Ithaca Finance, LLC v. Lopez

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18-P-433 Appeals Court
ITHACA FINANCE, LLC vs. WANDA E. LOPEZ & another.1
No. 18-P-433.
Suffolk. January 7, 2019. - May 6, 2019.
Present: Hanlon, Lemire, & Wendlandt, JJ.
Taxation, Real estate tax: foreclosure of right of redemption.
Land Court, Vacation of judgment. Due Process of Law,
Notice. Practice, Civil, Vacation of judgment. Notice,
Tax taking.
Petition filed in the Land Court Department on May 9, 2014.
A motion for relief from judgment was heard by the
recorder.
Carl E. Fumarola for the defendant.
John Connolly, Jr., for the plaintiff.
WENDLANDT, J. This case requires us to construe G. L.
c. 60, §§ 62 and 63, which set forth procedures by which a
person may redeem property that has been taken for nonpayment of
1 Wells Fargo Financial Massachusetts, Inc. (Wells Fargo),
interested party. Only Wells Fargo has appealed.
2
taxes and extinguish a tax taking of the property. More
specifically, we are called on to determine whether one of these
procedures -- namely, recording an instrument of redemption --
is available after the assignee of the tax taking on the
property has filed a petition to foreclose the right of
redemption in the Land Court. Because the commencement of the
foreclosure action vests exclusive jurisdiction in the Land
Court with regard to the right of redemption, we hold that once
a foreclosure action is commenced in the Land Court, a property
may not be redeemed by paying the outstanding tax liability
directly to the municipality in which the property is located;
instead, a party seeking to redeem must follow the procedure
specified by the Land Court.
Background. In 2005, the defendant, Wanda Lopez, granted
Wells Fargo Financial Massachusetts, Inc. (Wells Fargo), a
mortgage on her property (property) in the city of Lawrence
(city). Lopez failed to pay real estate taxes for fiscal years
2008 and 2009 to the city. In 2009, the city assigned the
municipal tax receivables on Lopez's property to Plymouth Park
Tax Services LLC (Plymouth Park) as part of a bulk sale pursuant
to G. L. c. 60, § 2C.2 The assignment was duly recorded. In
2 General Laws c. 60, § 2C, provides, in relevant part:
"(b) The appropriate financial official of a municipality
may arrange for and assign or transfer to a purchaser the
3
2010, because the taxes remained unpaid, Plymouth Park effected
a tax taking of the property and recorded an instrument of
taking on Lopez's property.3 In 2014, Plymouth Park assigned the
instrument of taking to the plaintiff, Ithaca Finance, LLC
(Ithaca), and (like the assignment from the city to Plymouth
Park) this assignment was duly recorded.
In May 2014, Ithaca filed the present action in Land Court
to foreclose the right of redemption on the property. Lopez and
Wells Fargo were served with notice of the pending action. The
notice informed them that the action was to foreclose all rights
of redemption and that failure to appear by no later than March
7, 2016, would result in a default, "forever barr[ing Lopez and
municipality's right to receive payments owed by a taxpayer
on tax receivables . . . ."
Plymouth Park is a "purchaser" under this statute.
3 Pursuant to G. L. c. 60, § 2C, as the purchaser of the tax
receivable on the property, Plymouth Park was subrogated to the
rights of the city to take tax title. The relevant provision of
§ 2C provides:
"(e) . . . The rights and remedies of the purchaser of the
right to receive payment of any individual taxpayer
receivable shall be subrogated to all the rights and
remedies of the municipality to receive and enforce payment
of such individual taxpayer receivable and any related tax
and interest accrued and to accrue thereon, including,
without limitation, the right to take tax title in its own
name in the same manner that the municipality is authorized
to take tax titles."
4
Wells Fargo] from contesting said complaint or any judgment
entered thereon."
Neither Lopez nor Wells Fargo entered an appearance.
Instead, in February 2016, Wells Fargo contacted Plymouth Park,
which referred Wells Fargo to its lien servicer, Propel
Financial Services LLC (Propel). Propel, in turn, informed
Wells Fargo that the instrument of taking had been redeemed.
The record does not reflect the basis for Propel's statement,
and Wells Fargo does not suggest that it made any payment to
satisfy the taxes owed. Nonetheless, Wells Fargo received a
certificate of redemption4 in March 2016, which it recorded in
May 2016 while the Land Court action was pending. There is no
indication in the record that either Lopez or Wells Fargo
informed Ithaca or the Land Court judge of this recording.
Meanwhile, having received no response from any interested
person, Ithaca moved for a general default. The motion was
allowed, and final judgment entered in June 2016. Over one year
later, Wells Fargo filed a motion to vacate the judgment. The
judge denied the motion, and this appeal followed.
