Dougherty v. Hassell

Opinions of the United
2006 Decisions States Court of Appeals
for the Third Circuit
1-12-2006
Dougherty v. Hassell
Precedential or Non-Precedential: Non-Precedential
Docket No. 05-1459
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NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 05-1459
JAMES BRUCE DOUGHERTY,
Executor of the Estate of Helen deToy Pfeuffer
v.
CATHERINE B. HASSELL; MYRAH KEATING; LILLIAN GARRETT;
EMILIE RAMDHANDIE; MYRAH SOLOMON; LILLIAN SMITH McBEAN;
JOHN KNUD HANSEN; JAMES KNUD HANSEN; INEZ D. WILKERSON;
FRANCES DURLOO WILSON; FRANK DURLOO; MILES A. FINNEGAN;
DESMOND FINNEGAN; DOROTHY F. LAUGHLIN; MARGARITA PARROTT;
JOSEFA MONSANTO AND OTHERS; VIRGINIA I. KEYS
The Heirs of Ramona deToy Aubrey,
Appellants
On Appeal from the District Court of the Virgin Islands
Division of St. Thomas and St. John
D.C. Civil Action No. 87-cv-00426
(Honorable Thomas K. Moore)
Argued December 5, 2005
Before: SCIRICA, Chief Judge, McKEE and NYGAARD, Circuit Judges
(Filed: January 12, 2006)
WILLIAM S. McCONNELL, ESQUIRE (ARGUED)
6500 Red Hook Plaza, Suite 206
Charlotte Amalie, St. Thomas
U.S. Virgin Islands 00802
Attorney for Appellants
MARIE E. THOMASGRIFFITH, ESQUIRE (ARGUED)
Birch, de Jongh, Hindels & Hall
Poinsettia House at Bluebeard's Castle
1330 Estate Taarnebjerg
Charlotte Amalie, St. Thomas
U.S. Virgin Islands 00802
Attorney for Appellee
OPINION OF THE COURT
SCIRICA, Chief Judge.
The heirs of Ramona deToy Aubrey appeal the District Court’s order dismissing
their objection to Horace Turnbull’s claim in this partition action. We have jurisdiction
under 28 U.S.C. § 1291 and will affirm.
I.
The facts are undisputed. Because we write for the parties, an abbreviated
recitation will suffice. In 1987, Ramona deToy Aubrey inherited a 1/24th undivided
interest in Thatch Cay, an uninhabited island in the United States Virgin Islands. Aubrey
failed to pay real property taxes on this interest from 1987 to 1993. In April 1995, the
Virgin Islands Department of Finance notified Aubrey by mail that failure to pay her
2
outstanding tax liability of $6,197.98 would result in the sale of her interest in Thatch Cay
at public auction. Thereafter, the Department of Finance included Aubrey’s interest in a
listing of properties that were to be sold at public auction on May 31, 1995. The listing
was published twice a week for three weeks in the Virgin Islands Daily News.
Horace Turnbull bought Aubrey’s interest for $6,625 at the May 31, 1995 tax sale
and a Certificate of Purchase was issued and recorded. On May 22, 1996, the Department
of Finance wrote to Aubrey, notifying her of the sale and of her right, under 33 V.I.C. §
2581,1 to redeem the interest by paying all outstanding taxes and fees within one year
1
33 V.I.C. § 2581 provides:
The owner of any real property sold for non-payment of real property taxes
and public sewer system user fees, his heirs, agent or assigns, or any person
having a right or interest therein, may redeem the same within one year
from the date of sale at public auction by paying to the Department of
Finance the full amount of all taxes and public sewer system user fees for
which the property was offered at public auction, plus interest at the rate of
twelve percent per annum computed on the full amount of the purchase
money to the date 30 days after tender is made to the Department of
Finance, together with all penalties, costs incurred, taxes and public sewer
system user fees due and a Department of Finance Administrative fee of
$15. Upon payment of said amounts, the redemptioner shall receive a
certificate of redemption from the Commissioner of Finance. The
certificate of redemption shall operate as a release of all claims by the
auction purchaser to title to said property by virtue of the sale for non-
payment of real property taxes and public sewer system user fees and shall
supersede the certificate of purchase. The redemptioner may have such
release duly entered in the real property register against the certificate of
purchase upon payment to the Recorder of Deeds of such fees as may be
specified by Title 28, section 133, of this Code. The property so released
shall remain subject to all liens and legal claims against it, other than the
real property tax and public sewer system user fee liens for which it was
(continued...)
