Plemons v. Gale

• Decision Date: 03 February 2005
• Docket Number: No. 04-1499.,No. 04-1196.,04-1196.,04-1499.
• Citation: 396 F.3d 569
• Parties: Linda PLEMONS, a/k/a Linda Plemons Buechler, Plaintiff-Appellee, v. Douglas Q. GALE; Advantage 99 TD, a Delaware business trust, by and through its trustee, Defendants-Appellants, and U.S. Public Finance, Incorporated, a Delaware corporation, Defendant. National Tax Lien Association, Amicus Supporting Appellants. Linda Plemons, a/k/a Linda Plemons Buechler, Plaintiff-Appellee, v. Douglas Q. Gale; Advantage 99 TD, a Delaware business trust, by and through its trustee, Defendants-Appellants, and U.S. Public Finance, Incorporated, a Delaware corporation, Defendant. National Tax Lien Association, Amicus Supporting Appellants.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 569

396 F.3d 569

Linda PLEMONS, a/k/a Linda Plemons Buechler, Plaintiff-Appellee, v. Douglas Q. GALE; Advantage 99 TD, a Delaware business trust, by and through its trustee, Defendants-Appellants, and U.S. Public Finance, Incorporated, a Delaware corporation, Defendant.

National Tax Lien Association, Amicus Supporting Appellants.

Linda Plemons, a/k/a Linda Plemons Buechler, Plaintiff-Appellee, v. Douglas Q. Gale; Advantage 99 TD, a Delaware business trust, by and through its trustee, Defendants-Appellants, and U.S. Public Finance, Incorporated, a Delaware corporation, Defendant.

National Tax Lien Association, Amicus Supporting Appellants.

No. 04-1196.

No. 04-1499.

United States Court of Appeals, Fourth Circuit.

Argued: October 26, 2004.

Decided: February 3, 2005.

ARGUED: Edward Pope Tiffey, Charleston, West Virginia, for Appellants. Donald R. Dinan, Hall, Estill, Hardwick, Gable, Golden & Nelson, P.C., Washington, D.C., for Amicus Supporting Appellants. James Truman Cooper, Cooper & Glass, Charleston, West Virginia, for Appellee.

Before NIEMEYER, MICHAEL, and MOTZ, Circuit Judges.

Vacated and remanded by published opinion. Judge MOTZ wrote the opinion, in which Judge MICHAEL joined. Judge NIEMEYER wrote a dissenting opinion.

NIEMEYER, Circuit Judge, dissenting.

OPINION

DIANA GRIBBON MOTZ, Circuit Judge:

Concluding that Linda Plemons had not received constitutionally adequate notice of her right to redeem certain real property, the district court granted summary judgment to Plemons and set aside a deed to that property obtained through the state tax-sale procedure. Advantage 99 TD, the tax lien purchaser, and Douglas Q. Gale, who subsequently acquired the deed from Advantage, appeal, asserting that constitutionally sufficient notice was provided to Plemons. For the reasons that follow, we vacate the judgment of the district court and remand for further proceedings consistent with this opinion.

I.

In August 1999, Linda Plemons and her business partner, Jerry Lipscomb (who is not a party to this appeal) purchased the property in question, located on Echo Road in South Charleston, West Virginia, for $55,000. They duly recorded the deed.

In February 2000, Plemons obtained financing from Capital State Bank in the amount of $45,000 to pay off the seller of the property. She mistakenly believed that the bank was paying the property taxes on the property through an escrow account. Because neither she nor the bank actually paid the taxes, the Sheriff of Kanawha County sold a tax lien on the property to Advantage 99 TD on November 13, 2000. Plemons was unaware of the sale when, in May 2001, she moved from the property and rented it to tenants.

In December 2001, Advantage sought the issuance of a tax deed. As required by West Virginia law, Advantage "[p]repare[d] a list of those to be served with notice to redeem" and filed that list with the Clerk of Kanawha County so that the Clerk could send them notice of their right to redeem the tax lien. See W. Va.Code Ann. § 11A-3-19 (Michie 2002).

The list enumerated several interested parties, including Plemons, and provided three addresses for Plemons: 913 Echo Road, South Charleston, the address of the subject property in the relevant deeds; 917 Echo Road, South Charleston, the mailing address of the property; and 928 Garden Street, Charleston, the address of another property owned by Plemons. The list also directed the Clerk to send notices to "Occupant" at 913 and 917 Echo Road. In late January 2002, the Clerk sent the notices by certified mail return receipt requested. The parties agree that the Post Office promptly returned as undeliverable the notices addressed to Plemons, as well as the notices sent to Occupant at the Echo Road addresses.¹ Plemons had been renting out the subject property and living on Quarry Pointe since November 2001.

