Michael Joe Sorrell and Sorrell Family Ltd Partners v. Estate of Benjamin Hardy Carlton, III, by and Through Its Independent Administratrix Darlene Barton ( 2016 )

Affirmed and Majority and Dissenting Opinions filed August 11, 2016.
In The
Fourteenth Court of Appeals
NO. 14-15-00361-CV
MICHAEL JOE SORRELL AND SORRELL FAMILY LTD. PARTNERS,
Appellants
V.
ESTATE OF BENJAMIN HARDY CARLTON, III, BY AND THROUGH
ITS INDEPENDENT ADMINISTRATRIX DARLENE BARTON, Appellee
On Appeal from the 239th District Court
Brazoria County, Texas
Trial Court Cause No. 70579
DISSENTING OPINION
In this appeal from a bench trial, our chief task is to apply the plain words of
a real-property redemption statute — Tax Code section 34.21 — to determine if the
former property owner satisfied the requirements to redeem the property after a tax
sale. The trial court found that the former owner successfully redeemed. But, the
trial evidence conclusively proves that the former owner did not unconditionally
tender the full redemption amount by the redemption deadline and that the former
owner did not substantially comply with section 34.21. For these reasons, this court
should reverse and render judgment that the former owner take nothing. Because
the court instead affirms, I respectfully dissent.
Redemption Under Tax Code Section 34.21
Appellants/defendants Michael Joe Sorrell and Sorrell Family, Ltd. Partners
(hereinafter the “Sorrell Parties”) appeal the trial court’s judgment in favor of
appellee/plaintiff the Estate of Benjamin Hardy Carlton, III, by and through its
Independent Administratrix Darlene Barton (the “Estate”) in the Estate’s suit
seeking a declaratory judgment that the Estate redeemed the approximately three-
acre tract of land in question (the “Property”) that the Sorrell Parties purchased at a
tax sale. After a bench trial, the trial court determined that the Estate had redeemed
the Property under Tax Code section 34.21 based on the court’s conclusions that the
Estate tendered full compensation during the redemption period and that the Estate
substantially complied with the statute.
Tax Code section 34.21, entitled “Right of Redemption,” provides in pertinent
part:
(a) The owner of real property sold at a tax sale to a purchaser other
than a taxing unit that was used as the residence homestead of the owner
or that was land designated for agricultural use when the suit or the
application for the warrant was filed, or the owner of a mineral interest
sold at a tax sale to a purchaser other than a taxing unit, may redeem
the property on or before the second anniversary of the date on which
the purchaser’s deed is filed for record by paying the purchaser the
amount the purchaser bid for the property, the amount of the deed
recording fee, and the amount paid by the purchaser as taxes, penalties,
interest, and costs on the property, plus a redemption premium of 25
percent of the aggregate total if the property is redeemed during the first
year of the redemption period or 50 percent of the aggregate total if the
property is redeemed during the second year of the redemption period.
2
...
(e) The owner of real property sold at a tax sale other than property that
was used as the residence homestead of the owner or that was land
designated for agricultural use when the suit or the application for the
warrant was filed, or that is a mineral interest, may redeem the property
in the same manner and by paying the same amounts as prescribed by
Subsection (a), (b), (c), or (d), as applicable, except that:
(1) the owner’s right of redemption may be exercised not later than the
180th day following the date on which the purchaser’s or taxing unit’s
deed is filed for record; and
(2) the redemption premium payable by the owner to a purchaser other
than a taxing unit may not exceed 25 percent.
(f) The owner of real property sold at a tax sale may redeem the real
property by paying the required amount as prescribed by this section to
the assessor-collector for the county in which the property was sold, if
the owner of the real property makes an affidavit stating:
(1) that the period in which the owner’s right of redemption must be
exercised has not expired; and
(2) that the owner has made diligent search in the county in which the
property is located for the purchaser at the tax sale or for the purchaser
at resale, and has failed to find the purchaser, that the purchaser is not
a resident of the county in which the property is located, that the owner
and the purchaser cannot agree on the amount of redemption money
due, or that the purchaser refuses to give the owner a quitclaim deed to
the property.
