S&C Fin. Grp., LLC v. Khan
| Decision Date | 19 May 2021 |
| Docket Number | Court of Appeals Case No. 20A-TP-1934 |
| Citation | 172 N.E.3d 280 |
| Parties | S&C FINANCIAL GROUP, LLC, Appellant-Respondent, v. Pinky KHAN and Ahmad Khan, Appellees-Petitioners |
| Court | Indiana Appellate Court |
Attorney for Appellant: John E. Kolas, Kolas Law Firm, LLC, Indianapolis, Indiana
Attorneys for Appellees: Scott J. Fandre, Alexander E. Porter, Krieg DeVault LLP, Mishawaka, Indiana
[1] S&C Financial Group, LLC ("S&C Financial") purchased a property at a tax sale. After the period for redeeming the property from the tax sale expired but before the tax deed was issued to S&C Financial, the owner of record at the time of the tax sale conveyed the property to another, who in turn conveyed the property to Ahmad and Pinky Khan. After S&C Financial moved to evict the tenants at the property and be placed in possession, the Khans petitioned to set aside S&C Financial's tax deed. Both parties moved for summary judgment, and the trial court granted summary judgment to the Khans, setting aside the tax deed and effectively granting the Khans ownership and possession of the property.
[2] S&C Financial appeals the trial court's grant of summary judgment to the Khans, raising several issues that we consolidate and restate as: 1) whether the Khans have standing to petition to set aside the tax deed; 2) whether the notice to the owner of record at the time of the tax sale was constitutionally sufficient; and 3) whether the bona fide purchaser defense applies to the Khans’ claim to the property. Concluding the Khans had standing, the notice was sufficient, and because of that, S&C Financial was vested with a fee simple interest in the property regardless of the Khans’ bona fide purchaser status, we reverse and remand.
[3] Prior to 2016, Oceanpointe Investments owned property in Marion County on Arnolda Avenue. In March 2016, Oceanpointe intended to convey title of the Arnolda Avenue property to Rainier Properties, LLC ("Rainier"), a Colorado limited liability company with a business address in Seattle, Washington and a mailing address of P.O. Box 181383 in Denver, Colorado (the "P.O. Box"). However, the deed misspelled the intended owner as Rainer Properties, LLC. Unfortunately for purposes of this case, Rainer Properties, LLC ("RPL") is also a Colorado limited liability company, with a business address on W. 67th Place in Arvada, Colorado ("Arvada Address"). The deed indicated tax notices for the Arnolda Avenue property should be mailed to RPL at the P.O. Box, which was the correct mailing address for the intended owner but the wrong name. This deed was recorded on April 14, 2016.
[4] Rainier apparently failed to pay taxes on the Arnolda Avenue property, and the property was scheduled to be sold at a tax sale in October 2017. The Marion County Auditor sent a Notice of Tax Sale dated July 27, 2017 via certified mail, return receipt requested, to RPL at the P.O. Box (as with the deed, the correct address but incorrect name). The certified mail tracking information showed the notice arrived at the P.O. Box and was "Available for Pickup" as of July 31, but was marked "Unable to deliver item, problem with address" and returned to sender. Appellant's Appendix, Volume III at 45. The Auditor also sent the notice via regular first-class mail to RPL at the P.O. Box and to "Occupant" at Arnolda Avenue. Id. , Vol. IV at 43-44. Neither of these notices was returned.
[5] S&C Financial purchased the property at a tax sale on October 5, 2017 and obtained a tax sale certificate from the Auditor evidencing its lien against the property. On March 28, 2018, the Auditor1 sent a Notice of Parcel Sold at Tax Sale and Expiration of Redemption Period or Issuance of Tax Deed ("Notice of Right of Redemption") via certified mail to RPL at the P.O. Box. The certified mail tracking information showed the notice was available for pick up at the P.O. Box as of April 5 but was marked "Unclaimed/Being Returned to Sender" on April 21. Id. , Vol. III at 49. The Auditor also sent the notice via certified mail to RPL's "Highest Officer Found" at the Arvada Address (RPL's business address). Id. at 51. This Notice was "Delivered, Left with Individual" at the Arvada Address on April 2. Id. at 52. There is no indication in the record that RPL advised the Auditor that it had received this notice in error.
