Pfeifer v. Westmoreland County Tax Claim Bureau

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Dorian E. Pfeifer, Susan D. Payne, :
Diane Torockio, Richard R. Dailey, :
Susan M. Peterman, Deborah R. Miller, :
and Linda Blackburn Scott, Ruth Ellen :
Gallagher, and Judith A. Gallagher :
Appellants :
:
v. :
:
Westmoreland County Tax Claim :
Bureau, BP Mineral Holdings III, LLC; :
Somerset Minerals, LP; : No. 1346 C.D. 2014
BRC Appalachian Minerals I, LLC : Argued: April 13, 2015
BEFORE: HONORABLE BERNARD L. McGINLEY, Judge
HONORABLE PATRICIA A. McCULLOUGH, Judge
HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION
BY JUDGE McGINLEY FILED: September 1, 2015
Dorian E. Pfeifer, Susan D. Payne, Diane Torockio, Richard R.
Dailey, Susan M. Peterman, Deborah R. Miller, Linda Blackburn Scott, Ruth Ellen
Gallagher, and Judith A. Gallagher (collectively Appellants), appeal from the
Order of Court entered by the Court of Common Pleas of Westmoreland County
(common pleas court) that granted Westmoreland County Tax Claim Bureau; BP
Mineral Holdings III, LLC; Somerset Minerals, LP; BRC Appalachian Minerals I,
LLC (collectively Appellees) Cross-Motion for Summary Judgment and
dismissing the Complaint.
At issue in the matter are the oil and gas rights (Gas Rights)
underlying a tract of land, containing approximately 267 acres, in Cook Township,
Westmoreland County, Pennsylvania, which were previously owned by Lewis and
Lucinda Thompson husband and wife (Thompsons). The Thompsons, severed the
subterranean Gas Rights from the corresponding surface land, by deed dated May
28, 1902, when they sold the surface land in issue to George E. Hoffer (Hoffer).1
Between 1925 and 2010, Appellants inherited the Gas Rights originating from the
Thompsons, and contained under the Hoffer tract of land, from their respective
predecessors in interest.
Due to the non-payment of taxes on the Gas Rights2, the
Westmoreland County Tax Claim Bureau (Tax Claim Bureau), conducted an upset
tax sale (Tax Sale) on December 10, 1990. At that Tax Sale, the Appellees
purchased the Gas Rights. The deed for the Tax Sale was recorded on December
26, 1990.
Subsequent to the Tax Sale, Appellants learned that they owned the
Gas Rights when persons interested in leasing or purchasing those Gas Rights
contacted Appellants in 2011 and 2012. In February 2013, Appellants learned that
the Gas Rights were sold at the Tax Sale in 1990 for delinquent taxes.
1
The Thompsons excepted and reserved the Gas Rights to themselves, and to their
heirs and assigns, together with the right to drill for, produce and transport the same, from the
operation of their deed to George E. Hoffer and recorded in the Office of the Recorder of Deeds
for Westmoreland County at Deed Book Volume 334, page 178.
2
The record does not indicate how many years that the Appellants or their
predecessors in interest did not pay taxes prior to the Tax Sale. Furthermore, in 2002, after the
Pennsylvania Supreme Court’s holding in Independent Oil & Gas v. Fayette County Board of
Assessment Appeals, 814 A.2d 180 (Pa. 2002), the Gas Rights on this tract of land and other
properties in Pennsylvania were no longer assessed with the real estate tax under the
Pennsylvania General County Assessment Law, Act of May 22, 1933, P.L. 853, as amended, 72
P.S. §§ 5020–101 - 5020–602.
2
Consequently, Appellants filed a Complaint in the nature of
exceptions nunc pro tunc to the Tax Sale as well as a Motion for Summary
Judgment against Appellees. On March 27, 2013, Appellees filed a Cross-Motion
for Summary Judgment and requested dismissal of the Complaint.
Appellants asserted that the Tax Claim Bureau did not provide them
with proper notice pursuant to Section 602 of the Real Estate Tax Sale Law (Act),
Act of July 7, 1947, P.L., 1368, as amended, 72 P.S. § 5860.602. Second
Amended Complaint in Equity in the Nature of Exceptions Nunc Pro Tunc to the
Tax Sale of Oil and Gas Rights, filed July 19, 2013, Paragraph No. 23; Appellants’
Motion for Summary Judgment filed December 30, 2013, Paragraph Nos. 1, 9-14;
and Reproduced Record (R.R.) at 11-12; 17-24. Appellants also objected to the
Tax Sale because the statute of limitations and the doctrine of laches were tolled.
