Roderick Johnson and Theus Wilkins v. Thomas Turner, Elsie Foster (mem. dec.)

MEMORANDUM DECISION
Pursuant to Ind. Appellate Rule 65(D),
this Memorandum Decision shall not be
FILED
regarded as precedent or cited before any Feb 26 2018, 5:42 am
court except for the purpose of establishing CLERK
Indiana Supreme Court
the defense of res judicata, collateral Court of Appeals
and Tax Court
estoppel, or the law of the case.
ATTORNEYS FOR APPELLANT ATTORNEY FOR APPELLEE
Leanna Weissmann Michael D. Kvachkoff
Tony Walker Crown Point, Indiana
The Walker Law Group, P.C.
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
Roderick Johnson and Theus February 26, 2018
Wilkins, Court of Appeals Case No.
Appellants-Petitioners, 45A03-1706-MI-1221
Appeal from the Lake Circuit
v. Court
The Honorable Marissa L.
Thomas Turner, Elsie Foster, et McDermott, Judge
al., The Honorable Stephen E.
Appellees-Respondents. Scheele, Magistrate
Trial Court Cause No.
45C01-1508-MI-181
Mathias, Judge.
[1] Roderick Johnson and Theus Wilkins (collectively “the Petitioners”) petitioned
the Lake Circuit Court for a tax deed for certain real estate located in Gary,
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Indiana and owned by Thomas Turner1 and Elsie Foster (collectively “the
Property Owners”). The Lake Circuit Court denied the petition after finding
that the Property Owners did not receive constitutionally adequate notice of the
tax sale. The Petitioners appeal and raise two arguments, which we restate as:
I. Whether a tax sale purchaser is required to comply with the Due Process
Clause when providing notice to the Property Owner of the tax sale
proceedings; and,
II. Whether the Property Owners received constitutionally adequate notice of
the tax sale.
[2] We affirm.
Facts and Procedural History
[3] The Property Owners failed to pay property taxes for real estate located at 1304
Garfield Street in Gary, Indiana in 2013 and 2014. As a result, the real estate
was certified for tax sale. At the auction in September 2015, the property did
not receive any bids. Therefore, the Lake County Board of Commissioners
acquired a lien on the property in the amount of the taxes owed, i.e. $5,598.54.
In March 2016, the Petitioners paid $3,200 to purchase a tax sale certificate for
the real estate.
[4] The Petitioners mailed all required notices, i.e. notice of the tax sale certificate
and of the redemption deadline, to the Property Owners via certified mail. The
1
Thomas Turner is listed as an owner of the real estate, but he died in 2013. Elsie Foster is Turner’s sister.
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certified mail was returned to the Petitioners marked “attempted -not known”
and “unable to forward.” Ex. Vol. Addendum, Ex. C. Also, both envelopes
were marked with the handwritten letters “ANK,” meaning address not known.
April 24, 2017 Tr. pp. 29–30. The certified mailing containing notice of the
redemption period that was sent to Thomas Turner was also marked “return to
sender –vacant –unable to forward.” Ex. Vol. Addendum, Ex. D.
[5] In August 2016, the Petitioners filed a verified petition for tax deed for the real
estate and sent notice to the Property Owners. At a hearing held on September
23, 2016, Elsie Foster appeared by counsel and objected to issuance of the tax
deed.
[6] On January 31, 2017, the trial court held a final hearing on the petition. The
Petitioners argued that the certified mailings sent as required by statute were
sufficient to notify the Property Owners that the real estate had been purchased
at a tax sale. Elsie Foster argued that she had not received the notice, the
Petitioners knew she had not received the notice because the certified mail was
returned to them, and due process requires more than the notice attempted in
this case. Foster, who resides in Georgia, and her daughter testified that
Foster’s daughter was responsible for caring for the real estate and collecting the
mail in Foster’s absence.
[7] The trial court denied the petition for a tax deed and found that “the notice
given by Petitioners was insufficient.” Appellants’ App. Vol. 2, p. 136.
