Centre County TCB Upset Tax Sale of: Tax Parcel No. 04-007-050-0000 Reputed Owner(s): D. Etters Appeal of: O. Levi ( 2023 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Centre County Tax Claim Bureau :
Upset Tax Sale of: :
: No. 697 C.D. 2022
Tax Parcel No. 04-007-050-0000 : Submitted: June 6, 2023
Reputed Owner(s): Dorothy Etters et al. :
:
Appeal of: Olga Levi :
BEFORE: HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE LORI A. DUMAS, Judge
HONORABLE STACY WALLACE
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE DUMAS FILED: August 8, 2023
Olga Levi (Appellant) appeals from an order of the Centre County
Court of Common Pleas (trial court), dated and filed on June 1, 2022,1 which set
aside the upset tax sale of property owned by John J. Harakal IV (Owner). In support
of its decision, the trial court credited evidence that the Centre County Tax Claim
Bureau (Bureau) had not properly notified Owner that his property was subject to a
pending sale. After review, we affirm.
I. BACKGROUND2
On September 21, 2021, the Bureau sold Owner’s property to
Appellant at an upset tax sale.3 Afterwards, the Bureau notified Owner of the sale
1
The Centre County Prothonotary mailed notice of the order on June 8, 2022. See
Pa.R.Civ.P. 236.
2
The relevant facts are not in dispute. We derive this background from the trial court’s
opinion, which is supported by the record. See Trial Ct. Op., 6/1/22, at 1-3.
3
The property is located at 611 Blanchard Street in Spring Township. See Appellant’s Ex.
A, Realty Transfer Tax Statement of Value, 1/27/16.
and filed a consolidated return with the trial court. The trial court issued a decree
nisi, and Owner timely filed objections asserting improper notice of the sale.
Subsequently, the Bureau discovered a defect in notice and refunded
Appellant’s payment. In January 2022, the trial court granted Appellant leave to
intervene and enjoined the Bureau from taking any further action pursuant to the
Real Estate Tax Sale Law (Tax Sale Law).4
The trial court held an evidentiary hearing at which Director Jennifer
Pettina credibly testified that the Bureau had not properly notified Owner of the sale.
For her part, Appellant conceded that she lacked evidence to the contrary.
On June 1, 2022, the trial court set aside the tax sale of Owner’s
property.5 Appellant timely appealed to this Court.6
II. ISSUES
Appellant asserts that the trial court erred in setting aside the upset tax
sale. She develops four arguments in support of this assertion. First, according to
Appellant, the Bureau sent notice of the sale to the correct address, as well as an
alternate address ascertained from tax assessment records. Second, Appellant argues
4
Act of July 7, 1947, P.L. 1368, as amended, 72 P.S. §§ 5860.101–5860.803.
5
The trial court similarly set aside the tax sale of second property owned by George Z.
Kern. See Trial Ct. Op., 6/1/22, at 6. That property is not at issue in this appeal.
6
On June 17, 2022, Appellant filed a motion with the trial court, styled as a motion for
post-trial relief. The trial court interpreted this as a motion for reconsideration but did not enter a
ruling denying the motion until September 6, 2022, long after the 30-day appeal period had
expired. See Trial Ct. Op., 9/6/22; see also Sewickley Valley Hosp. v. Dep’t of Pub. Welfare, 550
A.2d 1351, 1353 (Pa. Cmwlth. 1988) (observing that a trial court lacks jurisdiction to consider a
motion for reconsideration after expiration of appeal period); Pa.R.A.P. 1701(a). Accordingly, the
decision of the trial court entered on September 6, 2022, constitutes a legal nullity. Sewickley
Valley Hosp., 550 A.2d at 1353. However, also on September 6, 2022, the trial court issued an
order relying on the September 6th opinion for purposes of Pennsylvania Rule of Appellate
Procedure 1925. To the extent the trial court’s analysis therein is responsive to issues preserved
in Appellant’s Pa.R.A.P. 1925(b) statement, we will consider it. Despite this procedural
irregularity, Appellant timely appealed. See Notice of Appeal, 6/28/2022.
