In Re: Adams County TCB ~ Appeal of: The Howard M. Saperstein Profit Sharing Plan ( 2018 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Adams County Tax Claim :
Bureau :
:
Sailors Derek and Maureen : No. 1415 C.D. 2017
43006-0093---000 :
Sale No. 0533 : Argued: September 12, 2018
:
Appeal of: The Howard M. Saperstein :
Profit Sharing Plan :
BEFORE: HONORABLE P. KEVIN BROBSON, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE JAMES GARDNER COLINS, Senior Judge
OPINION BY
JUDGE McCULLOUGH FILED: December 13, 2018
The Howard M. Saperstein Profit Sharing Plan (the Saperstein Plan)
appeals from the September 14, 2017 order of the Court of Common Pleas of Adams
County (trial court) denying its petition to set aside a judicial tax sale of a tract of
land identified as 4 Trout Run Trail and located in Carroll Valley, Adams Township
(Property). Upon review, we reverse.
Howard M. Saperstein is the trustee of the Saperstein Plan and has
resided at Delray Beach, Florida as of November 18, 2016. On June 26, 2014, the
Saperstein Plan, by and through an attorney at Trinity Law (Firm), filed a mortgage
foreclosure complaint against Derek and Maureen Sailors (Sailors). In this action,
the Saperstein Plan obtained a default judgment and later executed a sheriff’s sale
on the judgment, which resulted in the Saperstein Plan acquiring a sheriff’s deed and
legal title to the Property on March 31, 2016. The Saperstein Plan recorded the
sheriff’s deed on that same date. Subsequently, the Firm, acting on behalf of the
Saperstein Plan, filed an ejectment action against the Sailors. The Sailors filed an
objection on October 21, 2016, and asserted that the Saperstein Plan does not own
the Property because it was sold to a third party at a judicial sale. The Firm then
contacted the Adams County Tax Claim Bureau (Bureau) on November 7, 2016,
inquiring into the tax status of the Property. The director of the Tax Services
Division of the Bureau informed the Firm that the Property was sold at a judicial
sale on September 30, 2016. (Reproduced Record (R.R.) at 1a-9a, 96a, 163a-64a.)
In the interim, the Bureau filed a Petition for Judicial Sale (Petition) on
May 20, 2016, in which it alleged that the Sailors were the owners of the Property
and owed delinquent taxes in the amount of $32,405.07 for tax years 2009 to 2015.
The Bureau asserted that the Property was exposed to an upset tax sale on September
25, 2015; however, the Bureau was unable to obtain bids sufficient to pay the upset
price. As such, the Bureau requested that the trial court issue a rule to show cause
why a judicial sale should not be had (Rule).1 (R.R. at 13a-16a, 27a.)
After the Bureau filed the Petition, a title search was prepared on April
3, 2016, and it listed both the Sailors and the Saperstein Plan as the owners. By
order dated May 26, 2016, the trial court issued the Rule, which contained three
addresses for the Saperstein Plan: a Maryland address; a Boca Raton, Florida
address; and a Pennsylvania address located at 145 East Market Street, York,
Pennsylvania 17401 (York Address). In attempting service, the Bureau sent the Rule
1
An upset tax sale precedes and is a prerequisite to a judicial sale. Generally speaking,
when a property owner is delinquent in paying taxes, an upset tax sale is conducted to recover the
“upset price,” which is the total sum of the taxes owed plus any tax liens and municipal claims;
however, if an individual does not bid the upset price at the upset tax sale, the tax bureau may
petition the court of common pleas for permission to sell the property free and clear of all liens in
a judicial sale, after which a trial court will issue a rule to show cause upon all interested parties.
See In re Sale No. 10, 801 A.2d 1280, 1282-85 (Pa. Cmwlth. 2002).
2
by certified mail to the Maryland and Florida addresses, but the correspondence was
returned to the Adams County Sheriff’s Office as return to sender, attempted not
known, unable to forward. On July 7, 2017, the York County Sheriff’s Office
effectuated personal service of the Rule at the York Address, having handed a copy
to a clerk who was employed by the Firm. (R.R. at 27a, 36a; Trial court op. at 6-7;
Findings of Fact (F.F.) Nos. 3-6.)