(f-1) An assessor-collector who receives an affidavit and payment
under Subsection (f) shall accept that the assertions set out in the
affidavit are true and correct. The assessor-collector receiving the
payment shall give the owner a signed receipt witnessed by two
persons. The receipt, when recorded, is notice to all persons that the
property described has been redeemed. The assessor-collector shall on
demand pay the money received by the assessor-collector to the
purchaser. An assessor-collector is not liable to any person for
performing the assessor-collector’s duties under this subsection in
reliance on the assertions contained in an affidavit.
...
(i) The owner of property who is entitled to redeem the property under
this section may request that the purchaser of the property, or the taxing
3
unit to which the property was bid off, provide that owner a written
itemization of all amounts spent by the purchaser or taxing unit in costs
on the property. The owner must make the request in writing and send
the request to the purchaser at the address shown for the purchaser in
the purchaser’s deed for the property, or to the business address of the
collector for the taxing unit, as applicable. The purchaser or the
collector shall itemize all amounts spent on the property in costs and
deliver the itemization in writing to the owner not later than the 10th
day after the date the written request is received. Delivery of the
itemization to the owner may be made by depositing the document in
the United States mail, postage prepaid, addressed to the owner at the
address provided in the owner’s written request. Only those amounts
included in the itemization provided to the owner may be allowed as
costs for purposes of redemption.1
In crafting this statute, the Legislature set specific deadlines, provided a formula for
determining the redemption amount, and identified the responsibilities of the parties
in the redemption process. The statutory regime bespeaks the Legislature’s
consideration of the needs and interests of the taxing entity, the tax-sale purchaser,
and the former property owner. Likewise, the statute’s precision and detail reflects
clear legislative intent that to get the benefit of statutory redemption, the former
property owner must follow the rules. It is the Legislature’s prerogative to make the
rules. It is the court’s obligation to evaluate the record evidence to determine if the
former property owner followed those rules.
When reviewing the legal sufficiency of the evidence, this court is to consider
the evidence in the light most favorable to the challenged finding and indulge every
reasonable inference that would support it.2 We are to credit favorable evidence if a
reasonable factfinder could and disregard contrary evidence unless a reasonable
factfinder could not.3 We must determine whether the evidence at trial would enable
1
Tax Code Ann. § 34.21 (West, Westlaw through 2015 R.S.).
2
City of Keller v. Wilson, 168 S.W.3d 802, 823 (Tex. 2005).
3
See id. at 827.
4
reasonable and fair-minded people to find the facts at issue. See id. The factfinder
is the only judge of witness credibility and the weight to give to testimony. 4 Because
findings of fact in a bench trial have the same force and dignity as a jury verdict, we
are to review them for legal sufficiency of the evidence under the same standards we
apply in reviewing a jury’s findings.5 We are to review the trial court’s conclusions
of law de novo.6
The Trial Court’s Conclusion that the Estate Tendered the Full Redemption
Amount During the Statutory Time Period
To redeem the Property, the Estate was required to “pay” the Sorrell Parties a
statutory redemption amount not later than the 180th day following the date on
which the Sorrell Parties’ deed was filed for record.7 The applicable statutory
redemption amount was “the amount the [Sorrell Parties] bid for the property, the
amount of the deed recording fee, and the amount paid by the [Sorrell Parties] as
taxes, penalties, interest, and costs on the property, plus a redemption premium of
25 percent of the aggregate total.”8 Based on the undisputed evidence and the trial
court’s findings, the redemption amount was $96,755.61 (“Redemption Amount”)
and the deadline for the Estate to pay this amount to the Sorrell Parties was August
27, 2012 (“Redemption Deadline”).9 Though section 34.21 requires that the
redeeming party “pay” the redemption amount, the Fourteenth Court of Appeals and
other courts have held that the payment requirement may be satisfied if the
4
See id. at 819.