Appellants’ Response to Cross-Motion for Summary Judgment, filed March 7,
2014, at 4-7; R.R. at 20-21.
Appellees averred that the Tax Claim Bureau provided proper notice
of the Tax Sale and that Appellants' claims were time barred pursuant to both the
statute of limitations and the doctrine of laches. Appellees’ Cross-Motion for
Summary Judgment, filed January 31, 2014; R.R. at 120-131.
By Order dated April 29, 2014, the common pleas court granted
Appellees’ Cross-Motion for Summary Judgment and dismissed Appellants’
Motion for Summary Judgment and Second Amended Complaint on the bases of
the statute of limitations and the doctrine of laches. Order of the Court of
Common Pleas of Westmoreland County, Pennsylvania, filed April 29, 2014 (April
29, 2014 Order), at 2-5; R.R. at 178-182. The common pleas court specifically
3
denied Appellants' claim of equitable tolling of the statute of limitations; held that
they had constructive notice of the conveyance to Appellees and that a delay arose
from Appellants' failure to exercise due diligence, which resulted in prejudice to
Appellees. April 29, 2014 Order at 3-4; R.R. at 180-181. The matter is now
before this Court3.
In the current controversy, a discussion of the statute of limitations
and laches must be examined in conjunction with a discussion of notice. Section
5527(b) of the Judicial Code, 42 Pa. C.S. §5527(b), sets forth the statute of
limitations applicable to an action to set aside a tax sale is six (6) years. Section
5527(b) of the Judicial Code states in pertinent part that “[a]ny civil action or
proceeding … must be commenced within six years”. Appellants herein assert that
the six (6) year statute of limitations does not apply to the Tax Sale because they
had no notice of the Tax Sale and consequently, were not able to defend against it.
This Court has previously held that a cause of action to set aside a tax
sale on the basis of deficient notice accrued and the statute of limitations began to
run on the date of the tax sale. Poffenberger v. Goldstein, 776 A.2d 1037 (Pa.
Cmwlth. 2001). In Poffenberger, this Court found that a ten (10) acre portion of
the twenty-three (23) acre tract of land at issue was improperly listed for tax sale
because there were no delinquent taxes owing on the land and consequently, no
basis for a tax sale on the non-delinquent portion of the property listed for and
purchased at a tax sale. This Court reasoned that the recording of the deed for the
ten (10) acre tract put the public on notice as to ownership and precluded the tax
3
This Court's review is limited to determining whether the common pleas court
abused its discretion, rendered a decision with lack of supporting evidence or clearly erred as a
matter of law. Krumbine v. Lebanon County Tax Claim Bureau, 621 A.2d 1139 (Pa. Cmwlth.
1993).
4
sale purchaser from making a bona fide purchase. Consequently, absent notice to
the public via recording of the tax sale deed, a tax sale is void. See Poffenberger
776 A.2d at 1042-43.
In the case at bar, the common pleas court determined that:
[T]here is a delay arising from [Appellants’] failure to
exercise due diligence, and resulting prejudice to the
[Appellees] from said delay. The tax sale at issue in this
case occurred more than twenty-three [23] years ago,
constituting significant delay…. [T]he recording of the
tax sale deed placed [Appellants] on constructive notice
of the loss of their alleged interest….
April 29, 2014 Order at 4; R.R. at 181.
This Court agrees. Recording the deed of the Tax Sale by Appellees
put the public on notice of the sale. Weik v. Estate of Brown, 794 A.2d 907 (Pa.
Super. 2002). See also Mancine v. Concord-Liberty Savings and Loan Ass’n., 445
A.2d 744 (Pa. Super. 1982). (The primary object of recording acts for deeds is to
give public notice of the title holder of property.) The passage of time and/or
Appellants’ constructive notice bars them from challenging any potential defects in
the Tax Sale. See Wilson v. El-Daief, 964 A.2d 354, 368 (Pa. 2009) (“the core
interest addressed by statutory limitations periods [is] that of defendants being free
from stale clams”) (citing Gustine Uniontown Associates, Ltd. v. Anthony Crane
Rental, Inc., L.P., 842 A.2d 334 (Pa. 2004)).