Thereafter, the Petitioners filed a motion to correct error and a hearing was held
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on their motion on April 24, 2017. The Petitioners argued that they sent the
statutorily required notices by certified and regular mail. However, the
Petitioners never presented evidence that the notices were sent by regular mail.
The Petitioners also argued that Foster received due process because both the
Lake County Auditor and the Petitioners complied with the statutes concerning
notice to property owners of tax sales.
[8] The trial court denied the motion to correct error, and in its order, the court
reasoned in pertinent part:
The Respondents assert, as they did at the 2/27/2017 trial, that
the Petitioners’ notice with respect to their tax deed petition was
not reasonably calculated to inform as required by law, and was
constitutionally inadequate. The Petitioners assert that their
posting of the notice via certified mail to the Respondents’
address of record with County taxing authorities, with nothing
more, is all the notice that is legally or reasonably or
constitutionally required, even where -as here- the certified
mailing was returned by the Postal Service as “RETURN TO
SENDER, ATTEMPTED -NOT KNOWN, UNABLE TO
FORWARD” and/or “RETURN TO SENDER, VACANT,
UNABLE TO FORWARD.” No evidence was presented to
show that the Petitioners, aside from sending the certified
mailings, also sent first class mail or physically posted notice on
the property or did anything else to inform the Respondents of
the tax sale process, in spite of all certified mailings having been
returned [to] Petitioners. At trial, this Court found that “the
notice given by Petitioners was insufficient,” and the Petition for
Tax Deed was denied.
Appellees’ App. Vol. 2, pp. 9–10. The Petitioners now appeal.
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Discussion and Decision
[9] When a real estate owner fails to pay property taxes, the property may be sold
to satisfy the tax obligation. Schaefer v. Kumar, 804 N.E.2d 184, 191 (Ind. Ct.
App. 2004), trans. denied.
A tax sale is purely a statutory creation, and material compliance
with each step of the statute is required. While a tax deed creates
a presumption that a tax sale and all of the steps leading to the
issuance of the tax deed are proper, the presumption may be
rebutted by affirmative evidence to the contrary. An order to
issue a tax deed will be given if the court finds that the notices
have been provided pursuant to the statutes. However, title
conveyed by a tax deed may be defeated if the notices were not in
substantial compliance with the manner prescribed by the
pertinent statutes.
Iemma v. JP Morgan Chase Bank, N.A., 992 N.E.2d 732, 738 (Ind. Ct. App. 2013)
(internal quotations and citations omitted).
[10] “A tax deed is void if the former owner was not given constitutionally adequate
notice of the tax sale proceedings.” Schaefer, 804 N.E.2d at 192; see also Ind.
Code § 6-1.1-25-16(7).
Before the government may sell property due to unpaid property
taxes, the Due Process Clause of the Fourteenth Amendment to
the United States Constitution requires the government to
provide the owner with “notice and opportunity for hearing
appropriate to the nature of the case.” Due process does not
require that a property owner receive actual notice before the
government may take his property. Rather, the government must
provide notice reasonably calculated, under all the
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circumstances, to apprise interested parties of the pendency of the
action and afford them an opportunity to present their objections.
Prince v. Marion County Auditor, 992 N.E.2d 214, 219 (Ind. Ct. App. 2013)
(internal citations omitted), trans. denied.
[11] A person may defeat a tax deed only by proving one of the seven defects set
forth in Indiana Code section 6-1.1-25-16. Swami, Inc. v. Lee, 841 N.E.2d 1173,
1177 (Ind. Ct. App. 2006), trans. denied. One such defect exists if the three
notices required by Indiana Code sections 6-1.1-24-4 (notice of tax sale), 6-1.1-
25-4.5 (notice of the right of redemption), and 6-1.1-25-4.6 (notice of petition
for tax deed) were not in substantial compliance with the requirements
prescribed in those sections. I.C. § 6-1.1-25-16(7); Schaefer, 804 N.E.2d at 191.
