Diversified Investments, LLC v. U.S. Bank, Na

• Decision Date: 07 December 2005
• Docket Number: No. 02A05-0503-CV-121.,02A05-0503-CV-121.
• Citation: 838 N.E.2d 536
• Parties: DIVERSIFIED INVESTMENTS, LLC, Appellant-Defendant v. U.S. BANK, NA, et al., Appellees-Plaintiffs.
• Court: Indiana Supreme Court

838 N.E.2d 536

DIVERSIFIED INVESTMENTS, LLC, Appellant-Defendant v. U.S. BANK, NA, et al., Appellees-Plaintiffs.

No. 02A05-0503-CV-121.

Court of Appeals of Indiana.

December 7, 2005.

Sean M. Clapp, Sean M. Clapp, LLC, Fishers, for Appellant.

Robert E. Kabisch, Andrew S. Williams, Hunt Suedhoff Kalamaros, LLP, Fort Wayne, for Appellee.

OPINION

ROBB, Judge.

Diversified Investments, L.L.C., ("Diversified") appeals from the trial court's denial of its motion for summary judgment simultaneous with a granted motion for relief from judgment in favor of U.S. Bank, N.A., et al. ("U.S.Bank"). We reverse.

Issue

Diversified raises one issue for our review, which we restate as whether the trial court properly denied its motion for summary judgment to quiet title in a tax deed, and voided the deed, where the Allen County Auditor ("Auditor") complied with statutory steps necessary to issue the deed.

Facts and Procedural History

On December 27, 1990, Randy and Kathleen Humbert executed and delivered to Trustcorp Mortgage Company a promissory note and mortgage for property located at 5320 Johnie Drive, Fort Wayne, Indiana, which was recorded in the Allen County Recorder's Office. The mortgage was assigned to Lincoln Service Corporation ("Lincoln") on February 13, 1991, which was also recorded in Allen County. The assignment listed Lincoln's address as 1100 Walnut Street, Owensboro, Kentucky 40302. In June and July of 1993, Lincoln changed its name to Lincoln Service Mortgage Corporation and moved to 4801 Frederica Street, Owensboro, Kentucky 42301. Neither the Allen County Recorder nor Auditor was notified of these changes. Between January 1995 and August 2001, a series of mergers resulted in Lincoln becoming U.S. Bank, which continued business at the Frederica Street location. No notification of the name changes subsequent to the mergers was provided to the Allen County Recorder or Auditor.

On September 18, 2002, the Humberts' property was sold at a tax sale due to delinquent real estate taxes and assessments. The tax sale certificate was purchased by an entity that subsequently assigned it to Diversified. U.S. Bank initiated foreclosure proceedings on November 21, 2002, after obtaining a title examination revealing no outstanding tax liens or assessments on the property. An in rem default judgment and decree of foreclosure was entered in favor of U.S. Bank on March 13, 2003.

The Auditor sent notice of the 2002 tax sale ("4.5 notice"), as required by statute, on May 28, 2003, to Mrs. Humbert, as well as to the defunct Lincoln and other parties with substantial interest in the property by certified mail, return receipt requested. The notice to Lincoln was sent to 1100 Walnut Street because it was the address listed in the Auditor's record indicating the interest, the 1991 assignment to Lincoln. The Auditor received the signed return receipt card, which showed the Walnut Street address crossed through and the Frederica Street address handwritten above it. After the yearlong redemption period, on October 7, 2003, the Auditor sent Mrs. Humbert and Lincoln a notice of petition for tax deed ("4.6 notice"). This second notice was also sent to Lincoln using the Walnut Street address. It was again delivered, and the Auditor received the return receipt card, signed by an unknown person and without indication of an alternative mailing address.

On November 20, 2003, after petitioning for and receiving an order to issue a tax deed from the Allen County Circuit Court, the Auditor issued a tax title deed for the property to Diversified, recorded with the Allen County Recorder. Diversified initiated an action to quiet title in the property, and a summons was issued to U.S. Bank at the Frederica Street address on March 5, 2004. U.S. Bank appeared in the case on March 30, 2004, and then filed an intervening answer, crossclaim, and counterclaim. U.S. Bank asserted that Diversified's tax deed was void because U.S. Bank had not received the tax sale and tax deed petition notices.

