Dist. of Columbia v. Mayhew

• Decision Date: 20 December 1991
• Docket Number: No. 89-1533.,89-1533.
• Parties: DISTRICT OF COLUMBIA, Appellant, v. Jackolyn MAYHEW, et al., Appellees.
• Court: D.C. Court of Appeals

601 A.2d 37 (D.C. 1991)

DISTRICT OF COLUMBIA, Appellant, v. Jackolyn MAYHEW, et al., Appellees.

No. 89-1533.

Court of Appeals of The District of Columbia

Argued: November 13, 1991

December 20, 1991

[Copyrighted Material Omitted]Edward E. Schwab, Asst. Corp. Counsel, with whom John Payton, Corporation Counsel, and Charles L. Reischel, Deputy Corp. Counsel, Washington, D.C., were on the brief, for appellant.

John E. Drury, Neil I. Levy, and Margaret A. Beller, with whom Eric S. Schuster, Washington, D.C., was on the brief, for appellees.

Before TERRY, FARRELL and KING, Associate Judges.

FARRELL, Associate Judge:

The issues we decide in this appeal are (a) whether the trustees under a deed of trust were entitled to constitutionally adequate notice of a tax sale of real property subsequently deeded to the District of Columbia, and (b), if so, whether the District's efforts to notify them were sufficient. We answer the first question yes, the second question no, and therefore affirm the judgment of the trial court declaring the tax deed held by the District to be null and void.

I. The Statutory Framework

Any property in the District of Columbia may be sold at a tax foreclosure sale for non-payment of property taxes and assessments. Before a tax sale takes place, the District is required by statute to mail two notices of the tax delinquency to the "record owner," stating that the property involved will be sold at public auction if the taxes are not paid. D.C.Code§ 47-1302 (1990); 9 DCMR §§ 314.1, 314.2, 314.3 (1984).¹ Also before the sale, the District must publish notification of the sale in two local newspapers in a manner prescribed by regulations.² To purchase the property at a tax sale, a person must bid at least the amount of the back taxes. If no one bids the amount due, the Collector of Taxes must bid the amount due and the property is deemed to have been "bid off" by operation of law to the District of Columbia. D.C.Code §§ 47-1303, -1304; 9 DCMR § 316.7 (1984).³

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Once a successful bid is made and the purchase price paid, the purchaser is issued a certificate of sale. D.C.Code § 47-1304. This certificate does not operate to transfer title; before such a transfer takes place, a two year redemption period must run. Within two years from the date of sale, the record owner of the property "or any other person having an interest therein" may redeem the property by paying all of the accrued taxes, interest, and penalties. D.C.Code § 47-1306(a). Accordingly, the District must give the record owner notice of the imminent expiration of the redemption period by registered or certified mail "[n]ot less than thirty (30) days prior to the expiration date...." 9 DCMR § 317.3 (1984). If the period runs without anyattempt at redemption, the tax sale purchaser may apply for a deed at any time within five years from the date of the tax sale. The tax deed once issued is "prima facie evidence of a good and perfect title in fee simple...." D.C.Code § 47-1304.

Property that is bid off by operation of law to the District can be disposed of in three ways. Under D.C.Code § 47-1304, if no one redeems the property during the two year period, the Mayor "shall in the name of and on behalf of the District of Columbia, sell said property at public or private sale and issue to any purchaser of such property a deed," which serves to transfer title as if the deed were issued pursuant to the annual tax sale provisions. No further notice is required if the property is disposed of in this manner. The District may also go to court to enforce a lien against the property under D.C.Code § 47-1312; the court may then, after notice to the record owner, decree a sale of the property to satisfy the lien. D.C.Code§§ 47-1313, -1314. Finally, the District may choose to place the property in the Homestead Program, D.C.Code § 45-2701 et seq. (1990), designed to let low income families purchase delinquent tax property at a reduced price. Thirty days before the property becomes part of the Homestead program, additional notice must be given to the record owner and any lienholders. D.C.Code § 45-2711; 10 DCMR § 3902.3(b) (1987).