4 The certificate of redemption provided that Plymouth
released the property for consideration of $11,215.16, which was
the amount Ithaca had paid to Plymouth in consideration for the
assignment of the tax taking.
5
Discussion. 1. Standard of review. A petition to vacate
a judgment of foreclosure of the right of redemption is governed
by G. L. c. 60, § 69A, which provides, in relevant part:
"No petition to vacate a decree of foreclosure . . . shall
be commenced by any person . . . except within one year
after the final entry of the decree."
A petition to vacate a final judgment of foreclosure is
"extraordinary in nature and ought to be granted only after
careful consideration and in instances where [it is] required to
accomplish justice" (citation omitted). Lynch v. Boston, 313
Mass. 478, 480 (1943). Absent a showing of a due process
violation, strict adherence to this one-year period is
mandatory. See Brewster v. Sherwood Forest Realty, Inc., 56
Mass. App. Ct. 905, 905-906 (2002). We review the denial of a
motion to vacate for abuse of discretion and error of law. See
Worcester v. AME Realty Corp., 77 Mass. App. Ct. 64, 67 (2010)
(AME Realty).
2. Judgment void ab initio. Wells Fargo contends that the
judge abused her discretion in denying its motion to vacate
because, according to Wells Fargo, its motion was timely. In
particular, Wells Fargo claims that the one-year period does not
apply to its motion because the Land Court judgment (which
otherwise started the clock running under § 69A) was void ab
initio. This position rests on a novel reading of G. L. c. 60,
§§ 62 and 63.
6
Section 62 provides two procedures by which a person who
has an interest in land that has been taken due to unpaid taxes
may redeem the property in the case where the tax taking has
been assigned. It states, in relevant part:
"Any . . . person [having an interest in land taken or sold
for nonpayment of taxes] may . . . redeem [the same] by
paying or tendering to a purchaser . . . or [its] assigns,
. . . at any time prior to the filing of such petition for
foreclosure, in the case of a purchaser the original sum
and intervening taxes and costs paid by him and interest on
the whole at said rate . . . . He may also redeem the land
by paying or tendering to the treasurer the sum which he
would be required to pay to the purchaser . . . ."
G. L. c. 60, § 62, second par. Pursuant to the first procedure
(payment directly to the assignee), the statute expressly states
that the payment to the assignee redeems the property only if it
occurs "prior to the filing of such petition for foreclosure."
G. L. c. 60, § 62, second par. Wells Fargo contends that
because the statute does not expressly set forth that the second
procedure must be effected prior to the filing of the petition
for foreclosure, it can be done even after a petition to
foreclose has been filed. Based on this premise, Wells Fargo
maintains further that the treasurer and Plymouth Park, as the
purchaser of the tax receivables on Lopez's property,5 were
5 Wells Fargo contends that Plymouth Park, as subrogee to
the city pursuant to G. L. c. 60, § 2C, is authorized to issue
the certificate of redemption under G. L. c. 60, § 63. See note
3 supra. We need not reach this issue, but note that § 2C
provides that a purchaser (like Plymouth Park) is subrogated to
7
authorized to receive payments of the amounts owed and issue a
certificate of redemption, which, if recorded pursuant to G. L.
c. 60, § 63,6 extinguished Ithaca's tax taking.
Notably, there is no evidence that any payments for the
fiscal year 2008-2009 taxes were received by Ithaca, the city
treasurer, or Plymouth Park to redeem the property either before
the commencement of the Land Court action or afterward. Indeed,
Wells Fargo does not contend that any payments have ever been
made to satisfy the outstanding taxes at issue in this case.
Moreover, once a petition to foreclose the right of
redemption has been filed, the Land Court has exclusive
jurisdiction over the foreclosure of rights of redemption. See
G. L. c. 60, § 64, which provides in pertinent part:
"The title conveyed . . . by a taking of land for taxes
shall be absolute after foreclosure of the right of
redemption by decree of the land court as provided in this
chapter. The land court shall have exclusive jurisdiction
only some rights of the city -- specifically, "to receive and
enforce payment" of the tax receivable. G. L. c. 60, § 2C (e).
6 Section 63 provides, in relevant part:
"The treasurer shall receive money paid to him instead of
the purchaser or assignee of a tax title . . . and give to
the person paying it a certificate . . . and the recording
of the certificate in said registry shall extinguish all
right and title acquired under the collector's deed or
evidence of taking. The treasurer shall forthwith pay over
all money so paid, to the person entitled thereto as
determined by him . . . ."
G. L. c. 60, § 63.
8
of the foreclosure of all rights of redemption from titles
conveyed by . . . a taking of land for taxes, in a
proceeding provided for in sections sixty-five to seventy-
five, inclusive" (emphasis added).