5
Anderson v. City of Seven Points, 806 S.W.2d 791, 794 (Tex. 1991).
6
Johnston v. McKinney, 9 S.W.3d 271, 277 (Tex. App.—Houston [14th Dist.] 1999, pet. denied).
7
See Tax Code Ann. § 34.21 (a),(e).
8
Tax Code Ann. § 34.21 (a),(e).
9
See id. The majority agrees that this sum is the Redemption Amount and that this date is the
Redemption Deadline. See ante at 6.
5
redeeming party timely tenders funds to the purchaser in the full redemption amount
without any conditions on the purchaser’s right to possess the funds.10 This court
has noted that, though redemption statutes should be construed liberally in favor of
redemption, courts cannot use the doctrine of liberal construction as a license to
contradict the plain meaning of section 34.21, which requires full payment of the
required redemption amount during the statutory redemption period.11 In Bluntson,
this court held that, as a matter of law, no redemption occurred under section 34.21
because the party attempting redemption did not timely tender funds to the purchaser
in the redemption amount of $19,081.73 without any conditions on the purchaser’s
right to possess the funds.12 The Bluntson court concluded there was no redemption
as a matter of law even though, during the redemption period, the party attempting
redemption made an unconditional tender of $17,687.98 (93% of the required
amount) and a conditional tender of the remainder of the redemption amount.13
In today’s case, the trial court concluded that the Estate tendered the full
Redemption Amount to the Sorrell Parties before the Redemption Deadline based
on the Estate’s August 21, 2012 letter to the Sorrell Parties. In this letter, the Estate
enclosed a proposed redemption deed and checks payable to the Sorrell Parties in
the amounts of $85,000 (125% of the amount the Sorrell Parties paid for the
Property) and $28 (the deed recording fee). The Estate instructed the Sorrell Parties
that the checks and deed were delivered to them in trust and that they should not
negotiate the checks until after the Sorrell Parties executed the deed and sent the
10
Bluntson v. Wuensche Servs., Inc., 374 S.W.3d 503, 507–08 (Tex. App.—Houston [14th Dist.]
2012, no pet.).
See id. at 509; Deutsche Bank Nat’l Trust Co. v. Stockdick Land Co., 367 S.W.3d 308, 315 (Tex.
11
App.—Houston [14th Dist.] 2012, pet. denied).
12
Bluntson, 374 S.W.3d at 505–08.
13
Id.
6
deed back to the Estate. The Estate’s counsel stated: “If there are any more claimed
expenses, please notify me immediately and such funds will be paid, upon review.”
Presuming for the sake of argument that the Estate unconditionally tendered $85,028
to the Sorrell Parties,14 under the letter’s unambiguous text, the Estate did not
unconditionally tender an amount greater than $85,028.15
To tender payment, the Estate had to relinquish possession of the amount of
money in question for a sufficient time and under such circumstances as to enable
the Sorrell Parties, without any special effort on their part, to acquire possession of
the money.16 The Estate said it would pay in the future any additional expenses that
the Sorrell Parties brought to the Estate’s attention “upon review.” Neither in this
statement nor in any other part of the letter did the Estate relinquish possession of
any money to cover these expenses. As a matter of law, the Estate did not tender an
amount greater than $85,028 because it did not relinquish possession of an amount
greater than this sum by the Redemption Deadline.17 In addition, the use of the term
“upon review” reflects that the Estate would pay these amounts only if, after review
of the expense(s) in question, the Estate concluded that the expense(s) were part of
the Redemption Amount. Therefore, any promise by the Estate to pay these
expenses in the future was conditional and thus insufficient to effect a redemption.18
Even presuming that during the redemption period the Estate tendered
$85,028 (88% of the Redemption Amount) to the Sorrell Parties without any
14
The trial court found that the Estate tendered $85,028 to the Sorrell Parties in the August 21,
2012 letter. In its fact findings, the trial court did not find that the Estate tendered a higher amount
during the redemption period.