3
from the date of the sale.2 Aubrey did not exercise this right. On June 11, 1996, the
Commissioner of Finance recorded an Expiration of Period of Redemption.
Meanwhile, the owners and putative owners of Thatch Cay commenced this
partition action on November 24, 1987 in District Court, seeking a sale of the island and
distribution of the proceeds. By virtue of her inherited interest, Aubrey was named as a
defendant. On September 28, 1988, default was entered against her. On November 9,
1989, she filed a Notice of Appearance and a motion to set aside the entry of default. The
District Court granted the motion on April 12, 2000, apparently unaware that the tax sale
had occurred and Aubrey had died during the intervening years.
The District Court established January 15, 2002 as a deadline for submission of all
claims in the partition action. On January 14, 2002, Turnbull submitted a claim for a
1
(...continued)
sold, to the same extent and in the manner as though said property had not
been sold for real property taxes and public sewer system user fees. When
the property is redeemed by a mortgagee, the redemption money paid by
him shall be added to his mortgage lien and may be recovered with the same
rate of interest borne by the mortgage lien; when a tenant or lessee redeems
such property, he may deduct the amount of such redemption money from
his rent.
2
We note the Department of Finance did not give Aubrey notice of her redemption
right until almost a full year following the date of the tax sale, when only eight days
remained in the statutory redemption period. But our reading of 33 V.I.C. § 2581, see
supra note 1, leads us to believe earlier notice was not required. This reading is
strengthened by the absence of discussion regarding the date of notice of the redemption
right in both parties’ briefs, and by the heirs’ consent to the statement of facts set forth in
Turnbull’s January 29, 2003 objection to the heirs’ claim, which stated the May 22, 1996
notice “complied in all material respects with the statutory requirements.”
4
proportionate share of proceeds based on the interest he purchased at the tax sale. On
February 25, 2002, after the Court’s established deadline, the Aubrey heirs filed a claim
and an objection to Turnbull’s claim. They contended title to Aubrey’s interest never
passed to Turnbull because notice deficiencies rendered the tax sale invalid and void. On
January 29, 2003, Turnbull filed an objection to the heirs’ claim. On December 29, 2004,
the District Court entered an Opinion and Order dismissing the heirs’ objection to
Turnbull’s claim on statute of limitations grounds. This appeal followed.
II.
Whether the statute of limitations bars the Aubrey heirs’ objection to Turnbull’s
claim is a question of law over which we exercise plenary review. Sheet Metal Workers
Local 19 v. 2300 Group Inc., 949 F.2d 1274, 1278 (3d Cir. 1991). Under Virgin Islands
law, there is a two year statute of limitations for any action to set aside a sale of property
for failure to pay property taxes. See Title 5 V.I.C. § 31(5)(A) (2005). The tax sale of
Aubrey’s interest in Thatch Cay occurred on May 31, 1995. Accordingly, the statute of
limitations, unless tolled or otherwise inapplicable, would have expired on May 30, 1997.
The tax sale was not challenged until the heirs filed their February 25, 2002 objection to
Turnbull’s claim in the partition action, more than four and a half years after this
expiration date. Notwithstanding, the heirs contend their challenge is not time barred
because the tax sale was invalid and void, and the statute of limitations does not apply.
5
We cannot agree that the heirs’ challenge—brought in an unrelated proceeding
almost seven years after the tax sale—is not time barred. We recognize “[i]t is firmly
established law in the Virgin Islands that a tax sale is void unless government carefully
adheres to the notice procedures for a tax sale required by Title 33 of the Virgin Islands
Code and the due process clause of the Fourteenth Amendment to the United States
Constitution.” Grobien v. Lombardi, 765 F. Supp. 856, 859 (D.V.I. 1991). But for the
reasons stated, we conclude the 1995 tax sale complied with constitutional requirements
of due process and with the statutory provisions of 33 V.I.C. § 2491, et. seq., and
accordingly, the sale was valid and the statute of limitations applied.
The District Court held the government provided constitutionally adequate notice
in the tax sale. We agree. Constitutionally adequate notice involves actual notice or
notice reasonably calculated to provide actual notice, and is satisfied by mailed notice.
See Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 798 (1983). Virgin Islands courts
have held constitutionally adequate notice requires notice of attachment be given by mail
where personal service is not effected. See Centralpack Eng’g Corp. v. Gov’t, Dep’t of
Fin., 24 V.I. 264 (V.I. Terr. 1989). It is undisputed that on April 5, 1995, Aubrey
received mailed notice of the attachment of her property at her home address listed on her
tax bills. Accordingly, we conclude the government provided constitutionally adequate
notice.
