Ankenman v. Rhea Academy, Inc.

[Cite as Ankenman v. Rhea Academy, Inc., 2013-Ohio-296.]
IN THE COURT OF APPEALS OF OHIO
SECOND APPELLATE DISTRICT
MONTGOMERY COUNTY
RALPH ANKENMAN, et al. :
: Appellate Case No. 25296
Plaintiff-Appellees :
: Trial Court Case No. 10-CV-5098
v. :
:
RHEA ACADEMY, INC., et al. : (Civil Appeal from
: (Common Pleas Court)
Defendant-Appellants :
:
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OPINION
Rendered on the 1st day of February, 2013.
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THERESA KAHLE, Atty. Reg. #0078743, 528 West Siebenthaler Avenue, Dayton, Ohio
45405
Attorney for Plaintiff-Appellees
LARRY G. CROWELL, Atty. Reg. #0012643, 207 South Main Street, Post Office Box 339,
Englewood, Ohio 45322
Attorney for Defendant-Appellant, Downtown Dayton Holdings, LLC,
and North Third Holdings, LLC
ROBERT J. BYRNE, Atty. Reg. #0040299, Ohio Bureau of Workers’ Compensation and
Ohio Department of Taxation, 150 East Gay Street, 21st Floor, Columbus, Ohio 43215
Attorney for Defendant-Appellee, Ohio Bureau of Workers’ Compensation
and Ohio Department of Taxation
DOUGLAS TROUT, Atty. Reg. #0072027, Montgomery County Treasurer’s Office, 301
West Third Street, 5th Floor, Dayton, Ohio 45422
Attorney for Defendant-Appellee, Montgomery County Treasurer
and Montgomery County Auditor
RHEA ACADEMY, INC., 1049 Walton Avenue, Dayton, Ohio 45407
Defendant-Appellee, pro se
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FAIN, P.J.
{¶ 1} Defendants-appellants Downtown Dayton Holding, LLC and North Third
Holdings, LLC (Lienholders) appeal from a judgment of foreclosure awarded to Ralph and
Lucille Ankenman. The Lienholders contend that the trial court erred in finding that the
notice of intent to foreclose filed by the Ankenmans complied with R.C. 5721.37.
Furthermore, the Lienholders contend that the trial court erred in finding that the Ankenmans
are the legal holders of the tax certificate relating to the real property at issue.
{¶ 2} We conclude that the trial court did not err in awarding a judgment of
foreclosure in favor of the Ankenmans. Accordingly, the judgment of the trial court is
Affirmed, and our October 3, 2012 stay of execution of the trial court’s judgment is vacated.
I. Course of the Proceedings
{¶ 3} In February 2010, the Lienholders were awarded a judgment against Rhea
Academy in the amount of $65,800.00 in Montgomery County Common Pleas Court Case
Number 2009 CV 03313. The judgment represented amounts Rhea Academy owed pursuant
to a lease agreement. A certificate of judgment in the amount of $65,800.00 was issued by
the Montgomery County Clerk of Courts in March 2010.
{¶ 4} On June 15, 2010, Ralph and Lucille Ankenman filed a “Notice of Intent to
Foreclose” with the Montgomery County Treasurer relating to the property owned by Rhea
Academy and located at 2935 Catalpa Avenue in Harrison Township (Catalpa Property). On
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that same date, the Montgomery County Treasurer certified that the Catalpa Property had not
been redeemed and that the tax certificate holder (the Ankenmans) had filed a notice of intent
to foreclose.
{¶ 5} Nine days later, the Ankenmans filed a Complaint For Foreclosure against
Defendants Rhea Academy and the Ohio Bureau of Worker’s Compensation in the
Montgomery County Common Pleas Court, Case Number 2010 CV 05098. According to
their Complaint, the Ankenmans acquired the first lien on the Catalpa Property by purchasing
Tax Certificate #2007-0000000897, which was sold at auction by the Montgomery County
Treasurer in November 2007. The Ankenmans attached the following to their complaint: a
copy of the tax certificate to the Catalpa Property purchased at the 2007 auction by American
Tax Funding Servicing, LLC; copies of documents purporting to show transfers of the tax
certificate from American Tax Funding Servicing, LLC to ID Properties, LLC and then to the
Ankenmans; a notice of intent to foreclose on the Catalpa Property; the Treasurer’s
certification that the Catalpa Property has not been redeemed; and a legal description of the
Catalpa Property.