2
that the Bureau’s “judgment” regarding proper notice is not dispositive. Third,
Appellant challenges the trial court’s deference to the Bureau and suggests that a
settlement between the Bureau and Owner should not be binding on Appellant.
Finally, according to Appellant, a successful bidder’s equitable interest in a property
is not subordinate to an owner’s right to redeem the property sold at an upset tax
sale.7
III. DISCUSSION8
A. Service upon Owner was Improper
In her first issue, Appellant asserts that the efforts of the Bureau to serve
notice of the upset tax sale upon Owner were appropriate and sufficient to satisfy the
requirements of due process. Appellant’s Br. at 13. Appellant notes, for example,
that the Bureau complied with its obligation to send notice by certified mail, and
when that was unsuccessful, by first class mail. Id. Finally, according to Appellant,
the Bureau exercised reasonable efforts to reach Owner at an alternate address. Id.Although Appellant concedes that these efforts were unsuccessful, she argues that
the “practicalities and peculiarities of this case” should absolve the Bureau of its
failure to effectuate service upon Owner. Id. (citing Famageltto v. Cnty. of Erie Tax
Claim Bureau, 133 A.3d 337 (Pa. Cmwlth. 2016)).
The purpose of the Tax Sale Law is to collect taxes, not to strip away
citizens’ property rights. Sampson v. Tax Claim Bureau of Chester Cnty., 151 A.3d
1163, 1167 (Pa. Cmwlth. 2016). There are due process implications in the taking of
7
Appellant’s issues have been paraphrased. See Appellant’s Br. at 2-3. The Bureau has
not filed a robust response to Appellant’s arguments. See Bureau’s Br. at 2 (“The Bureau takes no
position at this time on whether this sale was valid.”).
8
In tax sale cases, we review whether the trial court abused its discretion, rendered a
decision that lacked supporting evidence, or clearly erred as a matter of law. In re Lehigh Cnty.
Tax Claim Bureau Upset Sale of September 19, 2018, 263 A.3d 714, 717 n.4 (Pa. Cmwlth. 2021).
3
property; therefore, a tax claim bureau must prove strict compliance with the
statutory provisions of the law. See id.; Rice v. Compro Distrib., Inc., 901 A.2d 570,
575 (Pa. Cmwlth. 2006). A failure to comply with the notice provisions of the Tax
Sale Law will nullify a sale. Sampson, 151 A.3d at 1168.
In relevant part, Section 602(e)(1) of the Tax Sale Law requires that a
tax claim bureau provide a tax-delinquent property owner notice of an upset tax sale
by certified mail at least 30 days prior to the sale. 72 P.S. § 5860.602(e)(1).9 If
service by certified mail is unsuccessful, then the bureau must provide notice by first
class mail at least 10 days prior to the sale. Section 602(e)(2) of the Tax Sale Law,
72 P.S. § 5860.602(e)(2). If notification by mail is unsuccessful, or if there are
“circumstances raising a significant doubt” as to whether service was successful,
Section 607.1(a) requires the bureau to “exercise reasonable efforts to discover the
whereabouts” of the owner and notify the owner of the tax sale. 72 P.S. §
5860.607a(a).10 The legislature has provided examples of “reasonable efforts,” but
these examples are “merely illustrative.” Clemmer v. Fayette Cnty. Tax Claim
Bureau, 176 A.3d 417, 421 (Pa. Cmwlth. 2017).
9
Section 602 requires notice of a tax sale in three ways: publication, posting, and mail. 72
P.S. § 5860.602. If the subject property is owner-occupied, Section 601(a)(3) also requires
personal service on the owner by a sheriff. 72 P.S. § 5860.602(a)(3). These additional notice
requirements are not relevant in this case.