The Tax Sale deed executed by the director of the Tax Claim Bureau
and witnessed by the supervisor of the Tax Claim Bureau, recites:
Advertisements required to be made by law were
published in the Westmoreland Law Journal on July 27,
5
1990 and on August 6, 1990 in the Latrobe Bulletin,
Valley Independent, Valley News Dispatch, Standard
Observer, and Tribune Review, newspapers of general
circulation in Westmoreland County. In addition to such
publications, notices of sale were mailed by certified
mail, return receipt requested, personal addressee only, to
all of the assessed owners and owners at the time of the
sale, and notice was further given by posting notice of the
sale on the property in the manner as required by law, all
such notices having been made at least ten (10) days
before the date of the sale. Also, a notice was sent by
certified mail to all persons whose property was sold as
required by law, after the sale advising them that their
properties had been sold. Further, the Trustee Grantor
herein made a consolidated return to the Court of
Common Pleas of Westmoreland County on October 5,
1990 at No. 439 of 1990 and the sale has been confirmed
absolute by the Court aforesaid.
Westmoreland County, Pennsylvania Tax Claim Bureau Deed, page 364 (citations
omitted); R.R. at 37.
The Tax Claim Bureau complied with Section 602(a) of the Act, 72
P.S. § 5860.602(a), which requires the Tax Claim Bureau to advertise notice of the
scheduled sale in at least two (2) newspapers of general circulation in the county
and the county's legal journal. As recited in the deed, the Tax Claim Bureau
published the required notices "in the Westmoreland Law Journal on July 27, 1990
and on August 6, 1990 in, the Latrobe Bulletin, Valley Independent, Valley News
Dispatch, Standard Observer, and Tribune Review, newspapers of general
circulation in Westmoreland County." R.R. at 37.
Further, the Tax Claim Bureau complied with Section 308 of the Act,
72 P.S. §5860.308, which addresses notice of filing the return of a tax bill and the
subsequent notice of entry of a claim of delinquency. The Tax Claim Bureau met
6
the burden of Section 308 of the Act by mailing, via United States Certified Mail,
return receipt requested, postage prepaid, notice of the return of delinquent taxes to
Ruth H. Blackburn, et. al, prior to July 31, 1990.
When the letter was not successfully delivered, the Tax Claim Bureau
thereafter posted a notice of the sale on the relevant property, evidenced by the
affidavit of Joseph Skrobacz, authorized Agent of the Tax Claim Bureau. Section
602(e)(3) of the Act requires posting on a property at least ten (10) days prior to a
sale. Agent’s Affidavit As Authorized Agent for Westmoreland County,
Pennsylvania. R.R. at 152. The affidavit of posting thereby establishes that the
Tax Claim Bureau also complied with Section 602(e)(3) of the Act.4
In Picknick v. Washington County Tax Claim Bureau, 936 A.2d 1209
(Pa. Cmwlth. 2007), and Thomas v. Montgomery County Tax Claim Bureau, 553
A.2d 1044 (Pa. Cmwlth. 1989), this Court addressed how a tax claim bureau
demonstrates compliance with the notice requirements of the Act. Both Picknick
and Thomas delved into the question of whether property sold at a tax sale had
been properly posted. The bureaus in both Picknick and Thomas submitted an
affidavit from the sheriff who posted the property. In Picknick, the finance and
operations manager of the bureau testified regarding posting for a tax sale notice.
In Thomas, testimony was elicited from its director regarding the bureau's standard
4
The unchallenged Affidavit of Joseph Skrobacz is "conclusive evidence that notice
was given as required by law." 72 P.S. § 5860.308(b). ("Notice given in the manner provided
by this section shall constitute proper service on the owner. A statement in the claim entered that
due notice of the same was given shall be conclusive evidence that notice was given as required
by law."). See also, 47 P.L.E. Taxation §352 (2013) ("The affidavit of posting establishes the
presumption that the premises subject to a tax sale was properly posted; if a challenger desires to
rebut the presumption, he or she has the burden to go forward with contradictory evidence.")
7
procedures for posting a tax sale notice, which called for the notice to be placed
where it would be easily visible to the owner or a passerby. In both instances, the
common pleas courts held that the bureaus were entitled to a presumption of
regularity of posting by virtue of its evidence.
The burden then shifted to Picknick and Thomas, the delinquent
taxpayers, to rebut the presumption of regularity. Both failed to do so and the
common pleas courts of Washington County and Montgomery County respectively
confirmed the tax sales. This Court affirmed in both matters holding that “the
trial court[s were] quite correct in finding, based upon the evidence before [them],
that a presumption of regularity existed with respect to the posting requirement....