[12] The notice of tax sale is governed by Indiana Code section 6-1.1-24-4(b) which
provides in pertinent part:
Not less than twenty-one (21) days before the earliest date on
which the application for judgment and order for sale of real
property eligible for sale may be made, the county auditor shall
send a notice of the sale by certified mail, return receipt
requested, and by first class mail to:
(1) the owner of record of real property with a single owner;
or
(2) at least one (1) of the owners, as of the date of
certification, of real property with multiple owners;
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at the last address of the owner for the property as indicated in
the transfer book records of the county auditor under IC 6-1.1-5-4
on the date that the tax sale list is certified. If both notices are
returned, the county auditor shall take an additional reasonable
step to notify the property owner, if the county auditor
determines that an additional reasonable step to notify the
property owner is practical.
***
Failure by an owner to receive or accept the notice required by
this section does not affect the validity of the judgment and order.
The owner of real property shall notify the county auditor of the
owner’s correct address. The notice required under this section is
considered sufficient if the notice is mailed to the address or
addresses required by this section.
[13] Next, Indiana Code section 6-1.1-25-4.5 governs notices of the right of
redemption. That statute provides in relevant part that a person who purchases
property at a tax sale must send notice of the sale and of the right of redemption
“by certified mail, return receipt requested” to “the owner of record at the time
of the [] sale of the property . . . at the last address of the owner for the property,
as indicated in the records of the county auditor;” and “any person with a
substantial property interest of public record at the address for the person
included in the public record that indicates the interest.” Indiana Code
subsection 6-1.1-25-4.5(h) provides that a notice that was mailed to “the last
address of the owner for the property, as indicated in the records of the county
auditor” is “considered sufficient.”
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[14] Finally, if the owner of record does not redeem the property from the tax sale
within the required period, the purchaser may petition the trial court for
issuance of a tax deed. I.C. § 6-1.1-25-4.6. Indiana Code section 6-1.1-25-4.6
requires a tax sale purchaser to provide
[n]otice of the filing of this petition . . . to the same parties as
provided in section 4.5 of this chapter, except that, if notice is
given by publication, only one (1) publication is required. The
notice required by this section is considered sufficient if the
notice is sent to the address required by section 4.5(d) of this
chapter.
[15] First, the Petitioners claim that because the Lake County Auditor gave notice to
the Property Owners of the tax sale as required by statute, and the Property
Owners have not challenged the notice provided prior to the tax sale, the
government met its constitutional burden and a tax sale certificate holder must
only comply with the notice requirements in Indiana Code sections 6-1.1-25-4.5
and -4.6. Contrary to the Petitioners’ argument, our courts have routinely held
that property owners are entitled to sufficient notice that satisfies the Due
Process Clause of the post-tax sale notices required under our statutory scheme.
See e.g. Iemma, 992 N.E.2d at 740; Marion County Auditor v. Sawmill Creek, LLC,
964 N.E.2d 213, 218–19 (Ind. 2012).
[16] The Petitioners also argue that Indiana’s tax sale notice statutes are “clearly
designed to satisfy, if not surpass, requirements of Due Process under the 14th
Amendment to the United States Constitution.” Appellants’ Br. at 17.
Furthermore, the Petitioners contend that they are not required to comply with
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the Due Process Clause because they are not state actors. Our court has held
otherwise.
[17] In Iemma, our court held that “a non-governmental tax purchaser must comply
with the notice requirements of the due process clause.” 992 N.E.2d at 740. Our
court observed that
when private parties make use of state procedures with the overt,
significant assistance of state officials, state action may be found.
The government is significantly involved in tax sale proceedings
as the taxing authority that files an application for judgment and
order for sale; indeed, it is the county government that takes the
property and sells it for unpaid taxes.
