In Re: Consolidated Return of Luzerne County TCB of the Upset Tax Sale of Properties held on April 26, 2013 ~ Appeal of: J.P. Covert and A. Covert ( 2014 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Consolidated Return of :
Luzerne County Tax Claim :
Bureau of the Upset Tax Sale of :
Properties held on April 26, 2013 : No. 2091 C.D. 2013
: Submitted: June 13, 2014
Appeal of: Jack P. Covert and :
Alice Covert :
BEFORE: HONORABLE DAN PELLEGRINI, President Judge
HONORABLE ROBERT SIMPSON, Judge
HONORABLE ANNE E. COVEY, Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE SIMPSON FILED: July 30, 2014
In this appeal, Jack P. Covert and Alice Covert, who are son and
mother (collectively, the Coverts), ask whether the Court of Common Pleas of
Luzerne County (trial court) erred in denying their exceptions and petition to set
aside an upset tax sale. The Coverts primarily assert the Luzerne County Tax
Claim Bureau (Bureau) failed to afford them proper notice of the upset tax sale
where it did not mail separate notices of the sale to each of the co-tenant owners of
the property in accordance with Section 602 of the Real Estate Tax Sale Law1
(RETSL). Because we agree with the Coverts that the Bureau did not provide
proper mail notice of the upset tax sale, we reverse.
The Coverts owned property located at 86 South Main Street, Wilkes-
Barre, Luzerne County (subject property), together with two other individuals, Jack
1
Act of July 7, 1947, P.L. 1368, as amended, 72 P.S. §5860.602.
P. Covert (father) and Terri A. Covert (wife). The elder Jack P. Covert died in
2004.
In April 2013, the Bureau held an upset tax sale for the subject
property. JAM Downtown, LLC (Purchaser) successfully bid on the subject
property. After the trial court entered an order confirming the sale, the Coverts
filed exceptions and a petition to set aside the upset tax sale. Primarily, they
argued that the Bureau did not properly provide separately mailed notices of the
sale to each of the owners of the subject property. The Coverts obtained a rule
returnable from the trial court setting a hearing. Purchaser subsequently filed its
response to the Coverts’ exceptions. It disputed the Coverts’ claim of improper
notice.
At the scheduled hearing, neither of the Coverts appeared. However,
the Coverts’ counsel appeared and requested a continuance on the ground that
Appellant Jack P. Covert was involved in ongoing domestic litigation in California.
Also, Appellant Jack P. Covert’s elderly mother, Alice Covert, relied on him to
transport her to the hearing. Purchaser’s counsel opposed the continuance request.
The trial court denied the continuance request, and the hearing proceeded.
Counsel for the Bureau presented the Bureau file. The file included,
among other things, certified mail notice of the upset tax sale sent to Jack P. Covert
“et al[.],” which was returned as “unclaimed,” proof of publication of the tax sale,
and a notice of the tax sale that was posted on the door of the subject property.
Reproduced Record (R.R.) at 24a. Purchaser then presented the testimony of
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Nadine Emil (Emil), the assistant director for the Bureau. Emil testified that the
Bureau mailed notice of the upset tax sale to “Covert, Jack P., et al[.], 431 2nd
Street, Harvey’s Lake, Pennsylvania.” R.R. at 26a.2 Because the certified mail
notice of the upset tax sale was returned as unclaimed, the Bureau sent a notice 10
days prior to the sale by regular mail.
Purchaser also presented various documents showing Alice Covert’s
address, including a tax assessment record, an M&T Bank home equity line of
credit, and docket sheets from the Luzerne County Prothonotary’s Office regarding
municipal liens filed against Alice Covert. Counsel for both parties then presented
brief closing arguments.
