address listed in the records of the Porter County Auditor; and
(2) the manner of notification was constitutionally adequate because the notices were sent
by certified mail, “and when that failed, by first class mail as well.” Appellant’s App. at
39. Noting that the Hains had no duty to search the internet for Bartruff’s name after the
notices were returned undeliverable, the trial court concluded that the Hains’ “attempts to
give notice to [Bartruff] were reasonably calculated and sufficient under Indiana Code § 6-
1.1-25-4.5(d) and § 6-1.1-25-4.6(a)(2).” Id. at 40. The Estate now appeals.
DISCUSSION AND DECISION
The Estate contends that the form and manner by which Bartruff was notified of the
sale of the property and right of redemption did not substantially comply with statutory
requirements or constitutional due process requirements.6
5
This response is not in the record before us.
6
The Estate also asserts that Bartruff’s heirs were not provided with notice after his death, which
was on a date that fell two months prior to the termination of the redemption period. Appellee’s Br. at 1-2.
Pursuant to Indiana Code sections 6-1.1-25-4.5 and 4.6, a purchaser of property sold at a tax sale is entitled
to a tax deed once the purchaser has complied with various conditions. One of those conditions is that the
purchaser must give notice to the owner of record at the time of the sale. Junior was not an owner of record
at the time of the sale; therefore, Junior was not entitled to notice.
6
I. Substantial Statutory Compliance
“‘A tax sale is purely a statutory creation, and material compliance with each step
of the statute is required.’” Iemma v. JP Morgan Chase Bank, N.A., 992 N.E.2d 732, 738
(Ind. Ct. App. 2013) (quoting Nieto v. Kezy, 846 N.E.2d 327, 337 (Ind. Ct. App. 2006)).
“‘While a tax deed creates a presumption that a tax sale and all of the steps leading to the
issuance of the tax deed are proper, the presumption may be rebutted by affirmative
evidence to the contrary.’” Id. (quoting Nieto, 846 N.E.2d at 337). “An order to issue a
tax deed will be given if the court finds that the notices have been provided pursuant to the
statutes.” Id. (citing Diversified Invs., LLC v. U.S. Bank, N.A., 838 N.E.2d 536, 542 (Ind.
Ct. App. 2005), trans. denied). “However, ‘title conveyed by a tax deed may be defeated
if the notices were not in substantial compliance with the manner prescribed’ by the
pertinent statutes.” Id. (quoting Porter v. Bankers Trust Co. of Cal., N.A., 773 N.E.2d 901,
906 (Ind. Ct. App. 2002)).
As our court noted in Iemma, the Indiana Supreme Court has summarized the
procedures for obtaining a tax deed as follows:
A purchaser of Indiana real property that is sold for delinquent taxes initially
receives a certificate of sale. A one-year redemption period ensues. If the
owners fail to redeem the property during that year, a purchaser who has
complied with the statutory requirements is entitled to a tax deed. The
property owner and any person with a “substantial property interest of public
record” must each be given two notices.
The first notice announces the fact of the sale, the date the redemption period
will expire, and the date on or after which a tax deed will be filed (i.e.,
redemption notice). The second notice announces that the purchaser has
petitioned for a tax deed (i.e., notice of petition for tax deed).
7
Iemma, 992 N.E.2d at 738-39 (quoting Tax Certificate Invs., Inc. v. Smethers, 714 N.E.2d
131, 133 (Ind. 1999) (internal citations omitted)).
The Estate contends that the Hains’ Tax Deed was void because the notices did not
substantially comply with Indiana Code sections 6-1.1-25-4.5 and 4.6—statutes governing
tax sales, redemption periods, and petitions for a tax deed. Appellant’s Br. at 4. While the
Estate does not specify the statutes with which the Hains failed to comply, we note that
pursuant to Indiana Code sections 6-1.1-25-4.5 and 4.6, the notices must contain “the date
of expiration of the period of redemption” and the “key number or parcel number of the
tract or real property.” Ind. Code § 6-1.1-25-4.5(e)(12) and (15); Ind. Code § 6-1.1-25-
4.6(a). Here, the property was identified as number 64-16-06-452-024.000; however, the
actual identification number was 64-16-06-452-024.000-013. Appellant’s App. at 49
(emphasis added). Additionally, the notices contained a one-day discrepancy regarding the
redemption date; first, noting that the property had to be redeemed “prior to October 20,
2011,” and later in the same paragraph stating that the property had to be redeemed “on or
before the expiration date of October 20, 2011.” Appellant’s App. at 49 (emphasis added),
50 (emphasis added). The Hains argue, “Although certainly there is nothing to indicate
that this error in format was dispersed intentionally, it is certainly misleading and should
invalidate the Verified Petition for Tax Deed.” Appellant’s Br. at 6.
