In re Beckham

• Citation: 447 B.R. 603
• Decision Date: 14 April 2011
• Docket Number: Adversary No. 10–4412–659.,Bankruptcy No. 10–49316–659.
• Parties: In re Lawrence W. BECKHAM, Debtor.Lawrence W. Beckham, Plaintiff,v.Brian Bond, and Collector of Revenue of the City of St. Louis, Defendants.
• Court: United States Bankruptcy Courts. Eighth Circuit. U.S. Bankruptcy Court — Eastern District of Missouri

447 B.R. 603

In re Lawrence W. BECKHAM, Debtor.Lawrence W. Beckham, Plaintiff,

v.Brian Bond, and Collector of Revenue of the City of St. Louis, Defendants.

Bankruptcy No. 10–49316–659.

Adversary No. 10–4412–659.

United States Bankruptcy Court, E.D. Missouri, Eastern Division.

April 14, 2011.

David T. Lumerman, St. Louis, MO, for Debtor and Plaintiff.Michael K. Daming, Murphy Wasinger, L.C., St. Louis, MO, for Defendants.Collector of Revenue of the City of St. Louis, pro se.

FINDINGS OF FACT AND CONCLUSIONS OF LAW

KATHY A. SURRATT–STATES, Bankruptcy Judge.

The matter before the Court is Plaintiff Lawrence W. Beckham's Amended Complaint to Set Aside Tax Sale, Defendant Brian Bond's Answer to Plaintiff's Amended Complaint to Set Aside Tax Sale, Defendant/Counterclaim Plaintiff Brian Bond's Counterclaim and Motion to Confirm Sheriff's Sale and Answer to Counterclaim of Brian Bond. The pertinent facts are set forth below.

FINDINGS OF FACT

Plaintiff Lawrence W. Beckham (hereinafter “Plaintiff”) purchased the real property located at 6617 Idaho Avenue, St. Louis, Missouri (hereinafter “Property”) in 2005 for $32,000.00. Plaintiff's Proposed Finding of Facts and Conclusions of Law (hereinafter “Pl.'s Facts”) ¶ 1. The first page of the Special Warranty Deed (hereinafter “Deed”) for the Property, made and entered into on November 16, 2005 between Plaintiff and Wells Fargo Bank, lists Plaintiff as “Lawrence Beckman” and Plaintiff's mailing address as 1424 South 18th Street, St. Louis, Missouri. Joint Ex. 1. The Grantee Rider is located on the fourth page of the Deed. The Grantee Rider lists Plaintiff as “Lawrence Beckham,” identifies Plaintiff as grantee on the Property and lists the Property's address. Joint Ex. 1.

Plaintiff did not pay real estate taxes on the Property from 2006 through 2009, and a delinquent tax lien arose. Joint Stipulation of Facts (hereinafter “Stip. Facts”) ¶ 1. The Collector of Revenue for the City of St. Louis, Missouri (hereinafter “Collector of Revenue”) filed suit to foreclose on the Property. Stip. Facts ¶¶ 2–3. Collector of Revenue filed the Affidavit of Service of Notice on June 1, 2010, published notice of the sale within thirty days of filing and served notice within thirty days of filing upon “Lawrence Beckman” at the South 18th Street address listed on the first page of the Deed. Stip. Facts ¶¶ 4–6; Joint Ex. 2. This name and address was contained in the City of St. Louis property assessor records for tax year 2009. Joint Ex. 5. No notice was served upon “Lawrence Beckham” or the Property. Joint Ex. 2.

On June 22, 2010, Collector of Revenue, through the sheriff, sold the Property at a tax sale (hereinafter “Tax Sale”). Defendant Brian Bond (hereinafter “Defendant”) was the highest and best bidder at the Tax Sale, paying $5,000.00. Joint Ex. 7. Plaintiff did not cure the tax arrearage on the Property prior to the sale. Stip. Facts ¶ 10. On July 20, 2010, Defendant filed a Motion to Confirm his purchase of the Property. Stip. Facts ¶ 11.

On August 17, 2010, Plaintiff filed a petition under Chapter 13 of the Bankruptcy Code. Stip. Facts ¶ 12. Defendant's tax sale purchase was not yet confirmed at the time of Plaintiff's bankruptcy filing. Pl.'s Facts ¶ 7. On October 4, 2010, Plaintiff changed the mailing address for the Property listed in the St. Louis property assessor records from the South 18th Street address to the actual address, 6617 Idaho Avenue. Joint Ex. 6.

Plaintiff contends that he did not have actual or constructive notice of the Tax Sale, did not have any knowledge of the tax delinquency and that he only became aware of the Tax Sale when he received notice of the Tax Sale confirmation hearing, which was mailed to the Property. The Tax Sale confirmation hearing had not been held prior to Plaintiff's bankruptcy filing. Plaintiff claims that the Chapter 13 plan, confirmed on November 5, 2010, provides adequate protection to Defendant by scheduling to fully cure the tax arrearage with interest and to compensate Defendant for the purchase price paid at the Tax Sale. Plaintiff also alleges that Collector of Revenue is the “real party in interest” regarding Plaintiff's Complaint to Set Aside Tax Sale and that Collector of Revenue has not filed an answer.

