Akey v. Clinton County, N.Y., Docket No. 03-7329.

• Decision Date: 09 July 2004
• Docket Number: Docket No. 03-7329.
• Parties: Lucie AKEY, Harold Boyle, Marion Elder, Donald Favreau, Madeline Favreau, Lance Macomber and Christopher McDonald, Plaintiffs-Appellants, Albert Farbotko, Aleksandra Farbotko, John Farbotko, and a class of similarly situated persons, Eric Hunt and Kirk Lamberti, Plaintiffs, v. CLINTON COUNTY, NEW YORK, and William Bingel, in his official capacity as Clinton County Administrator, Defendants-Appellees.
• Court: U.S. Court of Appeals — Second Circuit

375 F.3d 231

Lucie AKEY, Harold Boyle, Marion Elder, Donald Favreau, Madeline Favreau, Lance Macomber and Christopher McDonald, Plaintiffs-Appellants Albert Farbotko, Aleksandra Farbotko, John Farbotko, and a class of similarly situated persons, Eric Hunt and Kirk Lamberti, Plaintiffs, v. CLINTON COUNTY, NEW YORK, and William Bingel, in his official capacity as Clinton County Administrator, Defendants-Appellees.

Docket No. 03-7329.

United States Court of Appeals, Second Circuit.

Argued December 11, 2003.

Decided July 9, 2004.

Mark A. Schneider, Plattsburgh, NY, for Plaintiffs-Appellants.

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

Before: WALKER, Chief Judge, OAKES and KATZMANN, Circuit Judges.

Chief Judge JOHN M. WALKER, JR. dissents in a separate opinion.

OAKES, Senior Circuit Judge.

Appellants, property owners in Clinton County, New York, who had their properties foreclosed upon for failure to pay delinquent taxes, filed Proofs of Claim as potential class members in a class action against the County for violation of due process in failing to provide proper notice of the foreclosures. The United States District Court for the Northern District of New York, David R. Homer, Mag. J., found that none of the appellants could defeat a presumption of receipt of a foreclosure notice and accordingly denied their Proofs of Claim that they were members of the class. With respect to the majority of the appellants, we agree with the district court that no due process violation occurred in the County's provision of notice. With respect to appellants Akey and McDonald, however, we conclude that the requirements of due process were not met by the County and therefore reverse the district court's denial of their claims.

BACKGROUND

The events giving rise to this case are set forth in full in Farbotko v. Clinton County, 168 F.Supp.2d 31 (N.D.N.Y.2001). To summarize, in January 1999, Clinton County mailed notices of foreclosure to all taxpayers who had failed to pay 1996 and/or 1997 taxes on commercial or vacant properties. The notices were sent by ordinary first-class mail in accordance with New York Real Property Tax Law § 1125 (1999).¹ The addresses on the notices were obtained from the tax rolls in the Clinton County Real Property Services Office, which were regarded by the County as the most accurate source for addresses. These notices by first-class mail were one of several ways the County attempted to inform the property owners of possible foreclosure; other methods included posting, publishing, and a notice of arrears on the current tax bill. See id. at 36.

In August 1999, an order of default transferred title of the delinquent taxpayers' properties to the County, and the properties were subsequently auctioned to the public. Just before the auction, a delinquent taxpayer filed a class action pursuant to 42 U.S.C. § 1983, alleging that Clinton County had violated the due process rights of all taxpayers whose property was the subject of the January 1999 foreclosure proceedings. The class was certified in October 2000, and the district court dismissed most of the plaintiffs' claims on summary judgment in October 2001. See Farbotko, 168 F.Supp.2d at 47.

At trial on the remaining claims in July 2002, the jury found that Clinton County had followed regular procedures in addressing and mailing the foreclosure notices, and was therefore entitled to a presumption that the notices were received. The jury also found that the presumption was rebutted for those class members who could establish that their notices of foreclosure had been sent to an incorrect address.

Appellants Lucie Akey, Harold Boyle, Marion Elder, Donald and Madeline Favreau, Lance Macomber, and Christopher McDonald, sought to join the class action at this point by filing Proofs of Claim alleging that they did not receive the notices of foreclosure, that the addresses used for mailing them were incorrect, that the County could have found correct addresses in its records, and that they did not receive notice by other means. Boyle, Elder, and the Favreaus, however, have since confirmed that the addresses used by the County in sending their notices were the correct mailing addresses. Macomber maintains that his notice was sent with an incorrect zip code. McDonald claims that his old address, which was used in sending the notice of foreclosure, had not been updated on the tax rolls when the County implemented a 9-1-1 service in 1992 that changed his address. None of these appellants' notices were returned as undeliverable.