See also G. L. c. 185, § 1, first par., which provides in
pertinent part:
"The land court department shall have exclusive original
jurisdiction of the following matters: . . . (b)
Proceedings for foreclosure of and for redemption from tax
titles under chapter sixty."
Once a petition to foreclose the right of redemption is filed in
the Land Court, "[a]ny person claiming an interest . . . shall,
if he desires to redeem, file an answer [in the foreclosure
action] setting forth his right in the land, and an offer to
redeem upon such terms as may be fixed by the court." G. L.
c. 60, § 68. To permit a person to redeem the tax taking by
recording an instrument of redemption (as Wells Fargo did here)
runs contrary to this statutory scheme. Accordingly, we decline
Wells Fargo's invitation to construe the statute to allow for
this result. See Baker Transport, Inc. v. State Tax Comm'n, 371
Mass. 872, 876 (1977) (court determines legislative intent by
"an examination of the entire statutory scheme"). Instead,
consistent with the statutory scheme, we construe the second
procedure for redemption under G. L. c. 60, § 62, as simply
permitting a change in the payee (the city treasurer instead of
the purchaser or assignee); it does not alter the additional
9
limitation of § 62, that any payments to redeem must be made
before a petition to foreclose the right of redemption is filed.7
Because, inter alia, Wells Fargo's recording did not
extinguish the tax taking, Wells Fargo's contention that the
Land Court judgment was void ab initio fails. Accordingly, the
clock started running under § 69A on the date the final judgment
entered, and Wells Fargo's motion to vacate, having been filed
after the one-year statutory period, was untimely. Absent a
showing of a due process violation, the motion was properly
denied.
3. Due process. We turn next to Wells Fargo's contention
that its due process rights were violated because it was led to
7 Notably, in addition to setting forth the aforementioned
procedures for redemption in the case where there has been an
assignment of the tax taking, § 62 also sets forth a procedure
for redeeming property in the case where the city effects the
tax taking and has not assigned it. In such a case, a person
may redeem the property by paying or tendering to the city
treasurer the amount owed, but only "prior to the filing of a
petition for foreclosure" under G. L. c. 60, § 65. See G. L.
c. 60, § 62, first par. Thus, our construction limiting § 62 to
preforeclosure action redemptions is consistent with the
apparent scope of § 62. Wells Fargo points to nothing that
would support the anomalous result it advocates –- namely, that
in situations where there has been no assignment, or where
payment is made directly to the assignee, the payments must be
made prior to institution of a foreclosure action, but when the
tax taking has been assigned and payment is made directly to the
treasurer, the payment may be made after institution of a
foreclosure action. We decline to adopt this anomalous
construction in the absence of a clear indication that that was
the Legislature's intent.
10
believe (by either Plymouth Park or Propel) that the outstanding
taxes had been paid and therefore Wells Fargo believed that the
recording of the certificate of redemption was effective to
purge the tax taking under G. L. c. 60, § 63. "An elementary
and fundamental requirement of due process in any proceeding
which is to be accorded finality is notice reasonably
calculated, under all of the circumstances, to apprise
interested parties of the pendency of the action and afford them
an opportunity to present their objections" (citation omitted).
Andover v. State Fin. Servs., Inc., 432 Mass. 571, 574 (2000).
Here, there can be no doubt that Wells Fargo received due
process.
First, Wells Fargo had, at the least, constructive notice
of the assignment from Plymouth Park to Ithaca at the time Wells
Fargo alleges it received the misleading notice from Propel, the
lien servicer for Plymouth Park. See Bank of Am., N.A. v.
Casey, 474 Mass. 556, 560-561 (2016) (recorded mortgage provides
constructive notice). Both the assignment from the city to
Plymouth Park and the assignment from Plymouth Park to Ithaca
were recorded.
Second, Wells Fargo received actual notice of Ithaca's
petition to foreclose the right of redemption. The notice
warned that failure to appear could result in a default judgment
against it. Rather than appear in the Land Court action, Wells
11
Fargo determined to record a certificate of redemption it had
received knowing that (i) it had not paid anything to anyone in
relation to the tax debt, (ii) Ithaca was the owner of the tax
taking, (iii) Ithaca had commenced an action in the Land Court
to foreclose any right of redemption, and (iv) Wells Fargo's
failure to appear in the Land Court action would result in a
default judgment against it. On this record, Wells Fargo has
not shown a due process violation. See AME Realty, 77 Mass.
App. Ct. at 67.8
Order denying motion to
vacate judgment affirmed.
8 To the extent that we have not specifically addressed any
argument raised by Wells Fargo on appeal, these arguments "have
not been overlooked. We find nothing in them that requires
discussion." Commonwealth v. Brown, 479 Mass. 163, 168 n.3
(2018), quoting Commonwealth v. Domanski, 332 Mass. 66, 78
(1954).