At the end of July and in early August 2017, the Bureau advertised the
judicial sale in the Adams County Legal Journal, the Gettysburg Times, and the
Hanover Evening Sun (Newspapers). However, in all of these publications, the
Sailors were listed as the reputed owners of the Property, despite the fact that the
Saperstein Plan had recorded the sheriff’s deed on March 31, 2016, and the Bureau’s
own title search indicated that the Saperstein Plan was an owner of the Property. In
addition, none of the Newspapers contained a reference to the previous
advertisements that the Bureau published in connection with the upset tax sale held
on September 25, 2015. Notably, the Sailors were listed as the reputed owners in
those advertisements as well, apparently because, at that point in time, the Sailors
maintained legal title to the Property and the Saperstein Plan had not yet recorded
the sheriff’s deed. (F.F. No. 7; R.R. at 150a-56a.)
Ultimately, the Saperstein Plan did not respond to the Rule. By order
dated August 11, 2016, the trial court scheduled a judicial sale of the Property for
September 30, 2016. The Property was sold to Jemez, LLC on that date. On
November 18, 2016, the Saperstein Plan filed a petition to set aside the judicial sale,
in which it alleged lack of notice and/or improper service. (F.F. Nos. 8, 11-12; R.R.
at 17a-21a.)
3
Thereafter, the trial court convened a hearing at which the parties
adduced documentary and testimonial evidence and factual stipulations based on the
exhibits of record. On September 14, 2017, the trial court denied the petition to set
aside. In doing so, the trial court determined, based on the sheriff’s return of service,
that personal service was valid and successfully accomplished at the York Address,
which is the address for the Firm, pursuant to section 611 of the Real Estate Tax Law
(Law).2 (Trial court op. at 8-10 & n.1.) Having arrived at this conclusion, the trial
court found that there was “no need to determine whether out of state service by
certified mail is improper.” Id. at 11. The trial court further found that, although the
Sailors were listed as the sole owners of the Property in the Petition, this did “not
obviate the fact that the record owner of the [P]roperty, [the Saperstein Plan],
received the statutorily required notice” and “was personally served with the Rule.”
Id. at 7. Most important for present purposes, the trial court did not address the issue,
properly presented and preserved, (see R.R. at 179a, 187a), regarding whether the
advertisement to the public in the Newspapers complied with the Law.
Before this Court,3 the Saperstein Plan raises four distinct issues for
review, asserting that the trial court erred in failing to set aside the judicial sale
because (1) the Petition named the Sailors as the owners of the Property and did not
include the Saperstein Plan; (2) the sheriff’s personal service of the Rule upon the
Saperstein Plan through the Firm at the York Address was an ineffective form of
service; (3) the Bureau provided faulty service via the alternative means of mailing
as the Rule was sent by certified mail when the Law mandates the use of registered
2
Act of July 7, 1947, P.L. 1368, as amended, 72 P.S. §5860.611.
3
Our review of the trial court’s denial of a petition is limited to determining whether the
trial court abused its discretion, rendered a decision without supporting evidence, or erred as a
matter of law. In Re York County Tax Claim Bureau, 3 A.3d 765, 767 n.3 (Pa. Cmwlth. 2010).
4
mail; and (4) the Bureau did not properly “readvertise” the judicial sale to the public
in accordance with section 612(b) of the Law.
Finding clear and dispositive merit in the fourth issue, the Court need
not rule upon the first three.
