Cedarbridge, LLC v. Eason

• Citation: 293 S.W.3d 462
• Decision Date: 26 May 2009
• Docket Number: No. ED 91544.,ED 91544.
• Parties: CEDARBRIDGE, LLC., Appellant, v. Joseph EASON, et al., Respondent.
• Court: Missouri Court of Appeals

293 S.W.3d 462

CEDARBRIDGE, LLC., Appellant, v. Joseph EASON, et al., Respondent.

No. ED 91544.

Missouri Court of Appeals, Eastern District, Division Two.

May 26, 2009.

Motion for Rehearing and/or Transfer to Supreme Court Denied July 13, 2009.

Application for Transfer Denied September 1, 2009.

Phillip K. Gebhart, Desoto, MO, for Appellant.

Jill R. Rembusch, St. Louis, MO, for Respondent.

ROY L. RICHTER, Presiding Judge.

CedarBridge, LLC ("CedarBridge") appeals the trial court's judgment in favor of Joseph Eason ("Eason") after two delinquent tax sales. We affirm.

I. BACKGROUND

This case arises from the August 2005 delinquent tax sales of two properties located at 7225 and 7233 Olive Boulevard.¹ Eason had acquired the properties at issue in 1996 by way of a General Warranty Deed. In 2002, he conveyed a security interest in the properties to Union Planters Bank ("the Bank") as beneficiary and Quatre Corporation ("Quatre") as trustee by way of a deed of trust. Eason failed to pay the property taxes in 2002, 2003, and 2004. CedarBridge was the successful bidder at the August 2005 delinquent tax sales and acquired the Collector's Deeds to the properties in August 2006.

Eason resides at 7069 Kennedy in St. Louis, Missouri, and has resided there since at least 2002. CedarBridge member William Glasgow ("Glasgow") testified that CedarBridge sent notice to Eason via certified mail at 4800 N. 68th Street, Paradise Valley, Arizona and 9500 Green Valley Drive, St. Louis, Missouri.² The notices sent by certified mail were returned to CedarBridge as undeliverable. Glasgow also testified that CedarBridge posted notices on the two properties in May 2006, and produced photographs of the postings at trial. CedarBridge similarly claimed that it sent notice to the Bank and Quatre. Glasgow testified that CedarBridge possessed return receipts indicating that certified mailings of notice had been sent to those entities, but could not produce the receipts during the litigation.

In October 2006, CedarBridge filed a petition seeking to quiet title to the two properties and to confirm its Collector's Deeds. In response, Eason filed a counterclaim seeking a declaratory judgment that CedarBridge had failed to comply with the notice requirements in Section 140.405 RSMo Cum.Supp.2003 and to set aside the Collector's Deeds. Eason also filed claims for ejectment and tortious interference with a valid contract, based on CedarBridge's having collected rent from the properties' tenants. CedarBridge asserted conditional claims for recoupment, but declined to present evidence thereon at trial, and instead reserved that issue for a later hearing.

To clarify the process, we summarize the notice requirements in delinquent tax sale purchases.

Who must receive notice

For all tax sales, both first and second offerings and third offerings, the purchaser must give notice to everyone who holds a publicly recorded deed of trust³, mortgage, lease, lien or claim to the real estate. Section 140.405. This includes one who was the publicly-recorded owner of the property prior to the sale. Section 140.405. Parties whose names and addresses appear on the front page of the deed of trust document, such as beneficiaries of deeds of trust and trustees of deeds of trusts, must receive notice as well. Kusher, 231 S.W.3d at 204.

Notice must be sent via certified mail to the recipient's last known available address.

All redemption notices must be sent via certified mail. Section 140.405. In the case of a publicly-recorded owner of property sold at a delinquent tax sale, the notice must be sent to the recipient's last known available address. If the tax sale purchaser receives notice that the certified mail was not claimed, i.e. that the intended recipient did not receive notice of the sale, the purchaser must take additional, reasonable steps to effectuate notice. Schlereth v. Hardy, 280 S.W.3d 47, 52-53 (Mo. banc 2009).

Form of notice: First and Second Offerings

First and second offering tax sales have a one-year redemption period that begins on the date of the sale. Section 140.340.1 RSMo Supp.2003. Therefore, in a first or second offering tax sale, the notice must inform the recipient that s/he has one year from the date of the tax sale to redeem the property or be forever barred from doing so. Keylien v. Johnson, 284 S.W.3d 606, 612-13 (Mo.App. E.D.2009). The purchaser must send the notice at least ninety days before it is authorized to acquire the deed to the property, i.e. at least ninety days before the expiration of the one-year redemption period. Section 140.405.

