Hetelekides v. Cnty. of Ont.
| Docket Number | 3 |
| Decision Date | 14 February 2023 |
| Citation | 39 N.Y.3d 222,205 N.E.3d 436,184 N.Y.S.3d 716 |
| Parties | Krystalo HETELEKIDES, Individually and as Executrix of the Estate of Demetrios Hetelekides, Also Known as Jimmy Hetelekides, Deceased, Appellant, v. COUNTY OF ONTARIO et al., Respondents. |
| Court | New York Court of Appeals Court of Appeals |
Adams Leclair, LLP, Rochester (Mary Jo S. Korona and Robert P. Yawman of counsel), for appellant.
Jason S. DiPonzio, Rochester, for respondents.
Pacific Legal Foundation, Arlington, Virginia (Jonathan M. Houghton of counsel) and Sacramento, California (David J. Deerson and Christina M. Martin of counsel), for Pacific Legal Foundation, amicus curiae.
Two fundamental legal principles govern our decision in this appeal. First, a tax foreclosure proceeding is in rem against the "res"—the taxable real property—and not an action in personam commenced against an individual to establish personal liability. Second, New York statutory law and state and federal constitutional guarantees of due process require that the petitioner in a foreclosure proceeding must attempt notice that is reasonably calculated to alert all parties with an interest in the property.
Here, defendants commenced an in rem tax foreclosure proceeding and mailed the statutorily-required notice to the publicly-listed owners of the property, posted and filed the notice, and publicized the notice in the press. Upon learning that a person listed as an owner died before the notices were issued, defendant County Treasurer also personally contacted the sole business located on the property in an effort to identify and personally inform a manager, owner, or any person in charge of the pending foreclosure proceeding. Under these circumstances, defendants provided legally adequate notice of a validly commenced tax foreclosure action. We therefore affirm the Appellate Division's order.
Plaintiff Krystalo Hetelekides, individually as the owner of the property and as executor of the estate of her husband, decedent Demetrios Hetelekides (also known as James Hetelekides), commenced this action against defendants County of Ontario and County Treasurer Gary G. Baxter for damages plaintiff allegedly incurred as a result of the tax foreclosure sale of decedent's property in the Town of Hopewell. At the time of suit, plaintiff had obtained title to the property after a third party purchased the property at public auction and assigned the bid to plaintiff, who paid the entire purchase price. Plaintiff alleged that she was owed the difference between the unpaid tax arrears and the auction purchase price and interest.
According to the record of the bench trial, decedent owned the property and—with plaintiff—operated a restaurant there. Until his death, decedent was responsible for paying the real property taxes. He had not paid the annual tax by the January 1, 2005 deadline when a tax lien was created by operation of law.
Defendants took action pursuant to RPTL article 11 to collect the overdue tax. First, the Treasurer hired a private commercial abstract company to identify the interested parties; the investigator reported that, as of August 31, 2005, and again on May 31, 2006, decedent was the publicly-listed property owner.1 Thereafter, on November 14, 2005, the Treasurer included the property on a list of delinquent taxes and executed and filed the list with the Clerk of the County in accordance with RPTL 1122.2 The tax remained unpaid when decedent died on August 1, 2006, a year and a half after the tax became due and almost a year after the filing of the delinquent taxes list.
As provided by RPTL 1123, on October 1, 2006—21 months after the lien date—the Treasurer filed an in rem foreclosure petition in Ontario County Court.3 The same day, the Treasurer's Office sent notices of foreclosure and copies of the petition by certified mail, return receipt requested, and by ordinary first class mail to the property, each addressed separately to "James Hetelekides"; "Hetelekides, James"; and "Geo–Tas, Inc." All told, six separate mailings were sent to the property. The notice listed January 12, 2007, as the final day to redeem the property.4 On October 2, the Treasurer also posted a copy of the notice and petition in the Ontario County Clerk's Office, published the notice in two local newspapers, and ran additional publications in the newspapers on October 16 and November 1. The certified mailings arrived on October 3, and a long-time employee of the restaurant signed the return receipts, which were then returned to the Treasurer's Office.