15
See Bluntson, 374 S.W.3d at 507–08.
16
Id. at 507.
17
See id.
18
See id.
7
conditions on their right to possess the funds, the trial evidence conclusively proves
that the Estate did not unconditionally tender the full Redemption Amount by the
Redemption Deadline. The Bluntson precedent mandates that this court reverse the
trial court’s judgment and render judgment that the Estate take nothing.19
The Trial Court’s Conclusion that the Estate Substantially Complied with
Tax Code Section 34.21
In Tax Code section 34.21, the Legislature did not address whether substantial
compliance with the statute would be enough to effect a redemption. To date, neither
the Supreme Court of Texas nor this court has addressed whether a former property
owner’s substantial compliance with section 34.21 is sufficient to effect a
redemption. Although the majority holds that substantial compliance is enough, this
holding is unnecessary for two reasons. First, as discussed above, as a matter of law
the Estate did not effect a redemption under the Bluntson precedent. And, second,
as a matter of law the trial evidence shows that the Estate did not substantially
comply with section 34.21.
The undisputed trial evidence shows:
 On February 7, 2012, the Sorrell Parties bought the Property at a tax sale for
the purchase price of $68,000.
 After buying the Property and before any attempt to redeem the Property, the
Sorrell Parties paid $8,694.49 in property taxes on the Property and $682 for
insurance on the Property.
 The deed conveying the Property to the Sorrell Parties was filed for record on
February 29, 2012, and a deed recording fee of $28 was paid.
 The first action taken by the executrix of the Estate in an attempt to redeem
the Property was taken on July 31, 2012, the 153rd day following the date on
which the deed to the Sorrell Parties was filed for record.
19
See id.
8
 On July 31, 2012, the Estate’s lawyer sent a letter to the Sorrell Parties
notifying them that the Estate “will be redeeming” the Property and indicating
that the deadline for this redemption was the 180th day after February 29,
2012. The Estate’s lawyer stated that, as required by law, the Estate would in
the future be tendering to the Sorrell Parties the amount they paid for the
Property plus 25%. The Estate’s lawyer stated that he would be sending the
funds in the future; he did not request a written itemization of the amounts the
Sorrell Parties had expended in costs on the Property.
 The Estate took no further action to redeem the Property until August 21,
2012, the 174th day following the date on which the deed to the Sorrell Parties
was filed for record.
 On August 21, 2012, the Estate’s lawyer sent a second letter to the Sorrell
Parties enclosing a proposed redemption deed and checks payable to the
Sorrell Parties in the amounts of $85,000 (125% of the amount the Sorrell
Parties paid for the Property) and $28 (the deed recording fee).
 The Estate instructed the Sorrell Parties that the checks and deed were
delivered to them in trust and that they should not negotiate the checks until
after the Sorrell Parties had executed and sent the deed to the Estate.
 The Estate stated that, as required by law, the Estate was tendering the amount
the Sorrell Parties paid for the Property plus an additional 25% and the deed
recording fee. The Estate stated, “If there are any more claimed expenses,
please notify me immediately and such funds will be paid, upon review.”
 The Estate did not state unequivocally that the expenses would be paid. Nor
did the Estate request a written itemization of the amounts the Sorrell Parties
spent on the Property.
 The Sorrell Parties retained a lawyer, who sent a letter on August 31, 2012,
ten days after the Estate’s second letter and the 184th day following the date
on which the deed to the Sorrell Parties was filed for record.
 The Sorrell Parties returned the two checks to the Estate, stating that the
amount tendered in the attempted redemption was insufficient. The Sorrell
Parties notified the Estate that the Sorrell Parties had paid $8,694.49 in taxes
on the Property and $682 for insurance.
