466 F.3d 259 (2nd Cir. 2006), 05-4083, Luessenhop v. Clinton County, New York

Docket Nº:Docket Nos. 05-4083-cv (L); 06-0093-cv (CON); 06-0704-cv (CON); 06-2180-cv (CON).
Citation:466 F.3d 259
Party Name:Elizabeth LUESSENHOP and Mark Baechle, Plaintiffs-Counter-Defendants-Appellants, Alexander Tupaz, Lourdes Tupaz, and Martin Bouchard, Plaintiffs-Appellants, v. CLINTON COUNTY, NEW YORK, William Bingel, in his individual capacity and in his official capacity as Clinton County Administrator, Janet L. Duprey, in her individual capacity and in her offi
Case Date:October 11, 2006
Court:United States Courts of Appeals, Court of Appeals for the Second Circuit
 
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466 F.3d 259 (2nd Cir. 2006)

Elizabeth LUESSENHOP and Mark Baechle, Plaintiffs-Counter-Defendants-Appellants,

Alexander Tupaz, Lourdes Tupaz, and Martin Bouchard, Plaintiffs-Appellants,

v.

CLINTON COUNTY, NEW YORK, William Bingel, in his individual capacity and in his official capacity as Clinton County Administrator, Janet L. Duprey, in her individual capacity and in her official capacity as Clinton County Treasurer, and Charles Johnson, Jr., Defendants-Counter-Claimants-Appellees,

Town of Mendon, Defendant-Cross-Defendant-Appellee.

Docket Nos. 05-4083-cv (L); 06-0093-cv (CON); 06-0704-cv (CON); 06-2180-cv (CON).

United States Court of Appeals, Second Circuit.

October 11, 2006

Argued August 11, 2006

Consolidated appeals from judgments of the United States District Court for the Northern District of New York and the United States District Court for the District of Vermont granting defendants-appellees' motions to dismiss for lack of subject-matter jurisdiction and motions for summary judgment. Holding that the Tax Injunction Act, 28 U.S.C. § 1341, does not preclude federal courts from determining whether the notices of foreclosure sent to taxpayers satisfy due process, we apply Jones v. Flowers, 126 S.Ct. 1708 (2006), to these four cases and vacate in part, reverse in part, and remand for further proceedings.

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Shannon A. Bertrand, Rutland, VT (Kenlan, Schwiebert & Facey, Rutland,

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VT, of counsel), for Plaintiff-Counter-Defendant-Appellant Mark Baechle.

Mark Schneider, Plattsburgh, NY, for Plaintiffs-Appellants Elizabeth Luessenhop, Alexander Tupaz, Lourdes Tupaz and Martin Bouchard.

Robert A. Rausch, Albany, N.Y. (Maynard, O'Connor, Smith & Catalinotto, Albany, NY, of counsel), for Defendants-Claimants-Appellees.

Philip C. Woodward, South Burlington, VT (Marikate E. Kelley, Woodward & Kelley, South Burlington, VT, of counsel), for Defendant-Cross-Defendant-Appellee.

Marc D. Craw, Colonie, NY, for Amicus Curiae Assemblyman Ortloff.

Michael T. Kirkpatrick, Deepak Gupta, Public Citizen Litigation Group, Washington, D.C., for Amicus Curiae Public Citizen, Inc.

Before: MESKILL, CALABRESI, and POOLER, Circuit Judges.

MESKILL, Circuit Judge:

These consolidated appeals raise two issues. First, whether federal courts, consistent with the Tax Injunction Act, 28 U.S.C. § 1341 (2006), have jurisdiction to adjudicate a taxpayer's challenge that the notice of foreclosure provided by the taxing authority of a state is constitutionally inadequate. We conclude that the district courts have jurisdiction. Second, whether the taxpayers in this consolidated appeal were provided with constitutionally adequate notice. Because three of the four lower court judgments dismissed the taxpayers' actions on jurisdictional grounds, we remand those cases for consideration of the merits consistent with the Supreme Court's recent decision in Jones v. Flowers, --- U.S. ----, 126 S.Ct. 1708, 164 L.Ed.2d 415 (2006). The sole case to resolve the dispute on non-jurisdictional grounds is reversed and remanded for proceedings consistent with this opinion.

I.

These appeals involve three cases arising in Clinton County, the northeastern-most county of upstate New York, and one case arising from Mendon, Vermont, a central Vermont town. Each plaintiff owned real property and was delinquent in paying property taxes. In response, the taxing authorities initiated foreclosure proceedings. Ultimately, the local governments intended to sell (and, in at least one case, did in fact sell) the taxpayers' property at a public sale to satisfy the unpaid property taxes.

None of the plaintiffs disputes the authority of the governmental body to collect the taxes due on the real property in question. Neither do they contest the assessments of their property, or the amount of taxes claimed due. Instead, plaintiffs assert that the local taxing authorities failed to notify them adequately of the pending foreclosure and subsequent public sale of their property.1 Plaintiffs complain that it is fundamentally unfair, and a violation of their due process rights enumerated in the Fourteenth Amendment, for the government to take their property without adequate notification.