Akey's notice, however, was returned. It had been sent to the address listed for Akey on the 1999 tax rolls for the Town of Champlain, where the property was located. After Akey's notice was returned, the County reviewed the tax rolls for Champlain but was unable to identify a correct address for Akey. Akey's correct address appears in the tax rolls for the Town of Schuyler Falls, which is part of Clinton County.

After a bench trial in February 2003, the district court denied each of the appellants' Proofs of Claim. See Farbotko v. Clinton County, No. 99-CV-1946 (DRH), 2003 WL 21303256 (N.D.N.Y. Feb.28, 2003). Specifically, it found that the foreclosure notices sent to Boyle, Elder, and the Favreaus were sent to their correct addresses, entitling the County to the presumption of receipt. Boyle did not testify at trial; Elder and the Favreaus testified that they had not received the notices. The district court held that the presumption of receipt was not rebutted because Elder and the Favreaus offered no evidence other than their bare denial of receipt, which was insufficient, and because Boyle offered no evidence at all. The district court therefore entered judgment for the County on these appellants' claims.

With respect to Macomber, the district court found that although the foreclosure notice had been sent with an incorrect zip code, the property at issue had already been foreclosed upon in an earlier proceeding. The district court therefore held that even if a due process violation had occurred, Macomber could not establish a loss of property or any damages suffered as a result of the violation. Accordingly, the district court entered judgment for the County on his claim.

With respect to McDonald, the district court found that the County required that his address in Ellenburg be changed from a post office box to a street number in 1992 when it implemented a 9-1-1 emergency response system. McDonald testified that he assumed that the County had updated its files to reflect his new street number address because it had put the 9-1-1 system in place that created the change. His foreclosure notice was sent to the outdated post office box address, and McDonald denied receiving it. The district court found that the County was entitled to a presumption of receipt because it had used the address in the tax roll and because the Ellenburg Postmaster testified that mail addressed to McDonald at the post office box was always delivered to him at his street address. The district court then held that McDonald's denial of receipt was insufficient to overcome the presumption and entered judgment for the County.

Finally, the district court found that the foreclosure notice on Akey's property was mailed to an outdated address. Akey's daughter, who managed her parents' properties and was responsible for her mother's taxes, testified that she had not notified the County but had notified the Town of Champlain of the new address when her parents' business had moved in 1992. The town, however, did not change Akey's address on its tax rolls. When Akey's foreclosure notice was returned to the County as undeliverable, the County searched the tax roll for the Town of Champlain for an alternate mailing address and found only the same incorrect address for Akey. The district court held that this search of the town tax roll satisfied the minimum requirements of due process and entered judgment for the County.

DISCUSSION

In order to satisfy the requirements of due process, a property owner must be given notice of foreclosure proceedings before foreclosure can occur. This principle arises from the holding in Mullane v. Central Hanover Bank & Trust Co., where the Supreme Court found that "[a]n elementary and fundamental requirement of due process in any proceeding which is to be accorded finality is 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." 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950); accord Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 795, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983); Weinstein v. Albright, 261 F.3d 127, 134 (2d Cir.2001). Reasonably calculated notice is notice by means "such as one desirous of actually informing the [property owner] might reasonably adopt to accomplish it." Mullane, 339 U.S. at 315; accord Torres v. $36.256.80 U.S. Currency, 25 F.3d 1154, 1161 (2d Cir.1994).

We have stated that in determining whether due process was provided in foreclosure proceedings, "[t]he proper inquiry is whether the state acted reasonably in selecting means likely to inform the persons affected, not whether each property owner actually received notice." Weigner v. City of New York, 852 F.2d 646, 649 (2d Cir.1988). "In the context of a wide variety of proceedings that threaten to deprive individuals of their property interests, the Supreme Court has consistently held that mailed notice satisfies the requirements of due process." Id. at 650 (citing cases). As notice by mail is deemed to be reasonably calculated to reach property owners, the state is not required to go further, despite the slight risk that notice sent by ordinary mail might not be received.

Guided by the above, we must determine whether the notices of foreclosure...