10
Section 607.1(a), added by the Act of July 3, 1986, P.L. 351, provides a non-exhaustive
list of the Bureau’s additional notification efforts:
The bureau's efforts shall include, but not necessarily be restricted to, a
search of current telephone directories for the county and of the dockets and
indices of the county tax assessment offices, recorder of deeds office and
prothonotary's office, as well as contacts made to any apparent alternate
address or telephone number which may have been written on or in the file
pertinent to such property.
72 P.S. § 5860.607a(a).
4
Upon exhausting reasonable efforts to notify the owner, a tax claim
bureau shall place in the property file a notation describing its efforts, and the sale
may proceed. Id. In reviewing the validity of an upset tax sale, the court must focus
on the activities of the bureau. “The focus is not on the alleged neglect of the owner,
which is often present in some degree, but on whether the activities of the [b]ureau
comply with the requirements of the statute.” Sampson, 151 A.3d at 1168 (cleaned
up). “It matters not that the reasonable effort may not have borne fruit. An effort
must still be undertaken.” Clemmer, 176 A.3d at 422 (citation omitted); see also
Famageltto, 133 A.3d at 340 (requiring “ordinary common sense business practices
to ascertain proper addresses”) (citation omitted).
Here, it was undisputed that Owner has resided at 845 North Allen
Street, State College, Pennsylvania, since 2006, not at the subject property. Notes
of Testimony (N.T.) Hr’g, 5/31/22, at 19. The Bureau was unsuccessful in
effectuating service at this address, by either certified or first class mail. See
Appellant’s Ex. A, Certified Mail Receipt (indicating notice was “unclaimed”);
Appellant’s Ex. A, First Class Mail Envelope (indicating notice was undeliverable
because address was “vacant”); N.T. at 12 (testimony from Director Pettina
conceding that the Bureau did not notify Owner of the pending upset tax sale). 11
The inability of the Bureau to effectuate service by mail triggered a
further requirement that the Bureau exercise reasonable efforts to locate and notify
Owner. However, the Bureau did not offer evidence that it undertook any additional
efforts to effectuate service, let alone “reasonable efforts” as required by Section
11
Director Pettina testified in relevant part:
Q. Ms. Pettina, do you have any reason to believe the Tax Claim Bureau
provided notice of this sale to [Owner] before the sale occurred?
A. From the information I’ve [seen] on the files, no, I do not.
N.T. Hr’g, 5/31/22, at 12.
5
607.1(a).12 Accordingly, the trial court did not err in nullifying the tax sale of
Owner’s property. Sampson, 151 A.3d at 1168; Clemmer, 176 A.3d at 422.
Moreover, the absence of any effort to effectuate service on Owner
renders Appellant’s reliance on Famageltto misplaced. In that case, the owners
challenged the upset tax sale of their property, asserting in part that the tax claim
bureau had failed to conduct reasonable efforts to discover their whereabouts
because it had not telephoned them regarding the upset tax sale, ultimately sent
notice by first class mail to an alternative address too late to effectuate actual notice,
and never attempted to personally serve notice upon them at the alternative address.
Famageltto, 133 A.3d at 344.
The Famageltto Court rejected these assertions. When service by mail
proved unsuccessful, the bureau had searched its internal records, as well as records
of the assessment office, office of deeds and wills, the prothonotary’s office, and the
local tax collector. Id. at 344. It also searched the telephone directory. Id. The
Famageltto Court concluded that these efforts were reasonable and satisfied the
requirements of Section 607.1(a). Id. Moreover, the Court specifically rejected the
owners’ suggestion that the bureau should have telephoned them or attempted
12
Appellant has suggested on appeal that the Bureau attempted to effectuate service at an
alternate address. See Appellant’s Br. at 13. There is evidence that the Bureau identified a former
address of Owner. Appellant’s Ex. A, Centre Cnty. Taxroll for parcel 36-004-,144-,0000-, 9/24/21
(indicating an updated mailing address for owner; noting address changed in 2006; suggesting an
extra notice was sent to this address; but no response received); see also N.T. Hr’g at 19 (Owner
testifying that he had moved to his current address in 2006). Director Pettina could not confirm if
the Bureau had sent notice of the sale to this former address but observed that the date of this
document was September 24, 2021, three days after the upset tax sale. N.T. Hr’g at 10. Thus, the
record does not support Appellant’s suggestion.