{¶ 6} In August 2010, the Lienholders filed a Complaint For Foreclosure in the
Montgomery County Common Pleas Court, Case Number 2010 CV 6893, naming as
defendants Rhea Academy, its statutory agent and its trustees, various subsidiaries of the State
of Ohio, and the Montgomery County Treasurer. The Lienholders sought to enforce their
judicial lien as the “valid first and best lien” on the Catalpa Property.
{¶ 7} Subsequently, both the Ankenmans and the Lienholders sought to amend their
respective complaints to add each other as defendants in their respective actions. The
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Lienholders also entered a “limited appearance” in Case Number 2010 CV 5098 for the sole
purpose of moving to dismiss the Ankenmans’ tax lien foreclosure action. The Ankenmans
and the Lienholders filed memoranda in Case No. 2010 CV 5098 addressing the Lienholders’
motion to dismiss and the validity of the tax certificate the Ankenmans had submitted to the
trial court. The Ankenmans requested that the trial court allow them to proceed in their tax
lien foreclosure case and dismiss the Lienholders’ case.
{¶ 8} In June 2012, the trial court overruled the Lienholders’ motion to dismiss and
ordered that the Ankenmans could proceed to prosecute their tax lien case. The trial court
dismissed the case filed by the Lienholders (Case Number 2010 CV 06893) and ordered that
all the parties’ claims shall be adjudicated as part of Case Number 2010 CV 05098.
{¶ 9} On June 29, 2012, the trial court entered a judgment of foreclosure on the
Catalpa Property. From this judgment, the Lienholders appeal.
II. Tax Certificates May Be Purchased and Transferred
{¶ 10} In 1998, tax certificate legislation was enacted. R.C. 5721.30 through R.C.
5721.41. The purpose of the law was to spare county governments with limited resources
from having to track and recover unpaid property taxes. The bill enabled county treasurers of
the twelve counties having populations of at least 200,000 to collect delinquent real property
taxes by selling tax certificates to private investors. The certificate entitles the tax certificate
holder to the first lien on the property. R.C. 5721.32. Property owners have the opportunity
to redeem the certificates, and thereby remove the lien, by paying the certificate holder the
purchase price plus interest, penalties, and costs. R.C. 5721.38.
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{¶ 11} If the owner of the real property does not redeem the certificates, the tax
certificate holder, after complying with certain statutory requirements, may initiate foreclosure
proceedings on the real property. This appeal concerns whether the Ankenmans met these
statutory requirements.
III. The Notice of Intent to Foreclose Complied with R.C. 5721.37
{¶ 12} The Lienholders’ first three assignments of error are interrelated and state:
THE TRIAL COURT ERRED IN FINDING THAT THE NOTICE OF
INTENT TO FORECLOSE COMPLIED WITH ORC 5721.37(A)(1) AND ORC
5721.37(F) WITH RESPECT TO FURNISHING A COMPLETE LEGAL
DESCRIPTION.
THE TRIAL COURT ERRED IN FINDING THAT THE NOTICE OF
INTENT TO FORECLOSE COMPLIED WITH ORC 5721.37(A)(1) AND ORC
5721.37(F) WITH RESPECT TO FURNISHING THE ADDRESS OF SUBJECT
PARCEL.
THE TRIAL COURT ERRED IN FINDING THAT THE NOTICE OF
INTENT TO FORECLOSE COMPLIED WITH ORC 5721.37(A)(1) AND ORC
5721.37(F) WITH RESPECT TO FURNISHING THE OWNER’S LAST KNOWN
MAILING ADDRESS.
