Ahmed Dizaya v. Tax Ease Lien Servicing, LLC ( 2020 )

RENDERED: DECEMBER 4, 2020; 10:00 A.M.
NOT TO BE PUBLISHED
Commonwealth of Kentucky
Court of Appeals
NO. 2019-CA-1297-MR
AHMED DIZAYA APPELLANT
APPEAL FROM JEFFERSON CIRCUIT COURT
v. HONORABLE MARY SHAW, JUDGE
ACTION NO. 11-CI-401354
TAX EASE LIEN SERVICING, LLC;
BRANCH BANKING AND TRUST COMPANY;
EDSON B. CAMPBELL; WANDA L. CAMPBELL;
JAMOS FUND I, L.P.; JEFFERSON COUNTY/LOUISVILLE
METRO GOVERNMENT; AND US BANK, AS CUSTODIAN
FOR SASS MUNI-V, DTR APPELLEES
OPINION
REVERSING AND REMANDING
** ** ** ** **
BEFORE: GOODWINE, K. THOMPSON, AND L. THOMPSON, JUDGES.
THOMPSON, L., JUDGE: Ahmed Dizaya (“Appellant”) appeals from an order of
the Jefferson Circuit Court setting aside in part a judgment and order of sale
entered in favor of Tax Ease Lien Servicing, LLC. Appellant argues that the
Jefferson Circuit Court erred in altering the description of the property sold rather
than setting the sale aside and refunding his purchase money. For the reasons
addressed below, we reverse and remand the order on appeal.
FACTS AND PROCEDURAL HISTORY
This matter arose from a lien enforcement action on a parcel of real
property identified as Parcel ID 07 039C 0083 0000 and located at 1746 Wilson
Avenue in Louisville, Kentucky. Appellee Tax Ease Lien Servicing, LLC
(“Appellee”) purchased several certificates of delinquency on the parcel and filed
an action in Jefferson Circuit Court to enforce the liens. Pursuant to Kentucky
Revised Statutes (“KRS”) 426.006, Appellee named as defendants several
individuals and entities who had tax liens or other interests in the property.
On August 27, 2015, the Jefferson Circuit Court rendered a judgment
and order of sale (“JOS”). The JOS correctly stated that the subject parcel was
located at 1746 Wilson Avenue; however, the legal description of the property,
which was attached to the JOS as Exhibit A, listed three tracts. Tract 1 in the legal
description was shown as Parcel ID 07 039C 0143 000 at 1744 Wilson Avenue;
Tract 2, noted above, was located at 1746 Wilson Avenue;1 and Tract 3 was
identified at Parcel ID 07 039C 0185 0000, or simply “Wilson Avenue.” None of
1
The record variously identifies this parcel as either 1746 Wilson Avenue or 1756 Wilson
Avenue.
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the parties asserted any claims against Tract 1 or Tract 3, and these tracts were
mistakenly recorded on the legal description attached to the JOS.
The first judicial sale occurred on November 10, 2015, and was set
aside after a purchaser, who was not a party to this action, failed to pay the balance
of his bid. A second sale was conducted on July 28, 2017, when Appellant
purchased the property for $30,000. After tendering payment, a master
commissioner’s deed was approved by the circuit court. This deed was recorded
by the Jefferson County Clerk on August 22, 2017. The deed improperly
purported to convey to Appellant Tracts 1, 2, and 3, even though Appellee’s lien
was only on Tract 2. After discovering the error, Appellant filed a motion to
correct the deed to describe only Tract 2.2
The matter proceeded before the master commissioner, who rendered
a master commissioner’s report on May 29, 2019. The master commissioner
recommended to the circuit court in relevant part that the court declare as void the
legal descriptions of Tracts 1 and 3 in the August 27, 2015 JOS, and to execute a
new deed in favor of Appellant as to Tract 2. On June 12, 2019, Appellant filed
exceptions to the master commissioner’s report. Appellant asserted that he paid
2
In the interim, Kentucky Tax Lien Fund, LLC (“KTLF”) filed a lien enforcement action as to
Tracts 1 and 3. Appellant was named in that proceeding by virtue of the incorrect legal
description in the master commissioner’s deed. A JOS was entered in favor of KTLF on April 4,
2019, but the scheduled sale was withdrawn pending resolution of the instant proceeding.