II. The Facts

The property at issue is located at 6425 14th Street, N.W. The record owner is ETDH Associates, whose current partners are the estate of B. Edith Gonska and Sandra Laake.⁴ETDH purchased the Fourteenth Street property in 1979. A deed of trust established at the time made Connecticut Avenue Woods No. 2, Inc. (Conn. Ave. Inc.) the beneficiary of the trust and Leon Gerber and Samuel Dweck the trustees. The deed of trust, recorded on July 20, 1979, bore the trustees' names but not their addresses. Conn. Ave. Inc. dissolved some time between October and December 1979, and thebeneficial interest under the deed of trust was transferred to the United Jewish Appeal Federation (UJAF). The dissolution of Conn. Ave. Inc. and the transfer of the beneficial interest were not a matter of public record, as UJAF failed to record its interest. The trustees, however, remained the same.

ETDH failed to pay property taxes on the property. After giving notice of the delinquency, the District mailed notice to ETDH that the property would be sold at auction in the tax sale for 1984, to be held on January 16, 1985. The District also gave what purported to be proper notice by publication. See note 2, supra. The tax sale was held as scheduled, and when no one bid for the property, it was purchased by the District of Columbia as required.⁵ On December 12, 1986, notice by mail was sent to ETDH that the two year redemption period would expire on January 16, 1987. However, no attempt was made to give notice to the trustees under the deed of trust. In November 1987, trustee Samuel

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Dweck died. On April 11 and 20, 1988, the District sent written notice to ETDH and to trustees under a junior trust stating that the property had been placed in the Homestead Program and that the thirty day redemption period was about to expire.

At the end of April 1988, the District made its first and only attempt to contact Conn. Ave. Inc. and the named trustees Samuel Dweck and Leon Gerber. The District learned that Conn. Ave. Inc. had dissolved and the beneficial interest under the deed of trust had been transferred; but because UJAF had not recorded its interest, the District had no way of determining to whom the beneficial interest had gone or how to contact that party.⁶ By contrast, the trustees' names and addresses were in the Washington, D.C. telephone book. The District's attempt to contact the trustees consisted of two telephone calls made by an administrator of the Homestead program. The first was to Samuel Dweck's law firm, which told the District that Dweck was no longer with the firm and that there was no forwarding address. TheDistrict later learned that Samuel Dweck was deceased. The District official did reach Leon Gerber by phone, and asked simply if he had any connection with property on 14th street; he answered no. As the trial court found, there was no evidence concerning what else, if anything, the official asked Gerber, "nor any evidence as to whether she asked him if he was a trustee." The District made no further attempt to notify Gerber by mail or otherwise. On June 3, 1988, the property was deeded to the District for inclusion in the Homestead Program.

The appellees⁷ contested the deed and intervened in the District's action to quiet title to the property. Besides claiming error in the published notice, note 2, supra, they asserted that the District had failed to provide constitutionally adequate notice to the trustees under the deed of trust.⁸ On cross-motions for summary judgment, the trial court ruled in favor of appellees on both claims, declaring the tax deed void. The District now appeals.⁹

III. Discussion

The trial judge ruled, as pertinent here, that the District's failure to notify the trustees of the tax sale by mail or personal service violated due process under the decision of the United States Supreme Court in Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983). This was so, the judge reasoned, irrespective whether the proper time for notice was before the tax sale (when the property was bid off to the District), before the expiration of the two-year redemption period, or before the property was deeded to the District in June of 1988. At none of these points, the judge found, was the notice given reasonably calculated to apprise the trustees of the pendency of the tax sale and provide them an opportunity to present their objections. See Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950).

On appeal the District argues that the trustees (Gerber and Dweck) had no interest in the property entitled to due process protection, and that even if they did, the "substantial efforts" made to notify them of the sale met constitutional requirements. We consider these arguments in turn.

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A.

"To have a property interest in a benefit, a person ... must have more than a unilateral expectation of it. He must, instead, have a legitimate claim of entitlement to it." Board of Regents v. Roth, 408 U.S. 564, 577, 92 S.Ct. 2701, 2709, 33 L.Ed.2d 548 (1972). Property interests "are not created by the Constitution. Rather, they are created and their dimensions are defined by existing rules or understandings that stem from an independent source such as state law--rules or understandings that secure certain benefits and that support certain claims of entitlement to those benefits." Id.; Parratt v. Taylor, 451 U.S. 527, 529 n. 1, 101 S.Ct. 1908, 1910 n. 1, 68 L.Ed.2d 420 (1981).

We have no difficulty in concluding that, in the District of Columbia, a trustee under a deed of trust has the requisite property interest deserving of due process protection. By statute, a trustee under a deed of trust is deemed to have a "qualified fee simple," D.C.Code § 45-703 (1990),...