Ultimately, the trial court issued an order denying the Coverts’
exceptions and their petition to set aside the tax sale. The Coverts filed a notice of
appeal to this Court. The trial court also directed the Coverts to file a concise
statement of the errors complained of on appeal, which they did. The Coverts also
filed a motion for reconsideration, which the trial court denied. The trial court then
issued an opinion pursuant to Pa. R.A.P. 1925(a) in which it rejected the Coverts’
assertion that it abused its discretion by denying their continuance request. The
trial court also rejected the Coverts’ argument that the Bureau did not provide them
with proper mailed notice of the upset tax sale. This matter is now before us for
disposition.
2
The trial court took judicial notice that, because of 911 emergency service issues, the
address on the original deed, which was “RR #1, Box 352, 2nd Street, Harvey’s Lake, PA
18618” was the same address as “431 2nd Street, Harvey’s Lake, PA 18618-7840,” where the
mailed notices were sent. Reproduced Record at 26a-27a.
3
On appeal,3 the Coverts maintain that the Bureau’s failure to send
separate notices of the upset tax sale to each of the owners of the subject property
and to perform any investigation as to the Coverts’ current addresses in accordance
with the RETSL deprived them of the subject property without due process of law.
They argue that the evidentiary record and the Bureau’s file reflect that only one
notice of the upset tax sale was sent to Jack P. Covert, et al., by certified mail and
one notice of the upset tax sale was sent to Jack P. Covert, et al., by regular mail.
The Coverts assert that the Bureau sent no separate notices to each record owner
(Jack P. Covert, Alice Covert, Terri Covert, and Jack P. Covert (father)), as
required by Sections 602(e)(1) and (2) of the RETSL, 72 P.S. §§5860.602(e)(1),
(2). The Coverts contend that Section 602 of the RETSL requires a separate and
individual notice be sent to each named owner whether that owner holds title as a
tenant in common, in joint tenancy or as tenants by the entireties. Johnson v.
Teslovich, 406 A.2d 1374 (Pa. 1979). The Coverts maintain that a notice sent to
multiple co-tenants with the designation “et al.” is violative of the due process of
the unnamed co-tenants. See LaBracio v. Northumberland Cnty., 467 A.2d 1221
(Pa. Cmwlth. 1983); see also Appeal of Marshalek, 541 A.2d 398 (Pa. Cmwlth.
1988). We agree.
The RETSL provisions governing upset sales require the tax claim
bureau to provide three types of notice: published notice, mail notice and posted
notice. 72 P.S. §5860.602. It is well established that the RETSL’s notice
3
In tax sale cases, this Court’s review is limited to determining whether the trial court
abused its discretion, clearly erred as a matter of law or rendered a decision with a lack of
supporting evidence. Rice v. Compro Distrib., Inc., 901 A.2d 570 (Pa. Cmwlth. 2006).
4
provisions are to be strictly construed, and that strict compliance with such
provisions is necessary to guard against deprivation of property without due
process of law. Rinier v. Tax Claim Bureau of Delaware County, 606 A.2d 635
(Pa. Cmwlth. 1992). Additionally, if any one of the required methods is defective,
the sale is void. Id. Further, the Bureau carries the burden of proving strict
compliance with all three statutory notification requirements. Id.
Of particular relevance here is the provision governing mail notice,
which provides (with emphasis added):
(e) In addition to such publications, similar notice of the sale
shall also be given by the bureau as follows:
(1) At least thirty (30) days before the date of the sale, by
United States certified mail, restricted delivery, return receipt
requested, postage prepaid, to each owner as defined by this act.
72 P.S. §5860.602(e)(1). Section 102 of the RETSL defines “owner,” in pertinent
part, as “the person in whose name the property is last registered, if registered
according to law, or, if not registered according to law, the person whose name last
appears as an owner of record on any deed or instrument of conveyance recorded
in the county office designated for recording ….” 72 P.S. §5860.102.