Concerning the fourth issue, the Saperstein Plan contends that,
irrespective of whether personal service was valid, the Newspapers readvertising the
judicial sale to the public did not include “a reference to the prior advertisement,”
i.e., the advertisement for the upset tax sale, as required by section 612(b) of the
Law.4 The Saperstein Plan argues that if such a reference were made in the
readvertisement, the public would have been alerted that the Sailors were designated
as the “owners” in the advertisement for the upset tax sale.5 In response, the Bureau,
4
72 P.S. §5860.612(b). When a trial court is satisfied that service of the rule has been
properly made upon the parties named in the rule, the court shall order that the property be sold at
a judicial sale, see 72 P.S. §5860.612(a), subject to the advertising, or more appropriately
readvertising, requirements of section 612(b), which provides:
When aforesaid petition for sale is presented within three (3) months
after the date of the scheduled upset sale, the court, in its order, shall
direct that no further advertisement is required. In cases where said
petition is presented after the three (3) month period has expired, the
court shall, in its order fixing a subsequent sale, direct that the
readvertisement of such sale need not be published three (3)
consecutive weeks, nor include a list and description of the lands to
be sold, but need only be advertised by one (1) insertion in one (1)
or two (2) newspapers as hereinbefore provided for such
advertisements, at least thirty (30) days prior to the sale, and include
the purpose, the time, the place and the terms of such sale with a
reference to the prior advertisement.
72 P.S. §5860.612(b) (emphasis added).
The “prior advertisement” language in section 612(b) refers to section 602(a) of the Law,
5
which governs public notice in an upset tax sale. This section states:
5
without directly addressing the issue of whether the Newspapers adequately
“referenced” the advertisement in the upset tax sale, asserts that the advertisements
in the upset tax sale correctly listed the Sailors as the owners because the upset tax
sale was conducted on September 25, 2015, and the Saperstein Plan did not become
official title owner of the Property until March 31, 2016.
At the outset, we note that the burden of proof is on the tax claim bureau
to prove compliance with the notice requirements of the Law. FS Partners v. York
County Tax Claim Bureau, 132 A.3d 577, 581 (Pa. Cmwlth. 2016). Section 612(b)
of the Law governs published notice to the public in a judicial sale. See In re Sale
of Real Estate Northampton County Tax Claim Bureau, 874 A.2d 697, 700-01 (Pa.
Cmwlth. 2005). The requisites of published notice are intended to provide
information to the public in general and, thus, defective published notice cannot be
cured, remedied, or otherwise excused by proper personal notice or service. See id.
at 701 (“[T]he readvertisement publication, which contains the time, place and terms
of the sale, is intended for the public at large.”); Basehore v. Dauphin County Tax
Claim Bureau, 480 A.2d 1313, 1315 (Pa. Cmwlth. 1984) (“[T]he requirements of
published notice serve a purpose different from notice mailed to the property owner,
At least thirty (30) days prior to any scheduled sale the bureau shall
give notice thereof, not less than once in two (2) newspapers of
general circulation in the county, if so many are published therein,
and once in the legal journal, if any, designated by the court for the
publication of legal notices. Such notice shall set forth (1) the
purposes of such sale, (2) the time of such sale, (3) the place of such
sale, (4) the terms of the sale including the approximate upset price,
(5) the descriptions of the properties to be sold as stated in the claims
entered and the name of the owner.
72 P.S. §5860.602(a) (emphasis added).
6
and defective published notice is not cured by proper personal notice.”); Hicks v.
Och, 331 A.2d 219, 220 (Pa. Cmwlth. 1975).
Pursuant to section 612(b) of the Law, a readvertisement for a judicial
sale “shall . . . include the purpose, the time, the place and the terms of such sale
with a reference to the prior advertisement” in the upset tax sale. 72 P.S.
§5860.612(b) (emphasis added). As is the case with most of the notice obligations
in the Law, the Bureau must strictly comply with the readvertisement requirements
of section 612(b) of the Law, or else the judicial sale will be set aside. See In re Sale
of Real Estate Northampton County Tax Claim Bureau, 874 A.2d at 701 (addressing
the republication notice requirements of section 612(b) of the Law and concluding
that they “must [] be strictly construed.”);6 see also Aldhelm, Inc. v. Schuylkill
County Tax Claim Bureau, 879 A.2d 400, 403 (Pa. Cmwlth. 2005).