6
The heirs contend that even if the notice was constitutionally adequate, it did not
comply with Virgin Islands statutory requirements, rendering the tax sale invalid and
void. See Benoit v. Pathaky, 20 V.I. 28, 30 (Terr. Ct., Div. St. Croix 1983), aff’d, 21 V.I.
378 (D.V.I. 1985), aff’d, 780 F.2d 336 (3d Cir. 1985) (“[S]tatutory requirements must be
strictly followed if there is to be a valid sale.”). The heirs allege three specific procedural
errors but in each case, we find no error.
First, the heirs allege the government failed to publish newspaper notice for a full
three weeks, in violation of 33 V.I.C. § 2546 (1995) (amended 1998).3 We interpret
section 2546 to require notice of a tax sale to be published twice a week during a three
week (21 day) period between the levy of attachment and the sale. Aubrey received
notice of the attachment on April 5, 1995 in a letter stating her property would “be sold at
Public Auction if the delinquent taxes are not paid promptly.” The government filed a
Certificate of Attachment on April 12, 1995, and then published notice of the tax sale in
the Virgin Islands Daily News twice a week for the three week period beginning Monday,
May 8, 1995.4 The auction was held on May 31, 1995, almost two months after Aubrey
3
As it then existed, 33 V.I.C. § 2546 stated, in relevant part:
After the levy of attachment the Commissioner of Finance shall proceed to
advertise the property for sale. The advertisement shall be published at
least twice a week for a period of three weeks in a newspaper of general
circulation in the judicial division and jurisdiction in which the property is
located . . . .
4
During the first week, notices were published on Thursday, May 11 and Saturday,
May 13; during the second week, notices were published Tuesday, May 16 and Friday,
(continued...)
7
received notice of the attachment. Accordingly, the government complied with the
requirements of 33 V.I.C. § 2546.
The heirs next allege the government erred by listing Aubrey’s name in a group of
un-alphabetized names at the end of the newspaper notice. We see no error. The statute
does not require a specific order for publication of delinquent tax rolls. See 33 V.I.C. §§
2546, 2547 (specifying the required form and content of the notice of sale). Nor does the
order of names call into question the constitutional adequacy of the government’s notice
to Aubrey. As noted, the constitutional standard is met when a taxpayer is given actual
notice or notice reasonably calculated to provide actual notice. In conjunction with the
notice of attachment mailed to Aubrey at her home address, the newspaper notice
satisfied this standard. It might have been preferable for all names in the notice to be
listed alphabetically, but this argument is more appropriately directed toward the Virgin
Islands legislature. In the absence of a statutory or constitutional violation, we cannot
conclude the lack of alphabetical order constitutes an error that invalidates or voids the
tax sale.
Finally, the heirs allege the government failed to comply with 33 V.I.C. § 2496
(requiring publication, within 60 days of taxes becoming delinquent, of a notice
informing delinquent taxpayers their property will be sold at public auction unless they
4
(...continued)
May 19; and during the third week, notices were published on Monday, May 22 and
Wednesday, May 24.
8
pay their tax liability in full). But the Department of Finance’s April 3, 1995 letter to
Aubrey, notifying her of her outstanding tax liability and the consequences of not paying
the liability in full, was sufficient to comply with the requirements of 33 V.I.C. § 2496,
which are intended to serve “as notice to the taxpayer of the impending sale of the real
property at public auction.” 33 V.I.C. § 2496.
We conclude the statute of limitations applied to the May 30, 1995 tax sale and
expired on May 30, 1997.5 Accordingly, the heirs are time barred from entering a claim
in this partition action based on a challenge to the tax sale.6
III.
For the reasons set forth, we will affirm the order of the District Court.
5
The heirs’ argument on appeal that Aubrey’s presence in the partition action served to
toll the statute of limitations was not presented to the District Court and was not,
therefore, properly preserved for appellate review. Regardless, this argument would not
affect our conclusion. The partition action and the tax sale were distinct proceedings, and
Aubrey’s presence in the former has no bearing on the statute of limitations for
challenging the latter.
6
We note that even if the heirs’ claims were not time barred under the statute of
limitations, they would have been barred by the District Court’s January 12, 2001 order
establishing a deadline of January 15, 2002 for submitting claims.
9