We begin by noting that the issue of these inconsistencies was not raised in the
Estate’s Motion to Vacate Judgment, during the July 2013 hearing on that motion, or in the
trial court’s Order Denying Respondent’s Motion to Vacate Judgment; therefore, the issue
8
is waived. See Frances Slocum Bank & Trust Co. v. Estate of Martin, 666 N.E.2d 411, 413
(Ind. Ct. App. 1996), trans. denied (“A party who raises an issue on appeal that was not
raised in the trial court waives that issue.”). Waiver notwithstanding, we find that Bartruff
could not have been misled by language in the notices that the Estate contends Bartruff
never received.
Even if Bartruff had received and read the notices, the Estate does not explain how
it was prejudiced by the language discrepancies. Under the facts of this case, such
explanation would not have prevailed. First, the inclusion in the notices of the property’s
legal description and address resolved any confusion regarding what parcel of property was
at issue. Second, the inconsistency of the stated redemption dates, being just one day apart,
was clear on the face of the notices. Hence, it would have been unreasonable for Bartruff
to rely on either date without making a further inquiry as to which date was valid. More
importantly, the Estate does not claim that the failure to redeem the property was the result
of the discrepancy or that Bartruff relied upon or was prejudiced by the discrepancy in any
way. We cannot conclude that either of these scrivener’s errors constitute a failure to
substantially comply with the notice requirements so as to invalidate the tax deed. See In
re Sale of Real Prop. with Delinquent Taxes or Special Assessments, 822 N.E.2d 1063,
1072 (Ind. Ct. App. 2005) (holding that failure to substantially comply with statute could
not be proven where owner of land failed to explain how she was prejudiced by scrivener’s
error in notice of tax sale); see also Anton v. Davis, 656 N.E.2d 1180, 1184 (Ind. Ct. App.
1995) (holding that auditor substantially complied with statute even though notice listed
9
tax sale date as October 3, when sale was actually held on October 17, because the owner
was not prejudiced), trans. denied.
II. Due Process Considerations
Here, the trial court entered special findings and conclusions according to Indiana
Trial Rule 52(A). Accordingly, our standard of review is two-tiered. Marion Cnty. Auditor
v. Sawmill Creek, LLC, 964 N.E.2d 213, 216 (Ind. 2012). We first determine whether the
evidence supports the findings and then whether the findings support the judgment. Id.
“Courts of appeal ‘shall not set aside the findings or judgment unless clearly erroneous.’”
Id. (quoting Ind. Trial Rule 52(A)). “In reviewing the trial court’s entry of special findings,
we neither reweigh the evidence nor reassess the credibility of the witnesses.” Id. (quoting
Stonger v. Sorrell, 776 N.E.2d 353, 358 (Ind. 2002)). The evidence is viewed in the light
most favorable to the judgment, and we will defer to the trial court’s factual findings if they
are supported by the evidence and any legitimate inferences therefrom. Id. at 216-17.
Conversely, legal conclusions are reviewed de novo. Id. at 217 (citing Nichols v. Minnick,
885 N.E.2d 1, 3 (Ind. 2008)). “A judgment is clearly erroneous if it applies the wrong legal
standard to properly found facts.” Id. (quotations omitted).
When an owner of real estate fails to pay property taxes, the property may be subject
to sale in settlement of the delinquent taxes. Sawmill Creek, 964 N.E.2d at 217. “This
action by the state conflicts with the rights of the property owner, thus ‘[b]efore a State
may take property and sell it for unpaid taxes, the Due Process Clause of the Fourteenth
Amendment requires the government to provide the owner “notice and opportunity for
10
hearing appropriate to the nature of the case.”’” Id. (quoting Jones v. Flowers, 547 U.S.
220, 223(2006) (quoting Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 313
(1950))).