[6] The redemption period expired on October 8, 2018, and on October 30, the Auditor sent a Notice of Filing Petition for Tax Deed ("Notice of Petition for Tax Deed") to three addresses: 1) RPL at the P.O. Box via certified and regular first-class mail; 2) RPL's "Highest Officer Found" at the Arvada Address via certified and regular first-class mail; and 3) the occupants of the Arnolda Avenue address via regular first-class mail. The certified mail tracking information for the notice sent to the P.O. Box indicates the notice was returned to sender on March 29.2 The certified mail notice sent to the Arvada Address was "Delivered, Left with Individual" on November 5, 2018. Id. at 60. None of the notices sent by first-class mail were returned, including the notice sent by first-class mail to the P.O. Box. The Auditor petitioned the trial court for a tax deed on S&C Financial's behalf on November 5, 2018.
[7] On November 14, 2018, Rainier conveyed the Arnolda Avenue property to GPS Property Acquisition, LLC ("GPS") via warranty deed. This deed was recorded on November 26, 2018. And on January 30, 2019, GPS conveyed the property to the Khans via warranty deed ("Warranty Deed"). The title search conducted by Nations Title for this transaction did not identify a prior tax sale, issuance of a tax sale certificate, or lis pendens notice for the property. The Khans averred they had no knowledge of the tax sale prior to their purchase of the Arnolda Avenue property or the recording of their deed. The Warranty Deed was recorded on February 12, 2019 at 7:02 a.m.
[8] On January 15, 2019, the court ordered a tax deed to be issued pursuant to the Auditor's petition. The Auditor issued a tax deed ("Tax Deed") to S&C Financial dated January 15 and recorded the Tax Deed on February 12 at 7:47 a.m., forty-five minutes after the Khans recorded their deed. On February 18, Nations Title informed the Khans of the recording of the Tax Deed.
[9] At the time the deeds were recorded, the Arnolda Avenue property was occupied by tenants. On March 1, 2019, S&C Financial filed a Motion for Writ of Assistance in the tax sale case seeking an order directing the Marion County Sheriff to "dispossess and evict any person or persons wrongfully holding the property" and "place [S&C Financial] in possession" of the property. Appellant's App., Vol. III at 13. The trial court issued the writ of assistance on March 5, allowing the Sheriff to evict the tenants by March 25. The Khans became aware of the motion for writ of assistance when the writ was forwarded to them by the tenants at the Arnolda Avenue property. On March 15, the Khans filed an Emergency Motion seeking to stay the writ. The trial court stayed the writ pending a hearing.
[10] On April 12, the Khans filed a Petition to Set Aside Tax Deed in the current cause number, naming S&C Financial, Rainier, GPS, and the Marion County Auditor and Treasurer (collectively, "Marion County") as defendants.3
[11] Both the Khans and S&C Financial filed a motion for summary judgment. After a hearing, the trial court granted the Khans’ motion for summary judgment and denied S&C Financial's motion, finding first, that despite S&C Financial's argument to the contrary, the Khans had standing to bring this action, and second, that although the notices sent by the Auditor were legally sufficient, the Khans were bona fide purchasers with no actual or constructive knowledge of the tax sale which "overrules the sufficiency of the notices." Appealed Order at 12. The trial court subsequently denied S&C Financial's motion to correct error4 and S&C Financial now appeals to this court.
[12] We begin by noting the parties have advanced two different standards of review: S&C Financial has cited the standard of review applicable to summary judgment decisions and the Khans have cited the clearly erroneous standard applicable to Trial Rule 52 findings. See Brief of Appellees at 10-11. The trial court did include "findings of fact" and "conclusions of law" in its order ruling on the parties’ summary judgment motions. See Appealed Order at 2-12. But that does not change the procedural posture in which this case arises. Trial Rule 52 applies when a case is tried without a jury. This case was disposed of on summary judgment. We therefore reject the Khans’ attempt to parlay the format of the trial court's order into a more favorable standard of review. The correct standard for reviewing the trial court's order in this case is the standard applicable to a summary judgment decision.
[13] When reviewing the grant or denial of summary judgment, we apply the same test as the trial court: summary judgment is appropriate only if the designated evidence shows there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C) ; Sedam v. 2JR Pizza Enters., LLC , 84 N.E.3d 1174, 1176 (Ind. 2017). "A fact is ‘material’ if its resolution would affect the outcome of the case, and an issue is ‘genuine’ if a trier of fact is required to resolve the parties’ differing accounts of the truth, or if the undisputed material facts support conflicting reasonable inferences." Hughley v. State , 15 N.E.3d 1000, 1003 (Ind. 2014). The moving party bears the initial burden of showing the absence of any genuine issue of material fact as to a determinative issue. Id.
[14] Our review is limited to those facts designated to the trial court, T.R. 56(H), and we construe all facts and reasonable inferences drawn from those facts in...
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