Adair Holdings, LLC v. Johnson
| Citation | 304 Neb. 720,936 N.W.2d 517 |
| Decision Date | 03 January 2020 |
| Docket Number | No. S-18-1214.,S-18-1214. |
| Parties | ADAIR HOLDINGS, LLC, appellant, v. Dennis G. JOHNSON et al., appellees. |
| Court | Supreme Court of Nebraska |
Deana K. Walocha, for appellant.
Nicholas R. Norton, of Jacobsen, Orr, Lindstrom & Holbrook, P.C., L.L.O., Kearney, for appellee Dennis G. Johnson.
Heavican, C.J., Miller-Lerman, Cassel, Stacy, Funke, Papik, and Freudenberg, JJ.
Adair Holdings, LLC, brought a quiet title action after obtaining a tax deed. Adair Holdings’ predecessor in interest attempted to provide Dennis G. Johnson, the owner of record, with notice of the application for a tax deed via certified mail and then by publication. However, the notice contained incorrect information about the timeframe in which Johnson could redeem the property. On a motion for summary judgment, the trial court determined that the deed was void for incorrect notice and granted Johnson’s counterclaim for quiet title. The court did not order Johnson to reimburse Adair Holdings for the delinquent taxes paid by Adair Holdings’ predecessor in interest. Adair Holdings appeals.
Adair Asset Management, L.L.C. (Adair Management), and BMO Harris Bank purchased a tax sale certificate from Franklin County. This tax sale occurred in March 2014 for taxes that were unpaid from 2012. Adair Management then paid the delinquent taxes for 2013, 2014, and 2015 as well.
After purchasing the tax certificate, Adair Management waited the 3-year statutory period set forth by Neb. Rev. Stat. § 77-1837 (Reissue 2009) and then sent notice in March 2017 by certified mail to Johnson’s address of record. This notice indicated that Adair Management would be applying for a tax deed within 90 days if the property was not redeemed. The certified mail was marked as "Return to Sender, Unclaimed, Unable to Forward." After the attempt to provide notice by mail failed, notice was published in the Franklin County Chronicle newspaper on April 5, 12, and 19, 2017.
The content of the notice included the statutory requirements of Neb. Rev. Stat. § 77-1831 (Reissue 2009). The notice also contained a phrase from a more recent version of § 77-1831, which phrase read:
If the property is owner occupied, the right of redemption shall expire at the close of business on the 45th day after the application for tax deed has been made. An additional redemption fee equal to twenty percent of all other amounts due must be paid if redemption is made after application for treasurer’s deed has been made.
This passage was a part of § 77-1831 (Cum. Supp. 2012); however, the statutory scheme contains a savings clause specifying that the 2009 law governs all tax sale certificates sold and issued between January 1, 2010, and December 31, 2014.1 It does not appear from the record that Adair Management sent a copy of the published notice to Johnson’s address of record.
Adair Management and BMO Harris Bank applied for the tax deed on July 19, 2017. The application included an affidavit by counsel stating that Adair Management had complied with the statutory requirements and provided notice via unclaimed certified mail and by publication. The treasurer issued a tax deed on July 25, 2017, and recorded it on July 31. In August, Adair Management and BMO Harris Bank provided a quitclaim deed to Adair Holdings for land described as follows: "The Southeast Quarter (SE ¼) of Section Five (5), Township Four (4) North, Range Fourteen (14), West of the 6th P.M. in Franklin County, Nebraska."
In October 2017, Adair Holdings commenced an action in equity to quiet title to the real estate in its name. Johnson filed an answer and a counterclaim requesting the court to quiet title in his name. Johnson argued that (1) the notice was statutorily defective for including a misstatement of law and (2) the notice was constitutionally defective according to Neb. Const. art. VIII, § 3, which requires that "occupants shall in all cases be served with personal notice before the time of redemption expires." In April 2018, Johnson served Adair Holdings with a set of requests for admissions and received no response.
Johnson moved for summary judgment, and a hearing was held in September 2018. In an affidavit entered at the summary judgment hearing, Johnson averred that he first discovered the existence of the tax deed in early August 2017. Johnson claims that he then reviewed the published notice and relied on the notice in believing he had 45 days to redeem the property. The 45th day from the issuance of the tax deed was Saturday, September 2, 2017. Johnson attempted to tender payment to the Franklin County treasurer on the first business day following September 2, and the treasurer refused payment because the tax deed had been issued.