6
personal service, noting that the Tax Sale Law imposed no such obligations on the
bureau.13 Id. at 345.
Regarding the timeliness of mail service to the alternative address, the
Famageltto Court observed that the bureau had mailed the notice more than 10 days
prior to the date of the sale in accordance with Section 602(e)(2) of the Tax Sale
Law. Id. at 345. The Court also noted that the owners had conceded that the notice
may have been in their mailbox for some time because they had received a notice
from the post office that the mailbox was too full. Thus, the owners lacked actual
notice simply because they failed to retrieve their mail. Under these circumstances,
the Famageltto Court concluded that the bureau had acted “in a manner reasonably
calculated to provide [the owners] notice . . . and, therefore, satisfied the demands
of due process.” Id. at 346.
In stark contrast to the efforts of the tax sale bureau in Famageltto, here,
when mail service was unsuccessful, the Bureau made no further attempts to
discover the whereabouts of Owner and notify him of the upset tax sale prior to its
occurrence. Cf. Famageltto. On this record, therefore, the activities of the Bureau
were insufficient and did not comply with the requirements of the Tax Sale Law.
Sampson, 151 A.3d at 1168; Clemmer, 176 A.3d at 422.
B. The Bureau must prove Strict Compliance with the Tax Sale Law
In brief remarks, Appellant next asserts that the trial court erred in its
deference to the Bureau’s judgment that service upon Owner was improper. See
Appellant’s Br. at 13-14. According to Appellant, the statements from the Bureau
conceding that it failed to effectuate service upon Owner cannot negate evidence of
13
Section 607.1(a) requires a bureau to “search . . . current telephone directories for the
county;” it does not require the bureau to call property owners. 72 P.S. § 5860.607a(a).
7
the Bureau’s compliance with the additional notification efforts set forth in Section
607.1(a) of the Tax Sale Law. See id. at 14. This claim is devoid of merit.
First, the premise of this claim is flawed. The trial court did not “defer”
to the Bureau’s judgment. Rather, the Bureau presented evidence, and the trial court
made findings based on that evidence. See Trial Ct. Op., 6/1/22, at 2-3.
Second, because a tax claim bureau has a constitutional duty to notify
a delinquent property owner of an upset tax sale, the tax claim bureau bears the
burden of proving strict compliance with the notice provisions of the Tax Sale Law.
Famageltto, 133 A.3d at 339. An upset tax sale must be set aside if a tax claim
bureau fails to meet this burden. Sampson, 151 A.3d at 168. This is so whether a
reviewing court rejects a tax claim bureau’s assertion that its notification efforts were
reasonable, whether a bureau fails to offer any evidence of its efforts, or whether a
bureau concedes that its efforts were flawed. See, e.g., In re Upset Tax Sale of
September 29, 2014, 163 A.3d 1072, 1078 (Pa. Cmwlth. 2017) (rejecting a tax claim
bureau’s argument that its notification efforts were sufficient and that it was not
required to search current telephone directories of the county); Clemmer, 176 A.3d
at 422-23 (affirming the trial court’s decision to set aside a tax sale where the bureau
offered no evidence of its efforts); In re Lehigh Cnty. Tax Claim Bureau Upset Tax
Sale of September 19, 2018, 263 A.3d 714, 722 (Pa. Cmwlth. 2021) (Lehigh)
(discerning no error in trial court’s decision to set aside an upset tax sale when the
bureau conceded on the record that it had not effectuated mail service and that its
personal service was flawed).14
Here, the Bureau conceded that it had not effectuated mail service upon
Owner. N.T. Hr’g at 12. The Bureau failed to offer evidence that it had exercised
14
The Lehigh Court’s remarks concerning the trial court’s decision to set aside the tax sale
based on the concession of the tax claim bureau were dicta but nonetheless persuasive.