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$30,000 for three lots, and if the commissioner was not able to deliver three lots
the sale should be set aside and his purchase money refunded in full. The matter
went before the circuit court, which entered an order on June 13, 2019, approving
the master commissioner’s report, correcting the legal description to describe only
Tract 2, and executing a new deed in favor of Appellant as to Tract 2. Upon
apparently determining that these mistakes were made by counsel for Appellee, the
court ordered counsel to pay two $50 fees for the master commissioner’s report
and the preparation of the new deed, and not to bill his client for his costs. On
June 20, 2019, Appellant moved to set aside the order.
Finally, on July 26, 2019, the Jefferson Circuit Court rendered an
order again overruling Appellant’s exceptions. The court opined that while there
was no elegant solution to the case’s procedural posture, Appellant’s prior motion
to correct the deed was an acknowledgement that he was not entitled to retain title
to Tracts 1 and 3. It further concluded that Appellant assumed the risk of loss by
purchasing at a commissioner’s sale and failing to perform any due diligence via a
title search, or by moving to correct the deed within the time allotted by the civil
rules. This appeal followed.
ARGUMENT AND ANALYSIS
Appellant argues that the Jefferson Circuit Court committed reversible
error in ordering the recording of a new and corrected deed to Tract 2 in favor of
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Appellant, rather than vacating the sale in its entirety and ordering the refund of
Appellant’s purchase money. He contends that Appellee and the circuit court are
engaged in the wrongful taking of property without just compensation and for the
benefit of private parties. Appellant argues that he was deprived of the just
compensation guaranteed by the Kentucky Constitution, and that this constitutional
provision is self-executing. He seeks an opinion reversing the order on appeal, and
remanding the matter to set aside the sale in its entirety. Appellees have not filed a
responsive brief.
Appellee sought and obtained a judgment in which a parcel comprised
of three tracts was offered for sale by the master commissioner in order to satisfy
the tax liens which Appellee had purchased. However, the tax liens which were
the basis for this action only applied to one of the three tracts in the parcel. This
error was the result of either Appellee performing a faulty title search prior to
filing its complaint or only seeking to foreclose on the tax liens associated with
Tract 2 when it also held tax liens on Tracts 1 and 3. In either scenario, it was
Appellee’s negligence which resulted in the faulty property description submitted
in the complaint, setting off the chain of events which ultimately harmed
Appellant. The faulty description was then relied upon by the circuit court in
granting a judgment in Appellee’s favor and ordering the property to be sold to
satisfy the liens. This in turn caused the master commissioner to offer the parcel of
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that particular description for sale, and Appellant bidding on, and ultimately
buying, the parcel in reliance on that description.
After the sale was confirmed, Appellant learned that Tracts 1 and 3
were not properly under the circuit court’s jurisdiction and the sale was invalid as
to those tracts. He appropriately sought a remedy with the circuit court. Appellant
first asked for reformation of the deed to conform to an accurate property
description. The master commissioner recommended that an amended deed be
issued and confirmed without any refund to Appellant of his purchase price.
Appellant objected to this confirmation because it resulted in him
receiving a deed to only one tract for the price that he paid for three. He asked the
circuit court to void the sale entirely. It refused to do so. On appeal, Appellant
argues that in reforming the deed to only include one tract of land, which he states
is not the most valuable tract of the three, the Commonwealth has taken property
from him without due process and just compensation. He argues the appropriate
remedy for this breach of the contract of sale is to set the contract aside, refund his
money, and allow Appellee to correct the judgment. Once the judgment is
corrected, the master commissioner can offer up for sale the parcel with a correct
description. We find this argument persuasive.