[T]he evidence of the affidavit gave rise to a presumption of posting.” Picknick,
936 A.2d at 1212 citing Thomas, 553 A.2d at 1046. “[A] prima facie presumption
of the regularity of the acts of public officers exists until the contrary appears.
Such a presumption is a procedural expedient. In tax sales it is particularly
suitable.” Picknick, 936 A.2d at 1213 citing Hughes v. Chaplin, 132 A.2d 200,
202 (Pa. 1957) (citations and internal quotations omitted).
In the case at bar, Appellants assert that the Tax Claim Bureau failed
to exercise additional effort to notify the Appellants.5 Testimony from the
deposition of the current director from the Tax Claim Bureau demonstrates a lack
of knowledge of what was in the Tax Claim Bureau’s file and the incomplete
nature of the Bureau's file, despite working for the Tax Claim Bureau in various
positions for thirty-eight (38) years.6 Notes of Testimony, Deposition of Yvonne
5
Section 607(a) of the Act, 72 P.S. §5860.607(a).
6
It is noted that the director of the Tax Claim Bureau, at the time of the Tax Sale,
Gerald P. Wendling, is deceased.
8
Hayes, July 2, 2013 (“Deposition of Yvonne Hayes”), at 5-8, 29-36; R.R. at 63, 69-
70. A “reasonable investigation” as required of a tax bureau in determining the
whereabouts of a landowner for purposes of notifying the landowner of a pending
tax sale, is one that uses ordinary common sense business practices to ascertain
addresses. While this ordinary common sense standard must go beyond the mere
ceremonial act of notice by certified mail, it does not require the equivalent of a
title search. Fernandez v. Tax Claim Bureau of Northampton County, 925 A.2d
207 (Pa. Cmwlth. 2007). In the case at bar, despite a lack of knowledge on the part
of its employee, the record shows that the Tax Claim Bureau went beyond the
ceremonial act of notice by certified mail and exercised common sense. For these
reasons, we find that the Tax Claim Bureau’s notice requirements were satisfied in
the case at bar.
This Court next turns to an examination of the running of time to
determine if the statute of limitations and the doctrine of laches were tolled. In this
matter, the Gas Rights were sold September 10, 1990, with the Tax Sale deed
recorded December 26, 1990. This action was filed March 27, 2013, as noted by
the court of common pleas, more than twenty-three (23) years after the Tax Sale.
Section 5527(b) of the Judicial Code, 42 Pa.C.S. §5527(b), states in pertinent part
that “[a]ny civil action or proceeding which is neither subject to another limitation
specified in this subchapter nor excluded from the application of a period of
limitation by section 5531 (relating to no limitation) must be commenced within
six years." Furthermore, Section 5527(b) of the Judicial Code, 42 Pa. C.S.
§5527(b), requires that an action to challenge a tax sale must be initiated within six
(6) years, regardless of a lack of notice. Poffenberger; Lewicki v. Washington
County, 431 Fed.Appx. 205 (W.D. Pa. 2010) cert. denied, ___ U.S. ___, 132 S. Ct.
796 (2011) rehearing denied, ___ U.S. ___, 132 S. Ct. 1137 (2012).
9
In Poffenberger, tax sales occurred in 1964 and thereafter on a portion
of the same property in 1985. An action to quiet title was filed in 1997, well past
the six (6) year statute of limitations within which to appeal the tax sales. This
Court in Poffenberger found that the statute of limitations applied. Specifically,
this Court held:
It is clear that the time period in which to challenge the
1985 tax sale has run. In 1985, the statute of limitations
applicable to an action to set aside a tax sale was the six
year period of limitations found at 42 Pa.C.S. § 5527. As
more than six years have passed since the 1985 sale, we
conclude that the procedural regularity of that tax sale is
beyond challenge. Similarly, whatever statute of
limitations applied in 1964, it was long past by 1997.
Therefore, [defendant] is correct that the common pleas
court erred in invalidating both tax sales on the basis of
deficiencies of notice.
Poffenberger, 776 A.2d at 1041-1042.
Further, the court in Weik, noted that Section 351 of Pennsylvania’s
Recording Act7 “has been given effect beyond determining priority of title. It has
been interpreted to give notice to the Public of title transfer and the contents of a
deed.” Weik, 794 A.2d at 911. (Emphasis added.) In this matter, Appellants took
twenty-three (23) years to bring their claim, clearly falling outside of the six (6)
year statute of limitations.