As our court recently noted, the Supreme Court of the United States has described
the notice requirements of due process as follows:
“An elementary and fundamental requirement of due process in any
proceeding which is to be accorded finality is notice 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. The
notice must be of such nature as reasonably to convey the required
information, and it must afford a reasonable time for those interested to make
their appearance. But if with due regard for the practicalities and
peculiarities of the case these conditions are reasonably met the
constitutional requirements are satisfied. The criterion is not the possibility
of conceivable injury, but the just and reasonable character of the
requirements, having reference to the subject with which the statute deals.”
City of Elkhart v. SFS, LLC, 968 N.E.2d 812, 817 (Ind. Ct. App. 2012) (quoting Mullane,
339 U.S. at 314-15 (citations and quotations omitted); see also Flowers, 547 U.S. at 229.
We first address whether the due process clause applies to the Hains who, obviously,
are not a governmental entity.7 See Tulsa Prof’l Collection Servs., Inc. v. Pope, 485 U.S.
478, 485 (1988) (holding that “Fourteenth Amendment protects [property interests],
however, only from a deprivation by state action”). Our court recently noted, “‘when
7
A county auditor and county treasurer may enter into a mutual agreement for the auditor, instead
of the purchaser, to provide the property owner with the notice required pursuant to Indiana Code sections
6-1.1-25-4.5 and 4.6. Ind. Code § 6-1.1-25-4.7. Here, the parties do not state whether Porter County entered
into such an agreement; however, because the notices were sent to Bartruff with the return address of the
Hains’ attorney, we proceed under the assumption that no such agreement was in place and that the duty to
provide notice remained with the purchasers. Appellant’s App. at 51; Appellees’ App. at 9.
11
private parties make use of state procedures with the overt, significant assistance of state
officials, state action may be found.’” Iemma, 992 N.E.2d at 740 (quoting Pope, 485 U.S.
at 486). “The government is significantly involved in tax sale proceedings as the taxing
authority that files an application for judgment and order for sale; indeed, it is the county
government that takes the property and sells it for unpaid taxes.” Id. (citing Sawmill Creek,
964 N.E.2d at 217). Furthermore, in some counties, the county auditor is responsible for
giving notice to the property owners and/or persons with interest in the property. Id.
“Without discussing the issue of state action by a non-governmental entity, both our
Supreme Court and this court have held that a non-governmental tax purchaser must
comply with the notice requirements of the due process clause.” Id. (citing Smethers, 714
N.E.2d at 133). We will follow precedent and evaluate whether the Hains’ notices
complied with due process requirements. Additionally, we will apply to the Hains the same
standards that are applied to government actors.
Here, the parties do not dispute that Bartruff and Junior failed to update the Porter
County Auditor’s records to reflect that Bartruff was imprisoned prior to the sale of the
property and then died two months prior to the deadline of the one-year period allowed to
redeem the property.8 The parties also do not dispute that the Hains mailed each required
notice to Bartruff at the address listed in the Auditor’s records, sending one by certified
mail and another by first class mail.
8
The Estate contends that Junior’s failure to update the records can be attributed to the fact that he
had no interest in the property until his father’s death. Additionally, the Estate contends that Junior did not
provide his address to the Auditor when he moved to Kentucky in November 2010, in part, because he did
not have a forwarding address when he moved.
12
Citing to Flowers, the trial court recognized that notice is constitutionally sufficient
“‘if it was reasonably calculated to reach the intended recipient when sent.’” Appellant’s
App. at 39 (quoting Flowers, 547 U.S. at 226). However, when a certified letter is returned
as unclaimed, additional steps must be taken “if practical to do so.” Flowers, 547 U.S. at
234. The trial court noted that “one reasonable step . . . would be for the State [or Petitioner]
to resend the notice by regular mail, so that a signature was not required.” Appellant’s
App. at 39 (quoting Flowers, 547 U.S. at 234). Recognizing that the Hains did just that,
the trial court concluded that the Hains had no additional duty to search for Bartruff. Id.
On appeal, the Estate, in its rather scant argument, contends that the constitutional
requirements of due process were not satisfied because Bartruff received no notice while
in prison, and further, a “Google search of Timothy Bartruff that takes less than one minute
[would have shown] that [Bartruff] was incarcerated and later died.” Appellee’s Br. at 8.