During the bench trial, the Treasurer testified that he first became aware of decedent's death and that plaintiff was operating the restaurant in late December 2006 or early January 2007. Thereafter, on three consecutive days during afternoon business hours, the Treasurer personally contacted the restaurant to speak with someone regarding the property. First, on Tuesday, January 9, 2007, the Treasurer called, identified himself, and asked to "speak to the owner, the manager, [or] someone that's in charge of the business." When he was told that no one was available, he said that "[i]t's very imperative or very important that I talk to somebody that owns the business or manages it or has control over it," and asked to be called back. Nobody responded. The Treasurer then called again the following day and asked to "talk to somebody, the owner, somebody who is in charge, a manager, anyone that can—that has any authority [over the] business, please, I need to talk to somebody." The person who answered the phone said that no one was available, and the Treasurer responded that he had "called yesterday" and "[i]t's very important that I talk to somebody." The Treasurer did not hear back and, the next day at roughly 1:30 p.m., he personally visited the restaurant, identified himself, and repeated to an employee that he needed to speak with a manager or anyone with authority. He was told a third time that no one was available. The Treasurer left his business card, asked for a return call, and reiterated that it was "very important" that he speak with someone. It is undisputed that, at the time of the Treasurer's phone calls and visit, plaintiff worked daily at the restaurant.
By plaintiff's own testimony, the Treasurer's Office and a Town employee gave her conflicting information regarding whether the tax was paid in full. According to plaintiff, after she received her residential tax bill, she went to the Treasurer's Office in either late December 2006 or early January 2007, paid that tax, and asked whether the tax on the restaurant property had been paid. She maintained that a clerk in the Treasurer's Office informed her that the property tax had been paid. However, when she checked with the Town's offices, she was told by an employee that the tax was unpaid. She spoke to the clerk at the Treasurer's Office on two additional occasions and each time was told that the property tax was paid. The clerk testified that she did not recall those conversations, and that, as a matter of course, an in-person inquiry related to a property would have been noted in the Office's records, but that no such record existed confirming plaintiff's visits.
The tax was still unpaid by the redemption deadline and it is undisputed that the Treasurer declined plaintiff's late offer to redeem. Thereafter, on February 5, 2007, defendants successfully moved for a default judgment in the foreclosure proceeding. Plaintiff, who at that point had retained counsel, did not move to vacate the default and instead unsuccessfully attempted to persuade the County Board of Supervisors to allow her to redeem the property. She also filed a petition in Surrogate's Court, after the default judgment issued, as the named executor to probate decedent's will, under which she was the named heir to the property. Subsequently, in May 2007 an individual purchased the property at public auction and assigned the bid to plaintiff, who then paid the purchase price and received title to the property. The following month, Surrogate's Court issued letters testamentary to plaintiff.
Plaintiff commenced this action in Supreme Court alleging that the in rem foreclosure proceeding was a nullity and that defendants had violated her due process rights; she also asserted additional claims under 42 USC §§ 1983 and 1988, contending that the County had adopted a policy, custom, or practice precluding the Treasurer from providing adequate due process to persons with interests in real property. Following a bench trial, Supreme Court rendered a verdict in plaintiff's favor, except as to the federal statutory claims, concluding that the Treasurer's mailings failed to comply with RPTL 1125 because they were addressed to decedent rather than his estate or plaintiff and that the foreclosure proceeding was a nullity because it was brought against a deceased person.
The Appellate Division modified the judgment, on the law, by vacating those parts that declared the foreclosure proceeding a nullity and granted plaintiff monetary relief, and, as so modified, affirmed ( 193 A.D.3d 1414, 147 N.Y.S.3d 811 [4th Dept. 2021] ). The Court concluded that the evidence presented at the bench trial established compliance with all statutory and due process requirements (see id. at 1417, 147 N.Y.S.3d 811 ). The Court also held that, assuming, arguendo, that defendants were required to take additional steps to ensure that plaintiff received due process, defendants took sufficient steps because the Treasurer made "three personal attempts to talk to someone with authority" and could not have further determined who owned the property because plaintiff had not yet filed a petition in Surrogate's Court ( id. at 1419, 147 N.Y.S.3d 811 ). Finally, the Court rejected the Second Department's reasoning in ( Matter of Foreclosure of Tax Liens , 165 A.D.3d 1112, 87 N.Y.S.3d 262 [2d Dept. 2018] [ Goldman ], appeal dismissed & lv....
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