In addition, Section 602(e)(2) of the RETSL states that if the return
receipt for the mail notice is not received from “each owner,” then:
[A]t least ten (10) days before the date of the sale, similar
notice of the sale shall be given to each owner who failed to
acknowledge the first notice by United States first class mail,
proof of mailing, at his last known post office address by virtue
of the knowledge and information possessed by the bureau, by
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the tax collector for the taxing district making the return and by
the county office responsible for assessments and revisions of
taxes. It shall be the duty of the bureau to determine the last
post office address known to said collector and county
assessment office.
72 P.S. §5860.602(e)(2) (emphasis added).
The primary purpose of the RETSL is to insure the collection of taxes,
not to strip away a citizen’s property rights. Stanford-Gale v. Tax Claim Bureau of
Susquehanna Cnty., 816 A.2d 1214 (Pa. Cmwlth. 2003). Thus, adequate notice to
property owners is a prerequisite before the execution of any tax sale. Id.
However, actual notice of a pending tax sale waives strict compliance with
statutory notice requirements, and technical deficiencies in those notice
requirements do not invalidate a tax sale. Id.; Sabbeth v. Tax Claim Bureau of
Fulton Cnty., 714 A.2d 514 (Pa. Cmwlth. 1998).
With regard to the requirement that separate mail notice be given to
each owner, in Stanford-Gale, this Court summarized:
In Boehm v. Barnes, 437 A.2d 784 (Pa. Cmwlth. 1981), we
held that where a partnership stands as owner of a property,
notwithstanding the prior mailing of tax bills to one partnership
address, each partner required separate notice of a tax sale on
the property. In [LaBracio], tenants in common as property
owners were held to each be required to receive separate notice
of a pending tax sale. In Appeal of Mangine, 487 A.2d 45 (Pa.
Cmwlth. 1985), husband and wife owners, as tenants in
entirety, were held to each require receipt of separate notice of a
tax sale. This rule of separate required notice of a tax sale has
also been applied to remaindermen, Donaldson v. Ritenour, 524
A.2d 1044 (Pa. Cmwlth. 1987), and to concurrent-owner
trustees that were individually listed as multiple owners on a
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deed, Krumbine v. Lebanon County Tax Claim Bureau, [663
A.2d 158 (Pa. 1995)].
Stanford-Gale, 816 A.2d at 1218.
Further, in Teslovich, our Supreme Court held that Section 602 of the
RETSL “requires separate and individual notice to each named owner of property;
regardless of whether that owner holds in common, in joint, or by the entireties.”
Id. at 1378 (emphasis added).
Similarly, in LaBracio, this Court held that where a tax claim bureau
sent notice of an impending tax sale in the name of only one of three owners of a
property, followed by the designation “et al.,” rather than directing notice to each
individual owner, the Bureau violated Section 602 of the RETSL. Accord
Marshalek (holding that notice of tax sale was required to be given to all tenants in
common of a property, and failure to do so invalidated the sale of the undivided
one-fifth interest of one of the tenants in common, despite the fact that none of the
other co-tenants’ interests was sold and none of the other co-tenants objected).
Here, the trial court determined that the Bureau’s mailed notice
complied with Section 602 of the RETSL where the Bureau sent notice of the upset
tax sale to the address listed for both of the Coverts. The trial court further stated
that the address used by the Bureau was the address listed on the various exhibits
submitted by Purchaser at the hearing. However, the trial court offered no
response to the Coverts’ argument that the mail notice sent by the Bureau violated
Section 602 of the RETSL where the Bureau sent the notice to Jack P. Covert “et
al.,” and did not send separate notice to each of the owners as required by this
7
Court’s decision in LaBracio. Based on our Supreme Court’s holding in Teslovich
and this Court’s decision in LaBracio, the trial court erred in determining the mail
notice sent by the Bureau complied with Section 602 of the RETSL.