Appellants’ final assertion is that the running of time for purposes of
the doctrine of laches was tolled. The doctrine of laches is an equitable bar to the
7
21 Pa. C.S. §351.
10
prosecution of stale claims and is the practical application of the maxim that those
who sleep on their rights must awaken to the consequence that they have
disappeared. Kern v. Kern, 892 A.2d 1 (Pa. Super. 2005).
Laches, a doctrine focused on one side's inaction and the
other's legitimate reliance, may bar long-dormant claims
for equitable relief. In order to apply the doctrine to bar
prosecution of a stale claim, the following elements must
be demonstrated: (1) a delay arising from Appellants’
failure to exercise due diligence; and (2) prejudice to the
Appellees resulting from the delay. Unlike the
application of the statute of limitations, exercise of the
doctrine of laches does not depend on a mechanical
passage of time. (Citations omitted.)
Kern, 892 A.2d at 9.
In the case at bar, Appellants did not file an action until twenty-three
(23) years after the Tax Sale deed was recorded and the recording of the Tax Sale
deed placed Appellants on notice of the sale of their interest in the Gas Rights.
Their asserted failure to discover the loss was a result of their failure to exercise
due diligence. Weik, 794 A.2d at 911. Further, Kern makes it clear that actual
notice is not required for the doctrine of laches to apply. Kern, 892 A.2d at 9-10
(“The question of whether a party exercised ‘due diligence’ in pursuit of a claim is
not what a party knows, but what the party may have known by the use of
information within their reach"). (Citation omitted.) Appellants clearly could have
availed themselves of knowledge of the tax sale through a simple, cursory search
of any number of publicaly available documents at any time in the twenty-three
(23) years prior to bringing the action.
11
Further:
It is well-settled law that the doctrine of laches is
applicable peculiarly where the difficulty of doing justice
arises through the death of the principal participants in
the transactions complained of, or of the witnesses or
witnesses to the transactions, or by reason of the original
transactions having become so obscured by time as to
render the ascertainment of the exact facts impossible.
Kern, 892 A.2d at 10.
The case at bar is an apt example of the logistical difficulties that arise
from a delayed challenge, particularly in this instance, of twenty-three (23) years.
The record reflects that the director of the Tax Claim Bureau at the time of the Tax
Sale is now deceased. LexisNexis Public Records Comprehensive Person Report
(citations omitted); R.R. at 134. Additionally, the two (2) other employees of the
Tax Claim Bureau involved in the Tax Sale at issue no longer work for the Tax
Claim Bureau. Deposition of Yvonne Hayes at 18, 25; R.R. at 66, 68. Further, the
deposition of the director from the Tax Claim Bureau and her testimony as to the
incomplete nature of the Tax Claim Bureau’s files were certainly not unexpected.
Id.
This Court is mindful of the fact that parties defending tax sales need
the files and records to meet the burden of proof shifted to them. However, this
Court also recognizes the incongruity caused by the Appellants’ attempt to gain an
advantage, from information lost by virtue of delay highlights the need to apply the
doctrine of laches in a situation such as this one. Appellants had twenty-three (23)
years to ascertain their standing and assert their claim. Appellants’ delay in
bringing this action resulted in demonstrable prejudice to the Appellees. Allowing
12
prior owners of tax sale properties to bring challenges to old tax sales would wreak
havoc on Pennsylvania’s property system.
In sum, Appellants had sufficient and appropriate notice of the Tax
Sale and the failure to bring action within the six (6) year period as specified by the
Act is now barred by the statute of limitations and the doctrine of laches.
The common pleas court order is affirmed.
_____________________________
BERNARD L. McGINLEY, Judge
13
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Dorian E. Pfeifer, Susan D. Payne, :
Diane Torockio, Richard R. Dailey, :
Susan M. Peterman, Deborah R. Miller, :
and Linda Blackburn Scott, Ruth Ellen :
Gallagher, and Judith A. Gallagher :
Appellants :
:
v. :
:
Westmoreland County Tax Claim :
Bureau, BP Mineral Holdings III, LLC; :
Somerset Minerals, LP; : No. 1346 C.D. 2014
BRC Appalachian Minerals I, LLC :
ORDER
AND NOW, this 1st day of September, 2015, the order of the Court of
Common Pleas of Westmoreland County in the above-captioned matter is
affirmed.
____________________________
BERNARD L. McGINLEY, Judge