Smitko v. Gulf S. Shrimp, Inc.

• Decision Date: 02 July 2012
• Docket Number: No. 2011–C–2566.,2011–C–2566.
• Citation: 94 So.3d 750
• Parties: Jerri G. SMITKO v. GULF SOUTH SHRIMP, INC.
• Court: Louisiana Supreme Court

94 So.3d 750

Jerri G. SMITKO

v.GULF SOUTH SHRIMP, INC.

No. 2011–C–2566.

Supreme Court of Louisiana.

July 2, 2012.

Edna Ayliffe Latchem, J. Peyton Parker, Jr., Robert Van McAnelly, Baton Rouge, LA, for Applicant.

William Ford Dodd, Jerri Gaines Smitko, Houma, LA, Christovich & Kearney, Walter Nicholas Dietzen, IV, Kevin Richard Tully, New Orleans, LA, for Respondent.

GUIDRY, Justice.

[2011-2566 (La. 1]We granted the writ application to determine whether the court of appeal erred in affirming the trial court's ruling granting summary judgment that confirmed and quieted the title of a tax purchaser on the basis that the former property owner failed to file a separate action or reconventional demand to institute a proceeding to annul the tax sale within six months from the date of service of the petition and citation to quiet title. For the reasons set forth below, we conclude the former property owner's claim that the tax sales were null and void was timely made and the former property owner has sufficiently established that there remain genuine issues of material fact as to whether the sheriff provided notice of the tax delinquencies and the tax sales to the record property owner as required by the due process clause of the Fourteenth Amendment, failure of which would render the tax sales entirely null and void. Accordingly, we find summary judgment to quiet tax titles in favor of the tax purchaser was not warranted on this record.

FACTS and PROCEDURAL HISTORY

Gulf South Shrimp, Inc., (hereafter, “Gulf South”) owned three tracts of land in Terrebonne Parish, where it apparently operated a shrimp processing plant. Gulf South failed to pay the ad valorem taxes on the properties for tax year 2002. Among other recorded liens, the properties were subject to a mortgage held by [2011-2566 (La. 2]First Louisiana Business and Industrial Development Company, L.L.C. (hereafter, “First Louisiana Bidco”), whose name was later changed to Source Business and Industrial Development Company, L.L.C. (hereafter, “Source Bidco”), which has an address on East Airport Road in Baton Rouge, Louisiana. At the time of the tax sale on June 25, 2003, Gulf South's agent for service was Vincenzo Marsala, with an address at 7332 Caillou Road in Dulac, Louisiana (which was also the physical address of a subject tract). According to the record, the Sheriff of Terrebonne Parish never mailed, either certified with return receipt requested or by ordinary post, written notice of tax delinquencies or a written notice of the tax sales to Gulf South at the Caillou Road address or to Source Bidco, or to any of the other lienholders of record. ¹ Instead, he mailed notices of the tax sales to Gulf South in care of Source Bidco at the Baton Rouge address for Source Bidco.

A stockholder for Gulf South, J. Peyton Parker, Jr., who asserted he was familiar with Gulf South's business affairs, attested by affidavit that Gulf South never received any notices of either the tax delinquencies or the tax sales. Mr. Parker stated that Gulf South never maintained an office at the East Airport address, nor did Gulf South ever list the East Airport address as its mailing or business address. He further stated that Gulf South was initially incorporated in Baton Rouge, but it had changed its address to Dulac in April 2000. Although Gulf South had obtained a loan from First Louisiana Bidco, Mr. Parker attested Gulf South had never done business at the office or address of Source Bidco, nor had it ever appointed Source Bidco or its agent as an agent for service of process. Mr. Parker attested that Gulf South's agent for service of process at the time of the [2011-2566 (La. 3]tax sales affecting the subject properties was Mr. Marsala at the Caillou Road address registered with the Louisiana Secretary of State.

On June 25, 2003, Jerri G. Smitko purchased a 100% interest in the properties at the tax sale. The tax deeds at issue were recorded in the mortgage and conveyance records of Terrebonne Parish on July 7, 2003. Gulf South did not redeem the subject properties during the three-year redemption period following recordation of the tax sale. SeeLa. Const. art. VII, § 25(B).

On November 16, 2006, Ms. Smitko filed a petition to quiet tax title pursuant to former La. R.S. 47:2228² and La. Const. art. VII, § 25(C).³SeeLa. Const. art. VII, § 25(D) (“The manner of notice and form of proceeding to quiet tax titles shall be provided by law.”). Ms. Smitko's petition named Gulf South as defendant and requested that a curator ad hoc be appointed to represent Gulf South or its assigns, on the basis of Ms. Smitko's claim that the last known registered [2011-2566 (La. 4]agent of Gulf South, Vincenzo Marsala, could not be located. SeeLa. R.S. 47:2228 (repealed). Ms. Smitko prayed that, if no proceeding to annul the tax sale were instituted within six months from the date of service of the petition and citation to quiet tax title, judgment be rendered in her favor, quieting and confirming her title in the property. See Id.