More specifically, as in LaBracio, the record, including the Bureau’s
file, see R.R. at 24a, 30a, reveals that the Bureau mailed certified mail notice to
only one named owner, Jack P. Covert, followed by the designation “et al.,” rather
than mailing separate notice to each owner. Further, Nadine Emil, the assistant
director for the Bureau, testified as follows (with emphasis added):
Q. Nadine, where did you send this notice with respect to this
individual property?
A. To 2nd Street. 431 2nd Street, Harveys Lake.
Q. How is that notice sent?
A. They are sent regular mail.
Q. Do you have any indication that the address of 2nd Street
was an accurate address for these particular property owners for
all of them?
A. Just what was in our system.
Q. Are you familiar with the fact that there were four property
owners to this particular property?
A. We sent it out as et al.
****
Q. Was a notice sent to a Terry A. Covert?
A. No.
Q. Was there a notice sent to Alice R. Covert?
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A. No.
Q. Was there a second notice sent to another Jack P. Covert?
A. Just the one that’s on here.
Q. Are you aware that there are two Jack Coverts listed as
grantees for the deed to this property?
A. No.
Q. Do you have anything in your file that would reflect an
investigation by your office as to what the current addresses for
any of those people that I just enumerated to you?
A. No, we don’t.
R.R. at 25a-26a. In short, the Bureau did not mail notice of the upset tax sale,
either by certified mail or regular mail, to each owner of the subject property as
required by Section 602 of the RETSL. Teslovich. Rather, the Bureau mailed
notice to only one of the named owners of the subject property followed by the
designation “et al.,” which is insufficient to satisfy Section 602 of the RETSL.
LaBracio.
While Purchaser asserts that actual notice (either express or implied)
of a pending tax sale waives strict compliance with the RETSL’s notice
requirements,4 the trial court here made no finding that Alice Covert had actual
notice of the impending tax sale. In fact, a fair reading of the trial court opinion
suggests the opposite conclusion. See Tr. Ct., Slip Op., 1/28/14, at 6. This is not
4
See, e.g., Popple v. Luzerne Cnty. Tax Claim Bureau, 960 A.2d 517 (Pa. Cmwlth.
2008); Cruder v. Westmoreland Cnty. Tax Claim Bureau, 861 A.2d 411 (Pa. Cmwlth. 2004);
Sabbeth v. Tax Claim Bureau of Fulton Cnty., 714 A.2d 514 (Pa. Cmwlth. 1998).
9
surprising given the absence of clear evidence that Alice Covert did, in fact, have
actual notice of the tax sale.5 Additionally, although Purchaser argues that the trial
court could draw an adverse inference that Alice Covert had actual notice of the
tax sale based on her failure to appear and testify at the hearing, the trial court’s
opinion does not indicate that it drew such an inference, and we may not do so on
appeal.
For the foregoing reasons, we reverse the trial court’s order and set
aside the upset tax sale.6
ROBERT SIMPSON, Judge
5
The trial court stated that the exhibits submitted by Purchaser, which includes an
assessment record, printouts of docket sheets regarding municipal liens filed against Jack Covert,
a copy of a telephone book entry for Jack Covert, and a home equity line of credit signed for by
Jack P. Covert and Alice Covert, bear the same address for the Coverts as the address to which
the Bureau sent notice here. However, the trial court offered no further explanation as to how
these documents, standing alone, prove that Alice Covert had actual notice of the upset tax sale.
6
Based on our resolution of this matter, we need not address the Coverts’ remaining
arguments that the trial court abused its discretion in denying their continuance request as well as
their motion for reconsideration.
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IN THE COMMONWEALTH COURT OF PENNSYLVANIA
In Re: Consolidated Return of :
Luzerne County Tax Claim :
Bureau of the Upset Tax Sale of :
Properties held on April 26, 2013 : No. 2091 C.D. 2013
:
Appeal of: Jack P. Covert and :
Alice Covert :
ORDER
AND NOW, this 30th day of July, 2014, the order of the Court of
Common Pleas of Luzerne County is REVERSED.
ROBERT SIMPSON, Judge