The Estate cites to Robinson v. Hanrahan, 409 U.S. 38 (1972) as support for its
contention that the manner by which the notices were sent constituted a due process
violation. Specifically, the Estate argues that mailing notice to Bartruff’s property was
insufficient when he was, in fact, in prison. In Robinson, the United States Supreme Court
found that Robinson, a criminal defendant, was denied due process when the State mailed
notice of a forthcoming forfeiture proceeding to his home of record—an address the
defendant was required to keep updated by statute—under circumstances where it was
known at the time that the defendant did not live there because he was incarcerated by the
State. 409 U.S. at 40.
13
Robinson is not controlling. Although the Estate’s attorney, Golding, tried to
introduce evidence suggesting that the Hains’ attorney, Grady, had knowledge of Bartruff’s
incarceration, Golding was unsuccessful. During the June 2013 hearing, Golding
questioned the Estate’s personal representative, Holesinger, with the goal of proving Grady
knew that Bartruff was incarcerated; therefore, any notices sent to Bartruff at his home
were not reasonably calculated to reach him. Holesinger testified that because he
represented one of Bartruff’s co-defendants in a federal criminal case against Bartruff, he
knew that Bartruff was incarcerated at the time of the tax sale. Tr. at 28. Holesinger also
testified that Grady represented another of Bartruff’s co-defendants and, therefore, also
likely knew of Bartruff’s incarceration. Id. at 28-29. Grady objected to Holesinger’s
testimony, noting that the Estate’s Motion to Vacate Judgment did not reference the federal
case against Bartruff and his co-defendants. In response to questioning from the trial court,
Golding admitted that he had not previously alleged that Grady had knowledge of
Bartruff’s incarceration. Id. at 29. The trial court closed down this line of questioning,
stating, “New Issue. It’s not in the petition. We’re going to work with the petition as
filed.” Id. at 30. Unlike the facts in Robinson, here, there is no admissible evidence that
Grady or the Hains knew that Bartruff was incarcerated.
Regarding the Estate’s claim that an internet search was required, the trial court
noted that the Hains were “‘not under any obligation to search for [Bartruff’s] new address
in [a] local phonebook or in other government records’ after the certified mail was returned
unclaimed.” Appellant’s App. at 40. We agree. While some attorneys have used internet
14
searches to find a property owner’s current address, we cannot say that failing to perform
an internet search, per se, violated Bartruff’s right to due process. See Nieto, 846 N.E.2d
at 331 (Yahoo internet search to find property owner did not reveal his current address).
Keeping within the limited confines of the issues raised to this court, and viewing
the evidence in the light most favorable to the judgment, we cannot say that the trial court’s
judgment denying the Estate’s motion to vacate is clearly erroneous.
Affirmed.
MAY, J., concurs.
BAILEY, J., concurs in result with separate opinion.
15
IN THE
COURT OF APPEALS OF INDIANA
THE ESTATE OF TIMOTHY J. BARTRUFF and )
ALL PARTIES OF INTEREST OF )
PUBLIC RECORD, )
)
Appellants-Respondents, )
)
vs. ) No. 64A05-1311-MI-540
)
DENNIS C. HAIN and JUDITH A. HAIN, )
)
Appellees-Petitioners. )
BAILEY, Judge, concurring in result
Under the Fourteenth Amendment to the United States Constitution, due process
requires “notice 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.” Robinson v. Hanrahan, 409 U.S. 38, 39-40 (1972) (quoting Mullane v. Central
Hanover Bank & Trust Co., 339 U.S. 306, 314 (1950)). The Estate’s motion to set aside
the sale of Bartruff’s residence alleged that Bartruff (and, in turn, the Estate) was denied
due process. The Estate’s questions sought to elicit testimony relevant to this matter, and
the trial court’s sustaining of the Hains’ objection to this line of questioning was, in my
opinion, an abuse of discretion.
16
Nevertheless, evidence presented at the hearing pointed to Bartruff’s ordinary
practice of regularly and timely paying property taxes on the home, Bartruff’s son’s
presence in the home for approximately one month after the auction of the property at a tax
sale, and the apparent proper delivery of regular U.S. mail to the residence. Under the
circumstances, I conclude that there was reasonable notice concerning the tax sale, from
which Bartruff or his Estate could have made inquiries concerning the redemption period.
I thus respectfully concur in the result.
17