{¶ 13} R.C. 5721.37 establishes the procedure to foreclose on a tax certificate.
Foreclosure proceedings begin when the certificate holder’s attorney files a foreclosure
complaint in the name of the certificate holder to enforce the lien. R.C. 5721.37(C) contains
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two filing requirements. The attorney must attach to the foreclosure complaint (1) a copy of
the notice of intent to foreclose, and (2) a certificate by the county treasurer that the tax
certificate has not been redeemed.
{¶ 14} The Lienholders contend that the notice of intent to foreclose that the
Ankenmans attached to their complaint for foreclosure does not comply with the statutory
requirements for such notices. According to the Lienholders, the Ankenmans failed to
include in the notice of intent to foreclose the following required information: a complete
legal description of the Catalpa property, the address of the Catalpa property, and the last
known mailing address of the owner of the Catalpa property. We do not agree.
{¶ 15} R.C. 5721.37(A)(1) provides, in part:
At any time after one year from the date shown on the tax certificate as
the date the tax certificate was sold, and not later than the end of the certificate
period, * * * a private attorney on behalf of the certificate holder may file with
the county treasurer a notice of intent to foreclose, on a form prescribed by the
tax commissioner, provided the certificate parcel has not been redeemed under
division (A) or (C) of section 5721.38 of the Revised Code * * *.
{¶ 16} The Ankenmans, holders of the tax certificate, hired a private attorney. R.C.
5721.37(A)(1) prescribes that the private attorney shall file a notice of intent to foreclose with
the county treasurer on a form prescribed by the tax commissioner. It is undisputed that a
private attorney for the Ankenmans filed a notice of intent to foreclose with the Montgomery
County Treasurer on a form prescribed by the tax commissioner. The Lienholders contend
that the notice of intent to foreclose filed on behalf of the Ankenmans does not comply with
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additional requirements contained in R.C. 5721.37(F). That division of R.C. 5721.37
provides, in part:
(F) With respect to tax certificates purchased under section 5721.32,
5721.33, or 5721.42 of the Revised Code, upon the delivery to the private
attorney by the county treasurer of the certification provided for under division
(C)(2) of this section, the private attorney shall institute a foreclosure
proceeding under this division in the name of the certificate holder to enforce
the holder’s lien, in any court or board of revision with jurisdiction, unless the
certificate redemption price is paid prior to the time a complaint is filed. * * *
The foreclosure proceedings under this division, except as otherwise
provided in this division, shall be instituted and prosecuted in the same manner
as is provided by law for the foreclosure of mortgages on land, except that, if
service by publication is necessary, such publication shall be made once a week
for three consecutive weeks and the service shall be complete at the expiration
of three weeks after the date of the first publication.
Any notice given under this division shall include the name of the
owner of the parcel as last set forth in the records of the county recorder, the
owner’s last known mailing address, the address of the subject parcel if
different from that of the owner, and a complete legal description of the subject
parcel. In any county that has adopted a permanent parcel number system, such
notice may include the permanent parcel number in addition to a complete legal
description.
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It is sufficient, having been made a proper party to the foreclosure
proceeding, for the certificate holder to allege in such holder’s complaint that
the tax certificate has been duly purchased by the certificate holder, that the
certificate redemption price is due and unpaid, that there is a lien against the
property described in the tax certificate, and, if applicable, that the certificate
holder desires to invoke the alternative redemption period prescribed in
sections 323.65 to 323.79 of the Revised Code, without setting forth in such
holder’s complaint any other special matter relating to the foreclosure
proceeding. * * * (Emphasis added.)