The master commissioner can only sell property and convey good title
when there is a valid judgment. KRS 426.570; KRS 426.571; KRS 426.574; KRS
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426.575. While a master commissioner’s deed can be a valid link in the title chain,
Ritchie v. Paine, 431 S.W.2d 498, 500 (Ky. 1968), it is not a valid link if the
judgment underlying it is void. See Howard v. Howard, 239 Ky. 160, 39 S.W.2d
245, 246-48 (1931) (explaining that a void sale by a master commissioner after
attachment under a void judgment cannot convey title to even an innocent
purchaser and the proper remedy is to cancel the deed thereby rendered and
dismiss the buyer’s claim to title of the property); Kengreen Gas Utilities Corp. v.
Crozer, 244 Ky. 440, 51 S.W.2d 262, 266 (1932).
If property owners are not properly brought before the court regarding
a particular parcel of land, any judgment in an action and selling the land pursuant
to that judgment will be void. Roberson v. Boaz, 195 Ky. 160, 241 S.W. 831, 833
(1922). Likewise, if the tax delinquency is not established, this would render a sale
to satisfy a tax delinquency void. Kypadel Coal & Lumber Co. v. Millard, 165 Ky.
432, 177 S.W. 270, 272 (1915). Just as a materialman’s lien cannot be effective
when the wrong property is described, and the right property cannot be ascertained
from the description, Powers v. Brewer, 238 Ky. 579, 38 S.W.2d 466, 469-70
(1931), a tax lien cannot be effective when attached to the wrong property. If
instead, which does not appear to be the situation here, the circuit court had “in
rem subject matter jurisdiction of the particular realty and personal jurisdiction
over the parties, any error in the judgment rendered by the court is voidable, and
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not void.” Hisle v. Lexington-Fayette Urban Cty. Gov’t, 258 S.W.3d 422, 432
(Ky. App. 2008).
Because Appellee only had the legal authority to foreclose on one of
the three tracts of property, the judgment which encompassed all three tracts as an
indivisible whole was void at its inception. There is no basis to reform a deed that
results from a void judgment; therefore, it does not matter what type of relief
Appellant initially requested as a void judgment cannot be the basis for him
gaining title to any portion of the property.
Even if the judgment was not void, there were nevertheless sufficient
grounds to set aside the sale.
To warrant the setting aside of a sale there must be either
fraud or misconduct in some one connected with the sale,
unfairness of the officer who conducts the sale, some
surprise or misapprehension on the part of those
interested, or some irregularity in the proceedings, or
other circumstances attending, conducing to show
unfairness.
Smith v. Holowell, 201 Ky. 271, 256 S.W. 408, 409 (1923). “[A] deed of
conveyance will not be set aside on the ground of mutual mistake, unless the proof
of the mistake is full, clear, and convincing.” Farar v. Eli, 195 Ky. 30, 241 S.W.
326, 326 (1922) (citations omitted).
An example of how mistake can justify the setting aside of a sale is
discussed in Noe v. Akridge, 310 Ky. 107, 220 S.W.2d 93 (1949), which concerned
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a dispute as to whether a fifty-foot strip of land was excluded or included in a sale
of property and the evidence surrounding that dispute. The court noted that the
conflicting evidence made it “entirely possible that the minds of the parties, the
purchaser and the agent of the sellers did not meet. If so, this afforded grounds for
a rescission of the contract or sale, not for reformation of the deed.” Id. at 94-95.
Although a value was not assigned to the parcel offered up for sale, it
is evident that the value of one parcel of three is not equivalent to all three. Thus,
when Appellant offered a $30,000 bid for three parcels and received one, he paid
far more per acre than he intended. We believe it is appropriate to consider this
sale in terms of valuation.
