In re Foreclosure of Tax Liens by Proceeding in Rem Pursuant to Article 11 of the Real Prop. Tax Law by Cnty. of Seneca

• Decision Date: 09 June 2017
• Citation: 151 A.D.3d 1611,56 N.Y.S.3d 704
• Parties: In the Matter of the FORECLOSURE OF TAX LIENS BY PROCEEDING IN REM PURSUANT TO ARTICLE 11 OF THE REAL PROPERTY TAX LAW BY COUNTY OF SENECA, Petitioner–Respondent. Maxim Development Group, Respondent–Appellant.
• Court: New York Supreme Court — Appellate Division

151 A.D.3d 1611

56 N.Y.S.3d 704

In the Matter of the FORECLOSURE OF TAX LIENS BY PROCEEDING IN REM PURSUANT TO ARTICLE 11 OF THE REAL PROPERTY TAX LAW BY COUNTY OF SENECA, Petitioner–Respondent. Maxim Development Group, Respondent–Appellant.

Supreme Court, Appellate Division, Fourth Department, New York.

June 9, 2017.

Holmberg Galbraith, LLP, Ithaca (Dirk A. Galbraith of Counsel), for Respondent–Appellant.

Frank R. Fisher, County Attorney, Waterloo, for Petitioner–Respondent.

PRESENT: CENTRA, J.P., PERADOTTO, LINDLEY, CURRAN, AND SCUDDER, JJ.

Memorandum:

In this in rem tax foreclosure proceeding pursuant to RPTL article 11, respondent property owner appeals from an order denying its motion seeking, inter alia, to vacate a judgment of foreclosure entered upon default. We agree with respondent that the default judgment of foreclosure is jurisdictionally defective, and we therefore reverse the order and grant the motion.

"Under both the federal and state constitutions, the State may not deprive a person of property without due process of law" (Matter of Harner v. County of Tioga, 5 N.Y.3d 136, 140, 800 N.Y.S.2d 112, 833 N.E.2d 255 ; see U.S. Const. 14th Amend; N.Y. Const. art. I, § 6 ; Kennedy v. Mossafa, 100 N.Y.2d 1, 8–9, 759 N.Y.S.2d 429, 789 N.E.2d 607 ).

" ‘Due process does not require that a property owner receive actual notice before the government may take his [or her] property’ " (Matter of City of Rochester [Duvall], 92 A.D.3d 1297, 1298, 939 N.Y.S.2d 214, quoting Jones v. Flowers, 547 U.S. 220, 226, 126 S.Ct. 1708, 164 L.Ed.2d 415 ). " Rather, due process is satisfied by ‘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' " (Duvall, 92 A.D.3d at 1298, 939 N.Y.S.2d 214, quoting Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 94 L.Ed. 865 ; see Kennedy, 100 N.Y.2d at 9, 759 N.Y.S.2d 429, 789 N.E.2d 607 ). "To that end, each property owner is entitled to personal notice of the tax foreclosure proceeding, which is to be sent by both ordinary first class mail and by certified mail to the address contained in the public record" (Lakeside Realty LLC v. County of Sullivan, 140 A.D.3d 1450, 1453, 35 N.Y.S.3d 498, lv. denied 28 N.Y.3d 905, 2016 WL 6273267 ; see RPTL 1125[1][a], [b][i] ; Matter of County of Herkimer [Moore], 104 A.D.3d 1332, 1333–1334, 961 N.Y.S.2d 715 ; Matter of County of Ontario [Helser], 72 A.D.3d 1636, 1637, 900 N.Y.S.2d 524 ).