8
additional, reasonable efforts to locate the whereabouts of Owner and notify him of
the sale. See generally N.T. Hr’g. Further, Appellant conceded that she had no
evidence to demonstrate the Bureau’s compliance with the notice provisions of the
Tax Sale Law. See N.T. Hr’g at 17. Accordingly, the Bureau failed to meet its
burden of proof. Famageltto; Clemmer; Lehigh.
C. Appellant was not Bound by the Bureau’s Concession
Appellant’s third argument is unclear. The question presented by
Appellant suggests that the trial court (1) deferred to the Bureau and (2) concluded
that a settlement between the Bureau and Owner was binding on Appellant. See
Appellant’s Br. at 2-3, 15.15 However, Appellant does not develop an argument in
support of this question presented. Rather, Appellant makes two seemingly
disparate assertions. First, according to Appellant, the trial court’s reliance upon
Lehigh was misplaced. Id. at 15. Second, Appellant asserts that “she is [not] bound
by any representation by the Bureau that its efforts to provide notice of the sale to
[Owner] were insufficient[.]” Id. at 16.
In Lehigh, the tax claim bureau proceeded with an upset tax sale even
though it had failed to properly notify the delinquent owner. 263 A.3d at 715-16.
The owner challenged the upset tax sale, but neither the owner nor the bureau
15
Appellant presented the issue as follows:
Whether the trial court erred as a matter of law in setting aside the upset tax
sale because it was bound to defer to the Bureau as to whether the statutory
notice requirement had been met, and that the acquiescence of the Bureau
and the owner to a settlement was binding on a purchaser who had properly
intervened.
Appellant’s Br. at 2-3. The first part of Appellant’s question presented is addressed in section
III.B., supra. The trial court did not defer to the Bureau; it considered evidence and made findings
thereon. The second part does not accurately reflect the record in this case. There was no evidence
introduced at the hearing that the Bureau and Owner had entered into a settlement agreement, nor
did the trial court conclude that such agreement was binding on Appellant. See generally N.T.
Hr’g; Trial Ct. Op., 6/1/22.
9
notified the successful bidders of the challenge. See id. The trial court held a hearing
on the owner’s objections, at which the bureau conceded that it had not notified the
owner of the sale. See id. The bureau and the owner also presented evidence that
they had agreed on a payment schedule for the delinquent taxes. See id. On this
record, the trial court set aside the upset tax sale. See id. Learning of this decision,
the successful bidders intervened and appealed. See id.
The sole issue before the Lehigh Court was whether successful bidders
are indispensable parties in an owner’s challenge to the upset tax sale of his property.
263 A.3d at 717. Ultimately, the Court concluded that successful bidders have an
equitable interest in the property and, therefore, have standing to intervene and
participate in a proceeding challenging the sale. Id. at 718-22. However, this interest
is insufficient to transform successful bidders into indispensable parties in the
proceedings, nor are they entitled to notice of those proceedings. Id.
In this context, the Lehigh Court set forth the statutory procedures for
conducting an upset tax sale, including a review of the notification requirements both
before and after an upset tax sale has occurred. See id. at 717-19. In cursory fashion,
after disposing of the relevant arguments, the Court addressed the underlying
decision to set aside the tax sale. Id. at 722. According to the Lehigh Court,
considering the bureau’s admission that notice was improper and the parties’
agreement on a payment plan for the delinquent taxes, the trial court was required to
set aside the upset tax sale and could do so without first hearing from the successful
bidders. See id. at 723.
Here, the trial court set forth general principles underlying the Tax Sale
Law and outlined the procedures required for conducting an upset tax sale. See Trial
Ct. Op., 6/1/22, at 3-5; Trial Ct. Op., 9/6/22, at 3-7. In so doing, the trial court cited
10
to relevant statutory provisions and case law, including Lehigh. See, e.g., Trial Ct.