Id. (citations and quotations omitted). We agree with the Iemma Court and turn
our attention to whether the Petitioners’ notices comply with due process
requirements.2
[18] The Petitioners sent the notices required in Indiana Code sections 6-1.1-25-4.5
and -4.6 by certified mail.3 But the Property Owners argue that because the
2
Arguing that a tax sale purchaser should not be considered a state actor, the Petitioners emphasize that the
post-tax sale notices are sent by the tax sale purchaser, not the government. The Petitioners’ argument
ignores the significant involvement of the government in tax sales and the tax sale purchaser’s role in
depriving the owner of his or her property.
3
At the hearing on the motion to correct error, the Petitioners told the trial court that the notices were also
sent via first class mail. However, they presented no evidence to support their claim, and therefore, the trial
court found that no evidence was presented to establish that the Petitioners sent the notices via first class
mail. For this reason, we do not credit the Petitioners’ claim in their brief that the notices were sent via first
class mail. The Petitioners also argue that Foster must have received notice because she hired an attorney and
appeared at the hearing on their petition for a tax deed. We agree that Foster must of received notice of the
petition, but we cannot also assume that she received the notices required in Indiana Code sections 6-1.1-25-
4.5 and -4.6.
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notices were returned to the Petitioners, the Petitioners had an additional
obligation under the Due Process Clause to take some other means to notify the
Property Owners of the tax sale of their real estate.
[19] To comply with due process, a purchaser must give notice that is “reasonably
calculated, under all the circumstances, to apprise interested parties of the
pendency of the action and afford them an opportunity to present their
objections.” Sawmill Creek, 964 N.E.2d at 218. “‘But if with due regard for the
practicalities and peculiarities of the case these [notice] conditions are
reasonably met, the constitutional requirements are satisfied.’” Id. at 219
(quoting Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314–15
(1950)). Ultimately, the issue is not the Property Owner’s actual knowledge, but
whether the Petitioners “gave notice under the circumstances of this case in a
manner reasonably calculated to inform” the Property Owners of the pending
loss of its interest in the real estate. See Iemma, 992 N.E.2d at 741–42.
[20] “[T]he review of whether notice efforts satisfied this standard is a fact-intensive
process that requires consideration of every relevant fact.” Sawmill Creek, 964
N.E.2d at 219 (citing Jones v. Flowers, 547 U.S. 220, 227 (2006)). In Sawmill
Creek, the court concluded that because the certified mailing was returned “Not
deliverable as addressed, unable to forward,” re-mailing the notice by first class
mail would be unreasonable. Id. at 220; see also Flowers, 547 U.S. at 234 (stating
“[w]hat steps are reasonable in response to new information depends upon
what the new information reveals”).
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[21] The Petitioners took no additional steps to give the Property Owners notice of
the tax sale. Under the facts of this case, mailing the notice by first class mail
would not have been a reasonable method of attempting notice because the
certified mail was returned with the notifications “attempted -not known” and
“unable to forward.” Ex. Vol. Addendum, Ex. C. Also, both envelopes were
marked with the handwritten letters “ANK,” or address not known. April 24,
2017 Tr. pp. 29–30.
[22] However, with regard to residential property, the Sawmill Court noted in dicta
that posting notice on the property would have been appropriate and effective,
or in other words, “reasonably calculated under all the circumstances, to
apprise interested parties of the pendency of the action and afford them an
opportunity to present their objections.” 964 N.E.2d at 218. Under the facts and
circumstances of this case, the Petitioners could and should have taken this
additional step of posting notice on the property. There is nothing in the record
that would lead us to conclude that posting notice would have been difficult.
And there is conflicting evidence concerning whether the property was
occupied. The Property Owners testified that the property was not vacant.
[23] For these reasons, we conclude that the Petitioners did not give notice that was
reasonably calculated under all the circumstances to notify the Property Owners
that the Petitioners had purchased their real estate at a tax sale and that they
had the right to redeem the property. We therefore affirm the trial court’s order
denying the petition for a tax deed.
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[24] Affirmed.
Najam, J., and Barnes, J., concur.
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