Johnson argued that the notice contained a misstatement of law, as admitted by Adair Holdings’ failure to respond to his requests for admissions, and that thus, the tax deed was void. Johnson also argued that Adair Management failed to inspect the land and should have served him personal notice pursuant to the Nebraska Constitution.
The court granted the motion for summary judgment in favor of Johnson, citing Adair Management’s failure to comply with the notice requirements. The order (1) ruled that the tax deed was void, (2) ruled that the tax sale certificate was invalid and of no force and effect, and (3) quieted title to the property in Johnson. Adair Holdings appeals.
Adair Holdings argues that the district court erred in granting summary judgment to Johnson. Specifically, Adair Holdings argues that (1) the tax sale certificate is still valid because the voiding of a tax deed does not extinguish the lien for delinquent taxes and (2) the tax deed is not void because all the statutory requirements for notice were met and Johnson did not detrimentally rely on the misstatement of the law contained within the notice.
Standing is a jurisdictional component of a party’s case because only a party who has standing may invoke the jurisdiction of a court.2 The question of jurisdiction is a question of law, upon which an appellate court reaches a conclusion independent of the trial court.3
An appellate court affirms a lower court’s grant of summary judgment if the pleadings and admitted evidence show that there is no genuine issue as to any material facts or as to the ultimate inferences that may be drawn from the facts and that the moving party is entitled to judgment as a matter of law.4
In reviewing a summary judgment, an appellate court views the evidence in the light most favorable to the party against whom the judgment was granted, and gives that party the benefit of all reasonable inferences deducible from the evidence.5
A quiet title action sounds in equity.6 On appeal from an equity action, an appellate court tries factual questions de novo on the record and, as to questions of both fact and law, is obligated to reach a conclusion independent of the conclusion reached by the trial court, provided that where credible evidence is in conflict on a material issue of fact, the appellate court considers and may give weight to the fact that the trial judge heard and observed the witnesses and accepted one version of the facts rather than another.7
Statutory interpretation presents a question of law, for which an appellate court has an obligation to reach an independent conclusion irrespective of the decision made by the court below.8
Disputes involving land that has been subjected to a government tax sale presents a unique situation where there are often two interrelated but distinct causes of action. Actions challenging title obtained via a tax deed are governed by statute. However, a successful challenge to a tax deed does not resolve the underlying land dispute. Because a void tax deed grants color of title in a potential future action, it will always be incumbent upon the original landowner to bring an action to quiet title in his or her name.9 This case presents Adair Holdings and Johnson’s quiet title actions, as well as Johnson’s action challenging Adair Management’s tax deed under the provisions of Neb. Rev. Stat. §§ 77-1801 to 77-1863 (Reissue 2009). We first address the court’s order granting summary judgment in favor of Johnson on his statutory cause of action challenging the tax deed.
Sections 77-1801 to 77-1863 govern tax deeds and provide the basic process by which a county may, through a tax sale, sell land to third parties as a means of recovering the landowner’s delinquent taxes.10 This court has long held that the statutory system for tax deeds found in chapter 77, article 18, of the Nebraska Revised Statutes must be strictly complied with and is to be strictly construed in favor of the landowner.11
Under the statutory scheme, a third party who pays a landowner’s delinquent taxes receives in exchange a tax sale certificate and a tax lien against the property.12 Title to the land does not immediately transfer to the tax sale certificate holder. These statutes require that a certificate holder must wait 3 years in order to either apply for a tax deed or foreclose upon the property.13
During this 3-year period, the landowner maintains the right to redeem the land by paying the delinquent taxes along with a statutorily set interest rate and costs.14 If, at the end of the 3 years, the property has not been redeemed, the certificate holder has only 6 months to request a tax deed or foreclose before both the certificate and tax lien expire.15
In order to apply for a tax deed during this 6-month window, the certificate holder must provide proper notice to all parties of record.16 The certificate holder must submit an affidavit to the county treasurer to demonstrate that all of the statutory requirements have been satisfied before a tax deed can be issued.17 Once a tax deed is issued, §§ 77-1843 and 77-1844 specify how a landowner can acquire...
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