After return of the mailed notices, Advantage published, from April 12, 2002 to April 26, 2002, notice as to redemption rights in two Charleston newspapers and posted the notice on the front door of the Kanawha County courthouse. No one responded to the publications or posting. On May 7, 2002, the Clerk issued a deed to Advantage, which it recorded. On November 22, 2002, Advantage conveyed the property to Douglas Q. Gale by quitclaim deed, which he properly recorded. According to Plemons, she first became aware of the sale of the property in January 2003.

II.

Challenging her failure to receive timely notice as a violation of state law and the United States Constitution, Plemons filed a complaint in West Virginia state court seeking to set aside the tax deed issued to Advantage as well as the deed issued to Gale. Advantage, a Delaware business trust, and Gale, a citizen and resident of Florida, removed the case to federal court on the basis of diversity jurisdiction.

On Plemons' motion for summary judgment, the district court examined West Virginia's statutory scheme for tax sales of property. Section 11A-3-22 provides in relevant part:

As soon as the clerk has prepared the notice ..., he shall cause it to be served upon all persons named on the list generated by the purchaser....

. . . .

If the address of any person entitled to notice ... is unknown to the purchaser and cannot be discovered by due diligence on the part of the purchaser, the notice shall be served by publication....

W. Va.Code Ann. § 11A-3-22 (Michie 2002). A related provision of West Virginia law allows a person to set aside a tax-sale deed if she shows "by clear and convincing evidence" that the purchaser "failed to exercise reasonably diligent efforts to provide notice of his intention to acquire such title to the complaining party." W. Va Code Ann. § 11 A-4-4(b) (Michie 2002).

The district court interpreted these West Virginia statutes to require a purchaser to exercise due diligence in identifying and locating parties entitled to notice and to allow publication notice only after the exercise of such diligence. The court, therefore, properly reasoned that West Virginia's statutory notice requirements parallel the requirements of the United States Constitution. See Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983); Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950).²

The court concluded that "[w]hen notice sent by certified mail is returned unclaimed, the reasonable diligence standard requires the purchaser to make further inquiry reasonably calculated to locate the interested party's correct address." The district court found that in this case, after return of the notices, Advantage "could have ascertained Ms. Plemons' address through a number of different means" — telephoning her at the number listed in the local telephone directory, asking Plemons' tenants for their assistance in reaching her, or inquiring of Plemons' mortgagee. Because Advantage took "none of these actions" to find Plemons after the notices were returned as undeliverable, the court held that Plemons had proved that she had not received constitutionally adequate notice of the right to redeem her property and granted her summary judgment.

Advantage and Gale appeal. They do not maintain that they are entitled to summary judgment. But they do assert that the district court erred in granting summary judgment to Plemons.

III.

We must determine whether, as a matter of law, Plemons failed to receive constitutionally sufficient notice before the issuance of the tax-sale deed that extinguished her property interest.³

A.

In a series of cases, beginning with Mullane v. Central Hanover Bank & Trust Co., the Supreme Court has set forth the requirements for constitutionally adequate notice of an impending deprivation of property. "[I]n any proceeding which is to be accorded finality," due process requires "notice 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." Mullane, 339 U.S. at 314, 70 S.Ct. 652.

Mullane dealt with notice by publication to beneficiaries of a common trust. Complying with the New York law governing such trusts, Central Hanover Bank published notice in a local newspaper to inform beneficiaries of a settlement. In addressing the sufficiency of this notice, the Supreme Court emphasized that "when notice is a person's due, process which is a mere gesture is not due process." Id. at 315, 70 S.Ct. 652. Rather, the means used to provide notice "must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it." Id. Only a method that is reasonable, taking into account "the practicalities and peculiarities of the case," will be adequate. Id. at 314-15, 70 S.Ct. 652. The Court held that notice by publication sufficed for those beneficiaries "whose interests or whereabouts could not with due diligence be ascertained." Id. at 317, 70 S.Ct. 652. But notice by publication did not suffice for those identifiable beneficiaries whose location was ascertainable; that class of beneficiaries should have been notified by mail. Id. at 318, 70 S.Ct. 652 ("Where the names and post office addresses ... are at hand, the reasons disappear for resort to means less likely than the mails....").

Cases following Mullane have sharpened its rule, but reasonable efforts designed to "actually inform[ ]" a party with a property interest of possible deprivation of that interest remain the touchstone of constitutionally adequate notice. Id. at 315, 70 S.Ct. 652. Thus, although the Constitution does not always require actual receipt of notice, it does always require efforts "reasonably calculated under all the circumstances to apprise" a party "of the pendency" of the deprivation of property. Dusenbery v. United States, 534 U.S. 161, 168-171, 122 S.Ct. 694, 151 L.Ed.2d 597 (2002). When a party required to give notice knows that a mailed notice has, for some...