Here, a review of the Newspapers confirms that they did not contain
any kind of explicit or overt “reference” to the published advertisement of or with
respect to the upset tax sale. (See R.R. at 150a-56a.) Standing alone, this deficiency
warrants setting aside the judicial sale under the sanctuary of the settled principle
that the published notice provisions of the Law demand strict compliance. 874 A.2d
697 at 701. However, rather than marking our denouement here, the Court briefly
comments on why this error cannot be considered a mere technicality and we attempt
to explain how the peculiar circumstances of this case highlight why a “reference”
in a judicial sale readvertisement to the upset sale advertisement makes pragmatic
sense in the eyes of a reasonable purchaser.
6
In Northampton County Tax Claim Bureau, this Court set aside a judicial sale where the
procedure in section 612(b) of the Law was not strictly complied with, i.e., the trial court set the
date of the judicial sale less than 30 days from the date of its order and the tax claim bureau failed
to readvertise the judicial sale.
7
Initially, although section 612(b) of the Law does not dictate that a
readvertisement in a judicial sale contain the correct name of the owner, the
Newspapers listed the Sailors as the owners of the Property at a time when they were
not. Regardless, had the Newspapers referenced the advertisement in the upset tax
sale, a potential purchaser in the judicial tax sale would have discovered in that
advertisement that the Sailors were denoted as the owners of the Property, albeit in
a time frame in which they were. Either way, or both ways, a potential purchaser
performing a title search and due diligence in preparation for a judicial sale would
have located the sheriff’s deed and obtained information to believe that the
Saperstein Plan is the current owner of the Property. Poffenberger v. Goldstein, 776
A.2d 1037, 1042 (Pa. Cmwlth. 2001) (“The recording of a deed serves to provide
public notice in whom the title resides.”).
At this juncture, the reasonable purchaser in the judicial sale would
have conflicting information concerning the identity of the Property’s owner. On
one hand, a property owner does not possess a legal duty to provide a tax claim
bureau with a change of address, see Smith v. Tax Claim Bureau of Pike County, 834
A.2d 1247, 1251 (Pa. Cmwlth. 2003), and if the advertisement in the upset tax sale
erroneously used the name of a former owner, rather than the current owner, a court
could conceivably declare the sale void. See Hicks, 331 A.2d at 220-21; accord
Wells Fargo Bank of Minnesota v. Tax Claim Bureau of Monroe County, 817 A.2d
1196, 1999 (Pa. Cmwlth. 2003). At the very least, the cloud of uncertainty
surrounding the Property’s ownership would most likely provide a potential
purchaser with reason to assess the risk of buying the Property, taking into
consideration such factors as the probability of a quiet title action, the status, finality,
and prospect of further litigation in the ejectment action, and the feasibility of
8
completing the steps necessary to be deemed a bona fide purchaser under the law.
See Poffenberger, 776 A.2d at 1042 (stating that a bona fide purchaser “must pay
valuable consideration, have no notice of the outstanding rights of others, and act in
good faith.”).
All said, the “reference to the prior advertisement” requirement of
section 612(b) of the Law is aimed toward the public and the provision has practical
utility in that it supplies a potential purchaser with background and investigative
information that could sway a decision to bid or not to bid. Consequently, we cannot
find that this language is superfluous or necessitates the performance of an empty
ritual. Instead, we conclude that directive for a “reference” in section 612(b) is
entitled to a strict construction like the other requirements for published and
advertised notice in the Law. Here, the Bureau failed to establish that the
Newspapers contained a direct “reference” to the upset tax sale.
Accordingly, we conclude that the judicial sale is invalid as a matter of
law and reverse the trial court’s September 14, 2017 order.
________________________________
PATRICIA A. McCULLOUGH, Judge
9
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Adams County Tax Claim :
Bureau :
:
Sailors Derek and Maureen : No. 1415 C.D. 2017
43006-0093---000 :
Sale No. 0533 :
:
Appeal of: The Howard M. Saperstein :
Profit Sharing Plan :
ORDER
AND NOW, this 13th day of December, 2018, the September 14, 2017
order of the Court of Common Pleas of Adams County is reversed.
________________________________
PATRICIA A. McCULLOUGH, Judge