The Legislature laid out the redemption procedure plainly. Under the
unambiguous language of the statute, to calculate the redemption amount, the former
owner needs to know the amount, if any, paid by the purchaser as taxes, penalties,
9
interest, and costs on the property.20 These amounts often are known only to the
purchaser. If the purchaser fails to disclose these amounts to the former owner
voluntarily, the former owner has recourse to subsection (i) of section 34.21.21
Under this provision, the former owner may send the purchaser a written request that
the purchaser provide the former owner a written itemization of all amounts spent
by the purchaser in costs on the property.22 The purchaser must deliver a written
itemization of these amounts to the former owner not later than the tenth day after
receiving the written request.23 If the purchaser provides a written itemization, then
the itemization allows the former owner to calculate and pay or tender payment of
the redemption amount.24 If the purchaser does not timely respond with a written
itemization, the former owner need not include in the calculation of the redemption
amount any taxes, penalties, interest, or costs on the property.25
The Estate first took action on July 31, 2012, 153 days into the redemption
period. If the Estate had made a written request in its July 31, 2012 letter for a
written itemization of all amounts spent by the purchasers in costs on the property,
the written itemization would have been due on August 11, 2012 (ten days after
receipt on August 1, 2012), allowing the Estate sufficient time to tender
unconditionally the Redemption Amount by the Redemption Deadline. In the July
31, 2012 letter, the Estate did not request a written itemization or anything else from
the Sorrell Parties. Instead, the Estate incorrectly stated that it only needed to tender
20
Tax Code Ann. § 34.21 (a),(e).
21
Id. § 34.21(i).
22
Id.
23
Id.
24
Id.
25
Id.
10
125% of the amount paid for the Property.
Six days before the Redemption Deadline, the Estate sent a second letter.
Even presuming the Estate unconditionally tendered $85,028 to the Sorrell Parties
in that letter, the sum did not include any amount for taxes, penalties, interest, or
costs on the property. The record contains no evidence that in the 173 days of the
redemption period before the Estate sent this letter that the Estate did anything to
determine the Redemption Amount. There is not an iota of evidence that the Estate
either formally asked for a written itemization or that the Estate informally inquired
as to the amount of the costs. Even in this second letter, there is no request for a
written itemization of all amounts spent by the purchasers in costs on the Property.26
Though the Estate did not request a written itemization, the Estate did ask the Sorrell
Parties to immediately “notify” the Estate “[i]f there are any more claimed
expenses.”27 Even if the Estate had made a request for written itemization in the
August 21, 2012 letter, the Sorrell Parties would not have been required to provide
the itemization until ten days later, after the Redemption Deadline.28 Indeed,
apparently treating the August 21, 2012 letter as a request for a written itemization
out of excess of caution, the Sorrell Parties itemized these costs in a letter written to
the Estate ten days later.
The trial evidence conclusively proves that the Estate did not substantially
comply with section 34.21, and therefore, this court should reverse and render a take-
26
See Tax Code Ann. § 34.21(i).
27
The majority concludes that this request for notification of any claimed expenses was a written
request for a written itemization of all amounts spent by the purchasers in costs on the Property.
See ante at 8. But, a request for notification if there are any claimed expenses is not a request for
a writing, nor is it a request for an itemization. Notification of the existence of any claimed
expenses can be made through oral communication and need not include any itemization of the
expenses.
28
See id.
