In re Brentwood Corp.
| Decision Date | 05 August 1993 |
| Docket Number | Adv. Pro. No. 93-1025.,Bankruptcy No. 93-10111 FGC |
| Citation | 157 BR 83 |
| Court | U.S. Bankruptcy Court — District of Vermont |
| Parties | In re BRENTWOOD CORPORATION, Debtor. BANK OF VERMONT, Plaintiff, v. BRENTWOOD CORPORATION, Defendant. |
L. Murphy, Law Offices of Langrock Sperry & Wool, Burlington, VT, for Bank of Vermont ("Bank").
M. Zimmerman, Law Offices of Palmisano Associates, Barre, VT, for Brentwood Corp. ("Brentwood").
This matter1 is before us on Bank's Motion for Judgment on the Pleadings in regard to Count I of Bank's Complaint for Declaratory Judgment and Recovery of Property. The motion arises out of discussions among the parties and the Court at the June 14, 1993 hearing on Brentwood's Motion to Dismiss Count II of the Complaint, which we denied. Because the parties have submitted affidavits and matters outside the pleadings for our consideration, we will treat the motion as one for summary judgment, pursuant to F.R.Civ.P. 12(c), as made applicable to this proceeding by F.R.Bkrtcy.P. 7012.
The principal issue before us is whether a tax collector's failure to obtain a warrant before levying on property for past due taxes voids a subsequent tax sale ab initio. We hold that it does.
The material facts are apparently undisputed. The property in question is a 3.4-acre parcel located in a Town of Williston ("the Town") industrial zone, which requires a minimum lot size of two acres. The property was originally owned by Joseph G.E. Senesac, who granted Bank a mortgage on the property. Senesac later conveyed the property by warranty deed to John B. Senesac as trustee of the Joseph G.E. Senesac Trust Fund # 1 ("the Trust"). The Trust failed to pay real estate taxes on the property during the 1990-91 tax year, and the Town issued a Notice of Tax Sale for the property. The Notice of Tax Sale was properly recorded, published and sent to lienholders, including Bank. The tax collector, however, neglected to extend a warrant against the property, or to file a copy of such a warrant with the Town Clerk, both of which are required by 32 Vt.Stat.Ann. § 5252(1)2 as prerequisites to a tax sale.
On November 7, 1991, Brentwood purchased the parcel at the tax sale for $5,269.57. At the time of the tax sale, the parcel's value was somewhere in the range of $350,000 to $450,000. Brentwood listed Joseph M. Senesac, a relative of both John B. Senesac and Joseph G.E. Senesac, as its president and sole director.
After the sale, the tax collector failed to file and record the report of sale in the Town Clerk's office, as required by 32 Vt. Stat.Ann. § 5255.3 On March 27, 1992, more than five months after the sale, Bank undertook a title search in preparation for a foreclosure action. This search failed to uncover the tax sale. A telephone call by Bank's counsel to the Town Clerk resulted only in the Clerk's advice that no sale had taken place according to the Town's land records, and that taxes were still due on the property. On April 10, 1992, Bank commenced an action for foreclosure in Chittenden Superior Court, and obtained a judgment and decree of foreclosure on August 11, 1992, for $240,852.65.
Subsequently, on December 4, 1992, Williston's tax collector conveyed the property to Brentwood by Tax Collector's Deed, which was recorded on December 12, 1992. An undated Report of Tax Sale was recorded in the Town's records on January 8, 1993. On January 25, 1993, the tax collector executed a warranty deed conveying the property to Brentwood, and recorded the deed the next day. No party redeemed the property prior to the final date of redemption of February 23, 1993.