{¶ 17} The Lienholders contend that the underlined language above requires that a
notice of intent to foreclose include, at a minimum, the following information: the name of
the owner of the parcel, the owner’s last known mailing address, the address of the subject
parcel, and a complete legal description of the subject parcel. We do not agree. The express
language of the third paragraph of division (F) provides that this information must be included
in “[a]ny notice given under this division.” (Emphasis added.) Division (F) applies to
foreclosure proceedings, not to a notice of intent to foreclose. A notice of intent to foreclose is
nowhere mentioned in division (F). Indeed, a notice of intent to foreclose must be filed with
the county treasurer prior to the commencement of any foreclosure proceedings provided for
in division (F). R.C. 5721.37(C)(2). A notice of intent to foreclose is provided for in
division (A)(1), which requires the notice of intent to foreclose be filed “on a form prescribed
by the tax commissioner[.]” R.C. 5721.37(A)(1). It is undisputed that a private attorney for
the Ankenmans filed a notice of intent to foreclose on a form prescribed by the tax
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commissioner.
{¶ 18} It is further undisputed that the Lienholders received notice of the foreclosure
action filed by the Ankenmans. The complaint for foreclosure, the documents attached to the
complaint, and the notice by publication of the complaint provide all of the information
referenced in the third paragraph of R.C. 5721.37(F). In short, the Lienholders received
notice of all of the information set forth in the third paragraph of R.C. 5721.37(F), and the
notice of intent to foreclose was completed on the form required by R.C. 5721.37(A).
Therefore, the trial court did not err in finding that the notice of intent to foreclose complied
with R.C. 5721.37.
{¶ 19} The Lienholders’ first three assignments of error are overruled.
IV. The Montgomery County Treasurer Certified That
the Ankenmans Are the Tax Certificate Holders
{¶ 20} The Lienholders’ Fourth Assignment of Error states:
THE TRIAL COURT ERRED IN FINDING THAT THE
ASSIGNMENTS/ENDORSEMENTS OF TAX CERTIFICATE TRANSFERS AND
THEIR CORRESPONDING ACKNOWLEDGMENTS WERE PROPER, VALID
AND ENFORCEABLE, AND IN COMPLIANCE WITH THE LAWS GOVERNING
ASSIGNMENT OF INTERESTS IN REAL ESTATE.
{¶ 21} The trial court found that the Ankenmans were the legal holders of the tax
certificate on the Catalpa Property. The Lienholders contend that this finding is in error
because the Ankenmans failed to show that they had acquired the tax certificate through
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proper transfers. We disagree.
{¶ 22} R.C. 5721.36(A)(1) governs the transfer of tax certificates and provides:
Except as otherwise provided in division (A)(2) of this section, the
purchaser of a tax certificate sold as part of a block sale pursuant to section
5721.32 of the Revised Code may transfer the certificate to any person, and any
other purchaser of a tax certificate pursuant to section 5721.32 or 5721.33 of
the Revised Code may transfer the certificate to any person, except the owner
of the certificate parcel or any corporation, partnership, or association in which
such owner has an interest. The transferee of a tax certificate subsequently may
transfer the certificate to any other person to whom the purchaser could have
transferred the certificate. The transferor of a tax certificate shall endorse the
certificate and shall swear to the endorsement before a notary public or other
officer empowered to administer oaths. The transferee shall present the
endorsed certificate and a notarized copy of a valid form of identification
showing the transferee’s taxpayer identification number to the county treasurer
of the county where the certificate is registered, who shall, upon payment of a
fee of twenty dollars to cover the costs associated with the transfer of a tax
certificate, enter upon the register of certificate holders opposite the certificate
entry the name and address of the transferee, the date of entry, and, upon
presentation to the treasurer of instructions signed by the transferee, the name
and address of any secured party of the transferee having an interest in the tax
certificate. The treasurer shall deposit the fee in the county treasury to the credit
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of the tax certificate administration fund.
Except as otherwise provided in division (A)(2) of this section, no
request for foreclosure or notice of intent to foreclose, as the case may be, shall
be filed by any person other than the person shown on the tax certificate
register to be the certificate holder or a private attorney for that person properly
authorized to act in that person’s behalf.