"[A]ll formal requirements governing tax sale proceedings must be scrupulously satisfied, because the result is divestiture of title to real property" (Land v. County of Ulster, 84 N.Y.2d 613, 616, 620 N.Y.S.2d 769, 644 N.E.2d 1325 ). Thus, "the failure to substantially comply with the requirement of providing the taxpayer with proper notice constitutes a jurisdictional defect which operates to invalidate the sale or prevent the passage of title" (Matter of Byrnes v. County of Saratoga, 251 A.D.2d 795, 797, 674 N.Y.S.2d 463, citing Land, 84 N.Y.2d at 616, 620 N.Y.S.2d 769, 644 N.E.2d 1325 ). "Tax foreclosure proceedings enjoy a presumption of regularity, such that ‘[t]he tax debtor has the burden of affirmatively establishing a jurisdictional defect or invalidity in [such] proceedings' " (Matter of County of Sullivan [Matejkowski], 105 A.D.3d 1170, 1171, 964 N.Y.S.2d 266, appeal dismissed 21 N.Y.3d 1062, 974 N.Y.S.2d 30, 996 N.E.2d 911, quoting Kennedy, 100 N.Y.2d at 8, 759 N.Y.S.2d 429, 789 N.E.2d 607 ; see RPTL 1134 ; Lakeside Realty LLC, 140 A.D.3d at 1452, 35 N.Y.S.3d 498 ). "Where ... the proof exhibits an office practice and procedure followed in the regular course of business which shows that notices have been duly addressed and mailed, a presumption arises that those notices have been received by the party to whom they were sent" (City of Yonkers v. Clark & Son, 159 A.D.2d 535, 536, 552 N.Y.S.2d 400, lv. dismissed 76 N.Y.2d 845, 560 N.Y.S.2d 130, 559 N.E.2d 1289 ; see RPTL 1134 ; Matter of County of Herkimer [Jones], 34 A.D.3d 1327, 1328, 824 N.Y.S.2d 529, lv. dismissed 8 N.Y.3d 955, 836 N.Y.S.2d 534, 868 N.E.2d 215 ; Sendel v. Diskin, 277 A.D.2d 757, 758–759, 716 N.Y.S.2d 471, lv. denied 96 N.Y.2d 707, 725 N.Y.S.2d 637, 749 N.E.2d 206 ).

Here, the gravamen of respondent's contention is that the default judgment of foreclosure is jurisdictionally defective because petitioner did not substantially comply with the notice requirements of RPTL 1125 (see CPLR 5015[a][4] ; see generally Matter of Foreclosure of Tax Liens, 144 A.D.3d 1033, 1034, 42 N.Y.S.3d 223 ). Respondent's submissions in support of its motion established that, in late summer 2015, it received correspondence from petitioner at respondent's offices in New Jersey, advising that respondent owed real estate taxes on property that it owned in Seneca County. Respondent's managing partner subsequently sent a letter to petitioner in which he disputed that respondent owed taxes on the property, but he received no response from petitioner. Respondent received a tax bill at its mailing address in New Jersey in early January 2016, but received no further correspondence from petitioner until approximately February 10, 2016, when it received a letter from the director of petitioner's Office of Real Property Tax Services (director), advising that the property would be sold at public auction on March 2, 2016. Respondent denied that it received a notice of petition and petition of foreclosure by either ordinary first class or certified mail.

In support of its assertion that it did not receive a notice of petition and petition of foreclosure, respondent submitted an October 2015 affidavit of service by mail sworn by the director, in which she stated that the notice and petition were served upon the parties entitled to notice "at the addresses contained in the attached" list, that the addresses on the list were "designated by [the parties] for that purpose," and that the notice and petition were served by depositing a "properly addressed" envelope with the post office. The affidavit of service by mail did not reference the requisite mailing by both certified mail and ordinary first class mail (cf. RPTL 1125 [1 ][b][i] ). The list of addresses ostensibly attached to the affidavit of service provided the location of respondent's property as "Rte 89" in the Town of Seneca Falls, which is not a valid mailing address for the property (cf. RPTL 1125[1][b][iv] ), let alone respondent's proper mailing address in New Jersey. Furthermore, petitioner indisputably had notice of respondent's mailing address in New Jersey, as evidenced by correspondence from respondent to petitioner with respect to respondent's change of address following a prior vacatur of a judgment of...