Op., 6/1/22, at 4. While Appellant is correct that the precise legal issue before the
Lehigh Court differs from the issue presently before this Court, the trial court’s
reliance on Lehigh for relevant principles of law was not misplaced. Further, the
Lehigh Court’s observation that a tax claim bureau’s admission constitutes sufficient
evidence that the bureau failed to comply with the notice requirements of the Tax
Sale Law is persuasive. Therefore, Lehigh is not inapposite.
Finally, Appellant’s assertion that the Bureau’s representations are not
binding echoes Appellant’s earlier arguments, misconstrues the record, and is
otherwise devoid of merit. The trial court did not conclude that Appellant was bound
by the representations of the Bureau. At the evidentiary hearing in this matter, the
Bureau presented evidence; thereafter, the trial court considered and credited this
evidence, and it then ruled accordingly. Moreover, the trial court granted Appellant
leave to intervene in the proceedings and afforded her an opportunity to refute the
Bureau’s evidence. Indeed, Appellant testified at the hearing but was unable to offer
evidence that Owner received proper notice of the upset tax sale. See N.T. Hr’g at
17 (Appellant denying any knowledge that proper notice occurred).
D. Trial Court did not recognize a Right of Redemption
In her fourth argument, Appellant suggests16 that the trial court may
have relied on Owner’s statutory right of redemption17 in rejecting Appellant’s
16
Appellant states, “To the extent that the trial court relied upon this purported ‘right of
redemption[,]’ . . . it was error, and its decision setting aside the upset sale should be reversed.”
Appellant’s Br. at 17.
17
Section 501(a) of the Tax Sale Law permits a property owner to cure a tax delinquency,
and thus “cause the discharge of tax claims and liens entered against the property . . . .” 72 P.S.
§ 5860.501(a). However, this right of redemption is “extinguished at the conclusion of the actual
sale even if no bid is made for the upset sale price, unless the trial court sustains objections or
11
efforts to uphold the upset tax sale. See Appellant’s Br. at 16-17. There is no support
for this assertion in the record.
In its initial decision setting aside this tax sale, the trial court quoted
language from the Lehigh Court’s analysis of a successful bidder’s equitable interest
in property purchased at an upset tax sale. See Trial Ct. Op., 6/1/22, at 5 (quoting
Lehigh, 263 A.3d at 714). This portion of the Lehigh Court’s analysis is irrelevant
to the legal issues pertinent to this case, nor did it form the basis of the trial court’s
decision. See generally id. Rather, the trial court properly determined that neither
the Bureau nor Appellant could establish the Bureau’s strict compliance with the
notice requirements of the Tax Sale Law. Id. at 5-6. Moreover, in its subsequent
opinion adopted for Pa.R.A.P. 1925 purposes, the trial court omitted this language.
See Trial Ct. Op., 9/6/22.
IV. CONCLUSION
For the reasons set forth above, Appellant’s several arguments on
appeal lack merit. The trial court considered evidence presented by the parties and
concluded that the Bureau failed to provide Owner with proper notice that his
property was subject to an upset tax sale. Based on this evidence, the trial court
properly set aside the sale. Accordingly, we affirm.
LORI A. DUMAS, Judge
exceptions to the sale and sets aside the sale.” Pacella v. Washington Cnty. Tax Claim Bureau, 10
A.3d 422, 429 (Pa. Cmwlth. 2010) (citations omitted).
12
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Centre County Tax Claim Bureau :
Upset Tax Sale of: :
: No. 697 C.D. 2022
Tax Parcel No. 04-007-050-0000 :
Reputed Owner(s): Dorothy Etters et al. :
:
Appeal of: Olga Levi :
ORDER
AND NOW, this 8th day of August, 2023, the order of the Centre County Court
of Common Pleas, dated and filed June 1, 2022, is AFFIRMED.
LORI A. DUMAS, Judge