Diversified's action to quiet title was consolidated into U.S. Bank's foreclosure case. The foreclosure case was thereafter consolidated into the tax sale case after U.S. Bank filed a motion to set aside the judgment ordering the Auditor to issue the tax deed to Diversified. U.S. Bank and Diversified also filed cross-motions for summary judgment. After reviewing the parties' briefs and hearing oral arguments, the trial court issued findings of fact and conclusions of law. It found that there were no issues of material fact and denied Diversified's motion for summary judgment, implicitly granting U.S. Bank's cross-motion for summary judgment, and voiding Diversified's tax deed by granting U.S. Bank's motion for relief from judgment. Diversified now appeals denial of its motion for summary judgment.

Discussion and Decision

I. Standard of Review

On appeal from summary judgment, we face the same issues that were before the trial court and follow the same process. Reeder Assocs. II v. Chicago Belle, Ltd., 778 N.E.2d 828, 831 (Ind.Ct.App.2002), trans. denied. Summary judgment is appropriate only where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Ind. Trial Rule 56(C). The party appealing a denial of summary judgment has the burden of persuading this court that the trial court's ruling was improper. Schaefer v. Kumar, 804 N.E.2d 184, 191 (Ind.Ct.App.2004), trans. denied. "If, as here, there is no dispute as to the facts, this is a proper case for summary judgment, and our standard of review is de novo[,]" in which the pleadings and designated materials are viewed in the light most favorable to the nonmovant. Reeder, 778 N.E.2d at 831.

In the summary judgment context we are not bound by the trial court's specific findings and conclusions, which merely aid our review by providing a statement of reasons for the trial court's actions. Bd. of Comm'rs of LaPorte County v. Town & Country Utils., Inc., 791 N.E.2d 249, 252 (Ind.Ct.App.2003), trans. denied. "The fact that the parties [made] cross-motions for summary judgment does not alter our standard of review. Instead, we must consider each motion separately to determine whether the moving party is entitled to judgment as a matter of law." Indiana Farmers Mut. Ins. Group v. Blaskie, 727 N.E.2d 13, 15 (Ind.Ct.App.2000).

II. Sufficiency of Notice

Diversified argues that the Auditor satisfied due process requirements when the official complied with the requirements of Indiana law in order to issue a valid tax deed, including adequate notice to Lincoln as U.S. Bank's predecessor-in-interest. U.S. Bank contends that after the Auditor received the 4.5 notice's return receipt postcard, with the handwritten Frederica Street address, the Auditor was required to send 4.6 notice to that alternative address to effectuate notice reasonably calculated to apprise U.S. Bank of the petition for the tax deed. The question we face, then, is whether the alternative address written on a return receipt postcard by an unknown party is sufficient to supply inquiry notice of a change of address to the Auditor, or whether a party with a substantial interest in property has an obligation to update the Auditor's official record of address.

A. Constitutional and Statutory Requirements

"An 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." Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 (1950). "The means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it. The reasonableness and hence the constitutional validity of any chosen method may be defended on the ground that it is in itself reasonably certain to inform those affected . . . ." Id. at 315, 70 S.Ct. 652. The constitutional requirements are satisfied if these conditions are reasonably met with "due regard for the practicalities and peculiarities of the case." Id. at 314-15, 70 S.Ct. 652.

"[A] mortgagee possesses a substantial property interest that is significantly affected by a tax sale[,]" and is therefore "entitled to notice reasonably calculated to apprise him of a pending tax sale." Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 798, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983) (discussing notice requirements for tax sales under Indiana law). To this end, "[n]otice by mail or other means as certain to ensure actual notice is a minimum constitutional precondition to a proceeding which will adversely affect the . . . property interests of any party, . . . if its name and address are reasonably ascertainable." Id. at 800, 103 S.Ct. 2706 (emphasis omitted).

Indiana's procedure for issuance of a tax deed following a tax sale has been implemented by statute, and was summarized by our supreme court in Tax Certificate Investments, Inc. v. Smethers, 714 N.E.2d 131 (Ind.1999), as follows:

A purchaser of Indiana real property that is sold for delinquent taxes initially receives a certificate of sale. A one-year redemption period ensues. If the owners fail to redeem the property during that year, a purchaser who has complied with the statutory requirements is entitled to a tax deed. The property owner and any person with a "substantial property interest of public record" must each be given two notices.

The first notice announces the fact of the sale, the date the redemption period will expire, and the date on or after which a tax deed petition will be filed. The second notice announces that the purchaser has petitioned for a tax deed.

Id. at 133 (citations omitted). Indiana Code section 6-1.1-25-4.5 entitles a purchaser to a tax deed only where proper notice is given. It states in relevant...