Form of notice: Third Offering

In the case of a third offering, the notice must inform the recipient that s/he has ninety days from the date the purchaser files the affidavit with the county collector in which to redeem the property, or be forever barred from doing so. Keylien, 284 S.W.3d at 612-13. Thus, third offering notices must inform the recipient of the date on which the purchaser intends to file an affidavit with the county collector. After sending the required notices, the purchaser shall then notify the county collector by affidavit that it has given proper notice to all required parties. Section 140.405. Again, the ninety day redemption period begins to run on the day the affidavit is filed.

A delinquent tax sale purchaser's failure to comply with any of the above notice requirements will result in its losing all interest in the real estate as a matter of law. Section 140.405.

The case was tried to the court, and Eason filed a Motion for Judgment at the Close of Plaintiff's Case ("Motion"). The trial court granted the Motion and quieted title to the properties in Eason. The court held that: (1) CedarBridge's Collector's Deeds were invalid for its failure to comply with the notice requirements of Section 140.405 and (2) Eason was entitled to recover on his ejectment and tortious interference claims, for which the court awarded him a total of $52,800 in damages. CedarBridge appeals.

II. DISCUSSION

In a judge-tried case, we will affirm the trial court's judgment unless no substantial evidence supports it, it is against the weight of the evidence, or it erroneously applies the law. Glasgow Enters., Inc. v. Brooks, 234 S.W.3d 407, 410 (Mo.App. E.D. 2007). We must view the evidence and the inferences therefrom in the light most favorable to the judgment and disregard all contrary evidence. Id.

CedarBridge asserts thirteen points of error on appeal. To simplify the issues, we will address some of its points categorically.

CedarBridge's first six points on appeal challenge the trial court's findings regarding notice. We address these points simultaneously because we believe CedarBridge's failure to give notice to the Bank and to Quatre to be dispositive of this issue.

We first summarize the trial court's findings with respect to notice. The trial court held that CedarBridge had failed to meet the requirements of Section 140.405 in multiple respects. As to Eason, the court found that CedarBridge had notice that Eason did not reside at the given addresses, because all the notices sent via certified mail were returned as undeliverable.⁴ CedarBridge was therefore aware that Eason did not have notice of the tax sales, and the court held that due process required it to take additional reasonable steps to notify Eason of his right to redeem.

The trial court also found portions of CedarBridge's testimony to be fabricated. Due to certain discrepancies that surfaced at trial, the court discredited CedarBridge's testimony that it had posted notice on the two properties. As to the Bank and Quatre, the court found that CedarBridge had failed to send them any notice. The trial court also found the form of the purported notices to be deficient because, according to the trial court, CedarBridge incorrectly informed the recipients of their statutory redemption rights.

Section 140.405 states, in pertinent part:

Any person purchasing property at a delinquent land tax auction shall not acquire the deed to the real estate, as provided for in section 140.420, until the person meets with the following [notice] requirement ... At least 90 days prior to the date when a purchaser is authorized to acquire the deed, the purchaser shall notify any person who holds a publicly recorded deed of trust, mortgage lease, lien or claim upon that real estate of the latter person's right to redeem such person's publicly recorded security or claim. Notice shall be sent by certified mail to any such person, including one who was the publicly recorded owner of the property sold at the delinquent land tax auction previous to such sale, at such person's last known available address. Failure of the purchaser to comply with this [notice] provision shall result in such purchaser's loss of all interest in the real estate. (Emphasis added.)

As this Court noted in Valli v. Glasgow Enters., Inc., 204 S.W.3d 273 (Mo. App. E.D.2006), the notice requirements of Section 140.405 use the term "shall." Id. at 276. "It is clear that when a statute mandates that something be done by providing that it shall occur, and it also provides what results shall follow a failure to comply with its terms, it is mandatory and must be obeyed." Id. at 276-77 (quoting Hutchison v. Cannon, 29 S.W.3d 844, 847 (Mo.App. S.D.2000)).

In Glasgow Enters., Inc. v. Kusher, 231 S.W.3d 201 (Mo.App. E.D.2007), this Court set aside a tax sale due to the purchaser's failure to send notice to the beneficiary of a deed of trust. In doing so, this Court stated:

Section 140.405 requires a purchaser at a tax sale to notify all deed of trust holders of their right to redeem. Notice to a deed of trust holder must be sent by certified mail to the deed of trust beneficiary at the beneficiary's last known address. The notice provisions of section 140.405 are mandatory and failure to follow them results in the purchaser losing its interest in the property.

Id. at...