Elizabeth Luessenhop

Elizabeth Luessenhop (Luessenhop) was the owner of two parcels of land located in the Village of Champlain, Clinton County, New York (the County). Her permanent address was 2944 Upton Street, N.W., Washington, D.C. At times during 2002, however, she temporarily lived in London, England. In the early 1990s, Luessenhop

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frequently did not timely pay her property taxes. However, when the County would send her a final redemption notice, it was her practice to pay a sufficient amount of the back taxes to avoid losing title to her property. In the early 21st century, Luessenhop fell behind on her taxes once again. As a result, on January 17, 2002, the County sent a Notice of Arrears to Luessenhop's D.C. address, via regular mail, informing her that "[t]axes from one or more prior levies remain due and owing." Luessenhop did not fulfill her full tax obligation in response to this notice. Then, on October 4, 2002, the County sent Luessenhop a Notice of Foreclosure, by certified mail, explaining that due to her failure to satisfy her property tax debt, foreclosure proceedings had begun, and to avoid loss of ownership Luessenhop must pay her taxes or respond prior to January 17, 2003. Additionally, the County posted a notice in the Clinton County Courthouse, and published a notice in two Clinton County newspapers once a week for three non-consecutive weeks. The Notice of Foreclosure sent on October 4, 2002 was returned to the County as "unclaimed," "which for purposes of the Postal Service means that the 'addressee abandoned or failed to call for the mail.' " Harner v. County of Tioga, 5 N.Y.3d 136, 140-41, 800 N.Y.S.2d 112, 115, 833 N.E.2d 255 (2005) (alterations omitted) (quoting United States Postal Service Domestic Mail Manual part 507, Ex. 1.4.1 available at http://pe.usps.gov/text/dmm300/ 507.htm). When the mailing was returned as "unclaimed," the County's staff checked the tax rolls and confirmed that the Upton Street address was correct. The County undertook no further efforts to contact Luessenhop.

Following Luessenhop's inaction, an order of default was signed on March 20, 2003 and entered on April 1, 2003, immediately transferring title of Luessenhop's property to the County. On or about May 16, 2003, Luessenhop offered to pay her tax debt but the County refused to accept the payment, explaining that January 17th was the final day of redemption.

Luessenhop moved to vacate the default judgment in Clinton County Supreme Court. Her motion was denied. See Luessenhop v. Clinton County, 378 F.Supp.2d 63, 66 (N.D.N.Y. 2005). The denial was affirmed by the Appellate Division and the Court of Appeals denied leave to appeal. Id. at 66 n. 8. Luessenhop then filed suit in the United States District Court for the Northern District of New York seeking, inter alia, an injunction preventing the County from auctioning her property, as well as actual and punitive damages. The district court found that the County's attempted notification was constitutionally adequate and it granted summary judgment for the County. Id. at 67-73. Luessenhop filed this timely appeal. The County agreed not to sell Luessenhop's property pending the conclusion of this action. See id. at 66.

Mark Baechle

Plaintiff Mark Baechle (Baechle) was the owner of a condominium in Mendon, Vermont (Mendon). He purchased the condominium in 1993, at which time his primary residence was 3050 South Drive, Allentown, Pennsylvania. In 1999, he moved to 4170 Ascot Circle in Allentown. He received a property tax bill from Mendon at his new address in 2000, and timely remitted payment. Unfortunately, Baechle's tax bills for 2001, 2002, and 2003 were sent to his former address and were not forwarded to 4170 Ascot Circle. These bills were returned to Mendon as undeliverable, and Baechle did not make any property tax payments for these three years.

In response to Baechle's delinquency, Mendon foreclosed and conducted a public

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tax sale to recoup the back taxes. Mendon's attempt to inform Baechle that he was soon to be relieved of ownership of his condominium was unavailing; the notices of the tax sale were sent to the 3050 South Drive address, and all were returned to Mendon as undeliverable.2 On March 31, 2004, Mendon sold Baechle's condominium to Mr. Charles Johnson.

Baechle learned of the sale to Mr. Johnson some time in 2005 and filed an action in the United States District Court for the District of Vermont seeking a declaration that the tax collector's deed given to Mr. Charles Johnson is null and void, as well as actual and punitive damages. Mendon moved to dismiss for lack of subject matter jurisdiction, relying on the Tax Injunction Act, 28 U.S.C. § 1341. The district court granted the motion and dismissed Baechle's claims.

Alexander and Lourdes Tupaz

The Tupazes are residents of Staten Island, New York who own two contiguous undeveloped parcels of land in the town of Plattsburgh, Clinton County, New York. The Tupazes fell behind in their tax payments for the year 2002 and the County allegedly sent the Tupazes numerous letters, throughout 2002 and the beginning of 2003, informing them that failure to pay back taxes would result in foreclosure. The letters were sent, via first-class mail, to 4675 Amboy Road, Staten Island, the address listed on the town tax rolls. The letters were not returned as undeliverable, but the Tupazes did not respond. On February 11, 2003, the County's letter advised the Tupazes that if their taxes...

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