On December 11, 2006, the curator ad hoc appointed to represent Gulf South's interests accepted service of Ms. Smitko's petition. On December 18, 2006, Gulf South, through its own retained counsel, filed an answer to the petition that generally denied the allegations of the petition. Additionally, Gulf South specifically alleged that “no notice was ever sent nor received of tax delinquency.” Gulf South's answer prayed for the dismissal of Ms. Smitko's petition to quiet title.

On July 10, 2007, Source Bidco, the holder of a recorded mortgage and security interest in the subject properties, filed a petition of intervention asserting the Sheriff failed to properly notify the record property owner, as well as the record mortgagee and other lienholders, of the tax delinquencies and the tax sales, as required by the due process clause, and, therefore, the tax sales were null and void and should be annulled. By order dated August 17, 2007, Ms. Smitko's successor, Dulac Dat, L.L.C. (hereafter, “Dulac Dat”), was awarded possession of the subject properties. Thereafter, Dulac Dat filed an opposition to Source Bidco's intervention.

On April 24, 2008, Gulf South filed a supplemental and amending answer, a reconventional demand against Dulac Dat, and a third party demand against Jerry J. Larpenter, in his capacity as the sheriff/ex officio tax collector for Terrebonne Parish. In its filing, Gulf South alleged the tax sales were an absolute nullity on the basis that it did not receive any notices from the Sheriff of either the tax delinquencies or the tax sales of its property. Gulf South further alleged the only notices sent by the Sheriff's office regarding non-payment of the 2002 taxes were [2011-2566 (La. 5]notices purportedly sent to Gulf South in care of Source Bidco at the East Airport Avenue address in Baton Rouge, which address was never the mailing address of Gulf South. Gulf South also asserted there were other record judicial lienholders, including Coastal Commerce Bank and the Internal Revenue Service, who were similarly not provided with written notice of the tax delinquencies or the tax sales, as admitted by the Sheriff. Gulf South asserted such lack of notice violates procedural due process rights. Gulf South further claimed that its action to nullify the tax sales was timely filed “on or about December 18, 2006 when the original answer was filed.” Gulf South prayed for a judgment annulling the tax sale as to each tract of the subject property and the return of Gulf South's ownership.

Dulac Dat responded to Gulf South's reconventional demand by filing another pleading captioned, “Exceptions.” Therein, Dulac Dat asserted that Gulf South's citation was insufficient, the action was barred by prescription, Gulf South had no cause or right of action to proceed, and Gulf South had used improper cumulation of actions.

On July 25, 2008, Gulf South filed a motion for summary judgment, maintaining there were no genuine issues of material fact that the tax sales of Gulf South's property were nullities based on due process violations. In support of the motion, Gulf South filed inter alia the Sheriff's responses to its request for admission of facts and the affidavit of Mr. Parker. In November 2008, the trial court denied Gulf South's motion for summary judgment on the grounds that Gulf South did not timely institute a separate proceeding, either by petition or reconventional demand, to annul the tax sales within six months from the date it was served with the petition as required by former La. R.S. 47:2228. The court thereafter invited the plaintiff to file its own motion for summary judgment.

In March 2009, Dulac Dat filed a motion for summary judgment, seeking an order quieting the titles to the property, urging that Gulf South had failed to timely [2011-2566 (La. 6]institute the appropriate proceeding to annul the tax sales. Dulac Dat maintained that Gulf South's original answer did not constitute a reconventional demand that attacked the validity of the tax sales and that Gulf South's amended answer with its reconventional demand was filed well after the statutory six-month limitation for attacking the sales due to nullity. Both Gulf South and Source Bidco opposed Dulac Dat's motion on the basis that the Sheriff had not provided proper notice of the tax sales to either Gulf South or the record mortgagee and lienholders. In May 2009, the trial court granted Dulac Dat's motion for summary judgment, therein quieting the tax titles and declaring Dulac Dat the sole and only owner of the subject properties, free from any encumbrances. In granting the motion, the trial court referenced its prior finding that Gulf South's reconventional demand seeking to annul the tax sales was barred because it was filed more than six months after Gulf South was served with the petition and citation to quiet title.

On appeal, a majority of a five-judge panel, after reviewing the...