An incorrect valuation can justify setting aside a sale “when it is made
to appear by sufficient allegations and proof that the incorrect valuation was
procured by fraud, or resulted from mistake other than in the mere judgment of the
appraisers.” Southwood v. Willis, 222 Ky. 782, 2 S.W.2d 660, 660 (1928)
(citations omitted). “[W]here there is shown great inadequacy of price, it is not
necessary to prove actual fraud or collusion, but it is sufficient to show additional
circumstances, though slight and insufficient in themselves to establish irregularity
or unfairness.” Maynard v. Maynard, 292 Ky. 638, 167 S.W.2d 853, 857 (1943)
(citation omitted). When such a showing is made, “the court may set aside a
judicial sale after confirmation[.]” Id.
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 Clearly there was surprise or misapprehension about what was being
sold and what could be sold and what its value was. Because of Appellee’s
mistake, there could be no meeting of the minds or contract where the actual
property to be sold varied so dramatically from what the parties intended. This
resulted in demonstrable unfairness to Appellant.
Appellant was entitled to rely on the property description provided by
the master commissioner. A title search on Appellant’s part would not have
revealed the error in the court’s order. The court order itself offering the parcel for
sale was an intervening event in the title of the property, thereby providing good
title, and allowing reliance so long as the judgment remained valid. There is no
evidence that Appellant was familiar with the property nor had any reason to know
that the foreclosure was not valid as to all three tracts or that he would not be able
to receive the property advertised. The only evidence is that he was misled by the
representations provided by the master commissioner which were in accordance
with the judgment. Caveat emptor is not applicable in such a situation. See
Manning v. Lewis, 400 S.W.3d 737, 742 (Ky. 2013) (stating the buyer will not be
allowed to recover for a deficiency in acres sold where he was on notice regarding
the deficiency before the sale.); Landers v. Scroggy, 294 Ky. 848, 172 S.W.2d 557,
558-59 (1943) (discussing why it was appropriate to allow compensation for a
deficiency in land where purchasers were unfamiliar with the land being sold and
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relied upon the information provided by the master commissioner, citing Courtney
v. Farthing, 282 Ky. 54, 137 S.W.2d 703 (1940) and Cooper v. Hargis’ Adm’r, 20
Ky. L. Rptr. 41, 45 S.W. 112 (1898)).
Given the magnitude of the mistake, the reformation of the deed could
not make Appellant whole unless it was also accompanied by a substantial refund
of the purchase price. While a land sale may be reformed if the contract was for a
sale by acre and the actual land delivered was deficient by 10% or more of the
agreed upon acreage, see Manning, 400 S.W.3d at 740-41, the situation that
occurred here is far worse than a deficiency of 10%. The two tracts omitted might
constitute a much higher deficiency.
The foregoing aside, we may properly characterize Appellee’s failure
to file an appellate brief as an admission of error. Kentucky Rules of Civil
Procedure (“CR”) 76.12(8)(c) provides specific consequences are available when
an appellee fails to file an appellate brief:
If the appellee’s brief has not been filed within the time
allowed, the court may: (i) accept the appellant’s
statement of the facts and issues as correct; (ii) reverse
the judgment if appellant’s brief reasonably appears to
sustain such action; or (iii) regard the appellee’s failure
as a confession of error and reverse the judgment without
considering the merits of the case.
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The order on appeal may be reversed under section (ii) as Appellant’s brief
reasonably sustains such action, as well as under section (iii) because Appellee’s
failure to file a brief constitutes a confession of error.
CONCLUSION
Appellee’s negligence resulted in the faulty property description
which ultimately harmed Appellant. As Appellee only had the legal authority to
foreclose on one of the three tracts of property, the judgment which encompassed
all three tracts as an indivisible whole was void at its inception. There is no basis
for reforming a deed that results from a void judgment. Finally, Appellee’s failure
to participate in the appellate process constitutes an admission of error which,
taken alone, supports a reversal. For the foregoing reasons, we reverse the order
on appeal and remand the matter for proceedings consistent with this opinion.
ALL CONCUR.
BRIEF FOR APPELLANT: NO BRIEF FOR APPELLEES
Vincent F. Heuser, Jr.
Louisville, Kentucky
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