Bank seeks a declaratory judgment that Brentwood has no legal or equitable interest in the property, the sale being void ab initio due to the tax collector's failure to record the sale within thirty days of its occurrence. Bank argues that it could have exercised its right of redemption if the tax collector had properly recorded a report of sale, which Bank would have discovered during its March 27, 1992 title search. Bank relies on Peterson v. Moulton, 120 Vt. 439, 442, 144, 144 A.2d 717 (1958) (citing Brush v. Watson, 81 Vt. 43, 46, 69 A. 141 (1906)), asserting that one who claims under a deed based upon a tax sale sustains the burden of proving the regularity of every antecedent act necessary to the validity of the tax, the levy, and the sale. In addition, Bank claims that the proper statute of limitations to apply is the three-year period applicable to the sale of real estate to collect taxes under 32 Vt. Stat.Ann. § 5263.4 Even if we should find that the one-year statute of limitations of 32 Vt.Stat.Ann. § 52945 applies, however, Bank argues that the defects in procedure are of such jurisdictional dimensions that the sale should be rendered void ab initio. Finally, Bank argues that as a matter of law the transaction is void because the consideration paid was inadequate, and the tax collector should have sold off only so much of the property as was necessary to satisfy the taxes, interest, and costs. Bank relies on Price v. Eland, 149 Vt. 518, 523, 546 A.2d 793 (1988) to posit that when the consideration paid on a tax sale is so inadequate as to lead any fair-minded person to the conclusion that it was unnecessary to sell the entire property for the payment of the taxes and costs, that by itself is enough to establish that the collector sold more than was necessary. Id. ().
Brentwood responds that the statute does not state that the owner or mortgagee must be provided with a copy of the report of sale, or that it must be published. Brentwood also argues that literal compliance with the statutory requirements of a tax sale is no longer necessary because recent cases require merely substantial compliance with the statute, and the instant sale did in fact substantially comply with the statute. Bank received the notice of sale, so the report of sale was not necessary to provide notice of the sale's occurrence. Furthermore, Bank could have sent a representative to the sale or contacted the tax collector. Finally, Brentwood argues that the tax collector could not have sold any smaller portion of the lot due to zoning restrictions, and that the applicable statute of limitations is one year, as dictated by 32 Vt.Stat.Ann. § 5294(4).
To prevail on a motion for summary judgment, the movant must satisfy the criteria set forth in F.R.Civ.P. 56 as made applicable by Rules of Practice and Procedure in Bankruptcy Rule 7056. F.R.Civ.P. 56 provides in part:
The judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.
See, Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986); Eastman Machine Company, Inc. v. United States, 841 F.2d 469 (2d Cir.1988); Hossman v. Spradlin, 812 F.2d 1019, 1020 (7th Cir.1987); Clark v. Union Mutual Life Ins. Co., 692 F.2d 1370, 1372 (11th Cir.1982); United States Steel Corp. v. Darby, 516 F.2d 961, 963 (5th Cir.1975).
The primary purpose for granting a summary judgment motion is to avoid unnecessary trials where no genuine issue of material fact is in dispute. Farries v. Stanadyne/Chicago Div., 832 F.2d 374, 378 (7th Cir.1987). Thus, the function of a Bankruptcy Court when considering a motion for summary judgment is not to resolve disputed issues of fact but only to determine whether there is a genuine issue to be resolved. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-50, 106 S.Ct. 2505, 2509-11, 91 L.Ed.2d 202; Knight v. U.S. Fire Insurance Co., 804 F.2d 9, 11 (2d Cir.1986), cert. denied, 480 U.S. 932, 107 S.Ct. 1570, 94 L.Ed.2d 762 (1987). Summary judgment in favor of Bank is warranted in this case because the undisputed facts establish that Bank is entitled to judgment as a matter of law.
Our task here is one of simple statutory construction, which begins with language of the statute itself. Where the meaning is clear, we need proceed no further.6 We hold that the three-year period applies. Section 5294(4) applies only to actions by the taxpayer, whereas § 5263 applies to anyone claiming under the taxpayer. Bank in this action is claiming under the taxpayer, so only § 5263 applies. In addition, § 5263 is in Article 5 of...
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