{¶ 23} Furthermore, R.C. 5721.37(C)(2) provides, in part:
With respect to a certificate purchased under section 5721.32, 5721.33,
or 5721.42 of the Revised Code, if the certificate parcel has not been redeemed,
at least one certificate respecting the certificate parcel, held by the certificate
holder filing the notice of intent to foreclose and eligible to be enforced
through a foreclosure proceeding, has not been voided under section 5721.381
of the Revised Code, a notice of intent to foreclose has been filed, and the
payment required under division (B) of this section has been made, the county
treasurer shall certify notice to that effect to the private attorney. * * * After
receipt of the treasurer’s certification and not later than one hundred twenty
days after the filing of the intent to foreclose or the number of days specified
under the terms of a negotiated sale under section 5721.33 of the Revised
Code, the private attorney shall commence a foreclosure proceeding in the
name of the certificate holder in the manner provided under division (F) of this
section to enforce the lien vested in the certificate holder by the certificate. The
private attorney shall attach to the complaint the notice of intent to foreclose
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and the county treasurer’s written certification.
{¶ 24} According to the Lienholders, there are irregularities in the transfer documents
attached as Exhibit A to the Ankenmans’ complaint, which call into question whether the
Ankenmans complied with the statutory requirements for properly transferring a tax
certificate. At first glance, we acknowledge that Exhibit A to the Ankenmans’ complaint
does raise some questions about who is the current holder of the tax certificate relating to the
Catalpa Property. But these questions are answered by the notice of intent to foreclose
attached to the Ankenmans’ complaint.
{¶ 25} At the bottom of the notice of intent to foreclose submitted by the
Ankenmans, the Montgomery County Treasurer states the following: “I hereby certify that
the above certificate parcel has not been redeemed, the amount indicated in line 4 above has
been received by me, and that the tax certificate holder has filed a notice of intent to foreclose
on this date: June 15, 2010.” The Ankenmans were identified on the notice of intent to
foreclose as the tax certificate holders. R.C. 5721.36(A)(1) makes it clear that only “the
person shown on the tax certificate register to be the certificate holder or a private attorney for
that person” may file a notice of intent to foreclose. Furthermore, R.C. 5721.37(C)(2)
provides for certification by the county treasurer to the private attorney for the current tax
certificate holder, which gives the tax certificate holder notice that foreclosure proceedings
must be commenced. In short, the notice of intent to foreclose along with the certification by
the county treasurer are sufficient to establish, in the absence of contrary evidence, that the
Ankenmans are the current holders of the tax certificate. Therefore, the trial court did not err
in finding that the Ankenmans are holders of the tax certificate relating to the Catalpa
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Property.
{¶ 26} The Lienholders’ Fourth Assignment of Error is overruled.
V. The Trial Court Did Not Err in Entering a Judgment of Foreclosure
{¶ 27} The Lienholders’ Fifth Assignment of Error states:
THE TRIAL COURT ERRED IN AWARDING A JUDGMENT AND
DECREE OF FORECLOSURE IN FAVOR OF APPELLEES CONTRARY TO THE
SPECIFIC PREREQUISITES SET FORTH IN ORC 5721.37 WITH RESPECT TO
PERFECTING TITLE TO THEIR TAX CERTIFICATE AND WITH RESPECT TO
PREPARING AND FILING A PROPER NOTICE OF INTENT TO FORECLOSE.
{¶ 28} The Lienholders argue that the trial court erred in awarding a judgment and
decree of foreclosure because the Ankenmans failed to submit a notice of intent to foreclose
that complied with R.C. 5721.37(F) and because they failed to show that they legally owned
the tax certificate relating to the Catalpa Property. This assignment of error relies on the
same arguments that we have rejected in the first four assignments of error. Therefore, this
assignment of error must similarly fail.
{¶ 29} The Lienholders’ Fifth Assignment of Error is overruled.
VI. Conclusion
{¶ 30} All of the Lienholders’ assignments of error having been overruled, the
judgment of the trial court is Affirmed.
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DONOVAN and FROELICH, JJ., concur.
Copies mailed to:
Theresa Kahle
Larry G. Crowell
Robert Byrne
Douglas Trout
Rhea Academy, Inc.
Hon. Mary L. Wiseman