Defendant argues that the Tax Sale satisfied all due process requirements under Missouri's Municipal Land Reutilization Law (hereinafter “MLRL”). Defendant asserts that as a result, the sale was proper pursuant to Missouri Revised Statute Sections 92.750.2 and 92.825.2 and that the Tax Sale extinguished Plaintiff's rights in the Property. Defendant asserts that Plaintiff's only remaining interest in the Property is an entitlement to any surplus sale proceeds after outstanding lien amounts are satisfied.

Beyond the mechanics and adequacy of the Tax Sale notice, the parties also disagree about the value of the Property. Plaintiff, supported by the appraisal of witness Eric W. Vaughan, asserts that the Property's value is $17,000.00, and thus, Plaintiff argues that the amount paid by Defendant at the Tax Sale is inadequate. Pl.'s Br. 8; Joint Ex. 11. In arriving at this valuation, Vaughan, who assesses five houses a week, testified that he sought the fair-market value of the Property by comparing it to the asking price of comparable properties on the same street. Joint Ex. 11. Vaughn testified that he did not compare the Property to comparable forced-sale values. Defendant, supported by the appraisal of witness Steven A. Goldman, asserts that the Property's value is $4,000.00, and thus argues that the amount paid by Defendant at the Tax Sale is due consideration. Def.'s Brief 4; Joint Ex. 9. In arriving at his valuation, Goldman, who assesses 500 houses a year, testified that he sought a value informed by “physical analysis of the site,” an analysis of the neighborhood and market analysis of other forced-sale properties. Joint Ex. 9. Further, Goldman testified that in forced-sale circumstances, property value is necessarily impacted by the absence of a willing seller, no open market, short notice and minimal marketing.

JURISDICTION

This Court has jurisdiction over the parties and subject matter of this proceeding under 28 U.S.C. §§ 151, 157, and 1334 (2010) and Local Rule 81–9.01(B) of the United States District Court for the Eastern District of Missouri. This is a core proceeding under 28 U.S.C. § 157(b)(2)(A) and (N) (2010). Venue is proper in this District under 28 U.S.C. § 1409(a) (2010).

CONCLUSIONS OF LAW

The Court must decide whether the Tax Sale was proper when the titleholder's right to cure expired during the tax sale process, and whether the price paid for the property is due consideration. The Court considers each issue in turn.

I. Propriety of the Sale

Plaintiff argues that the Tax Sale, irrespective of confirmation, was void due to the inadequacy of notice. Regretfully, this argument is without basis in the applicable law. Plaintiff contends that the Tax Sale violated his constitutional rights because Collector of Revenue served notice on “Lawrence Beckman” and mailed the notice to 1424 South 18th Street, St. Louis, Missouri, as listed on Page 1 of the Deed, despite the accurate listing of Plaintiff's name and actual address on the Deed's Grantee Rider, located on Page 4 of the Deed.

The Missouri Constitution provides that “[n]o real property shall be sold for ... city taxes without judicial proceedings, unless the notice of the sale shall contain the names of all record owners thereof....” Mo. Const. Art. 10, § 13. To demonstrate that this is a threshold matter, Plaintiff draws upon Mitchell v. Atherton, 563 S.W.2d 13 (Mo.1978), which explains that notice “must contain the names of all record owners or the name of all owners appearing on the land tax book.” Id. at 15. And in urging the Court to consider what Plaintiff purports to be a denial of due process—notice served on the wrong name at an incorrect address—Plaintiff cites Mennonite Board of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983) and Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950).

Plaintiff's argument is reasonable for a number of reasons. First, if a deed contains two names that appear to identify the same person, the recorder should exercise adequate circumspection and ameliorate the discrepancy. Second, common sense dictates that notice of a foreclosure should be served upon the subject property.

Common sense also dictates that Plaintiff, himself, might have obviated this notice problem: Plaintiff signed the Deed. Plaintiff could have reviewed the document more closely and identified its internal inconsistencies before affixing his signature. Plaintiff did not. Moreover, Plaintiff claims to have never received notice about property taxes, but common sense compels most people to anticipate paying annual property taxes.

Ultimately, the MLRL requires only that notice be “mailed ... to the person[ ] named in the petition as being the owner[ ]” of the foreclosure property, and that notice “shall be sent to the address[ ] of such person[ ] upon the records of the assessor.” Mo.Rev.Stat. § 92.760.1 (2010). The Tax Sale was executed pursuant to these MLRL requirements, and as a result, it is valid and proper.

Additionally, the Missouri Supreme Court rejected a constitutional argument analogous to Plaintiff's thirty years ago, and that decision remains good law. In Collector of Revenue v. Parcels of Land Encumbered with Delinquent Tax Liens (Parcels 24–069 and 24–070), 585 S.W.2d 486 (Mo.1979) (hereinafter “ Parcels 24–069 ”), a titleholder whose rights were extinguished by a foreclosure sale appealed, claiming that the notice requirements of the MLRL were unconstitutional and that the foreclosure sale was void. Id. at 487. Appellant argued that by not requiring personal service of process, the MLRL deprived him of his due process rights under the Fourteenth Amendment of the...