11
nothing judgment without addressing whether substantial compliance applies to this
statute.29
Today, the majority embraces the analysis of the Tenth Court of Appeals in
Jensen v. Covington,30 a case in which, unlike today’s case, the former owner made
a written request under subsection (i) of section 34.21 for a written itemization of all
amounts spent by the purchaser in costs on the property.31 The Jensen court
concluded that the former owner tendered the full redemption amount within the
redemption period and substantially complied with section 34.21, even though the
former owner (1) first took action at 3:00 p.m. on the day of the redemption deadline;
(2) did not know the amounts spent by the purchaser in costs on the property; (3)
waited until the redemption deadline to make a written request under subsection (i)
of section 34.21 for a written itemization; and (4) relied on the purchaser calculating
the full redemption amount, confirming to the former owner’s satisfaction the
amounts of costs spent on the property, executing a quitclaim, and obtaining a check
drawn on the former owner’s escrow account sometime between 3:00 p.m. and
midnight on the redemption deadline after first receiving notice at 3:00 p.m. that
day.32
The facts of Jensen differ from the facts before us today.33 As the dissenting
justice in Jensen pointed out, the Jensen court failed to apply the unambiguous
language of subsection (i) of section 34.21, which gives the purchaser ten days to
29
See Deutsche Bank Nat’l Trust Co., 367 S.W.3d at 314–15; Burd v. Armistead, 982 S.W.2d 31,
35 (Tex. App.—Houston [1st Dist.] 1998, pet. denied).
30
See 234 S.W.3d 198, 203 (Tex. App.—Waco 2007, pet. denied).
31
See id. at 201.
32
See id. at 201–02.
33
See id.
12
respond to a request for a written itemization.34 The Jensen court held that the
purchaser “violated his statutory duty to provide [the former owner] with the
itemization]” by not providing the itemization on the day it was requested, rather
than within the ten-day period allowed under the plain language of the statute.35 The
Jensen court appeared to base this holding on a liberal construction of the statute in
favor of redemption.36 Though the Tenth Court of Appeals apparently allows this
liberal construction to be used to undercut the unambiguous text of section 34.21,
the Fourteenth Court of Appeals has eschewed that approach.37 Under this court’s
precedent, a liberal construction in favor of redemption cannot be used as a license
to contradict the plain meaning of section 34.21.38
In addition, the Jensen court found that a redemption had been effected on the
redemption deadline, even though the former owner did not unconditionally tender
the full redemption amount during the redemption period; instead, the former owner
invited the purchaser to stop by the former owner’s lawyer’s office on the deadline
date to confirm to the lawyer the amount of costs spent on the property.39 The would-
be redeeming party conditioned the last-minute alleged tender on the purchaser’s
confirmation of the amount of costs spent on the property to the satisfaction of the
former owner’s lawyer.40 Thus, this part of Jensen conflicts with Bluntson’s holding
that the former owner must make a timely tender of funds to the purchaser in the full
redemption amount without any conditions on the purchaser’s right to possess the
34
See id. at 205, n.3; id. at 208 (Gray, C.J., dissenting).
35
See Tax Code Ann. § 34.21(i); Jensen, 234 S.W.3d 201–202, 205 & n.3.
36
Jensen, 234 S.W.3d at 205, n.3.
37
See Bluntson, 374 S.W.3d at 509; Deutsche Bank Nat’l Trust Co., 367 S.W.3d at 315.
38
See Bluntson, 374 S.W.3d at 509; Deutsche Bank Nat’l Trust Co., 367 S.W.3d at 315.
39
Jensen, 234 S.W.3d at 201.
40
See id.
13
funds.41
Jensen is not on point. And, Jensen clashes with this court’s binding
precedent.42 This court should not follow Jensen.
Conclusion
The trial evidence conclusively proves that the Estate did not unconditionally
tender the full Redemption Amount by the Redemption Deadline. Even presuming
that the substantial-compliance doctrine applies, the trial evidence conclusively
proves that the Estate did not substantially comply with Tax Code section 34.21. For
these reasons, this court should reverse and render judgment that the Estate take
nothing.
/s/ Kem Thompson Frost
Chief Justice
Panel consists of Chief Justice Frost and Justices Boyce and Wise. (Boyce, J.,
majority).
41
Bluntson, 374 S.W.3d at 507–08.
42
See id. at 507–09; Deutsche Bank Nat’l Trust Co., 367 S.W.3d at 315.
14