In the Matter of Foreclosures of Liens For Delinquent Land Taxes By Action In Rem Collector of Revenue v. Bhatti

• Decision Date: 01 March 2011
• Docket Number: No. SC 90732.,SC 90732.
• Citation: 334 S.W.3d 444
• Parties: In the Matter of FORECLOSURES OF LIENS FOR DELINQUENT LAND TAXES BY ACTION IN REM COLLECTOR OF REVENUE, and Lewis Mitchell Company, Respondents,v.Mohammad Bhatti, Appellant.
• Court: Missouri Supreme Court

334 S.W.3d 444

In the Matter of FORECLOSURES OF LIENS FOR DELINQUENT LAND TAXES BY ACTION IN REM COLLECTOR OF REVENUE, and Lewis Mitchell Company, Respondents,

v.Mohammad Bhatti, Appellant.

No. SC 90732.

Supreme Court of Missouri, En Banc.

March 1, 2011.Rehearing Denied April 26, 2011.

Angela S. Yee, Yee Law Firm, St. Louis, for Bhatti.Richard Blanke, Uthoff, Graeber, Bobinette & Blanke, St. Louis, for Lewis Mitchell Company.Anthony J. Sestric, The Sestric Law Firm, Tyrone Taborn, St. Louis, for City's Collector of Revenue.Gordon Schweitzer Jr., St. Louis, for City's Sheriff.Michael S. Kisling, Jefferson City, for State's Department of Revenue.MARY R. RUSSELL, Judge.

The Collector of Revenue of the City of St. Louis filed a tax lien foreclosure suit under the Municipal Land Reutilization Law ¹ (MLRL) against a property owner who failed to pay real estate taxes for three years. After a judgment of foreclosure, the real estate was sold at a tax sale. The purchaser sought confirmation of the tax sale, which the circuit court granted. The owner, who had been delinquent on his taxes, filed a motion to set aside the tax sale and the confirmation judgment because he alleged that he did not receive notice of either.

The circuit court overruled the motion, and the owner appeals to this Court, arguing that the MLRL violated his due process rights because he did not receive notice of either the tax sale or the confirmation hearing. Under Jones v. Flowers, 547 U.S. 220, 126 S.Ct. 1708, 164 L.Ed.2d 415 (2006), if a government entity knows or has reason to know that a notice was ineffective, then it must take reasonable, additional steps to notify the owner of the potential taking of the property. Because the owner failed to present evidence that the sheriff knew or should have known that the notice of the tax sale was ineffective, the sheriff was not required to take any additional steps to notify the owner of the potential taking of the property. The circuit court's judgment is affirmed.

I. Background

Mohammad Bhatti (Owner) failed to pay real estate taxes for 2005, 2006, and 2007 on a house he owned in St. Louis. The collector proceeded against him under the MLRL. To satisfy the tax lien attached to property, the MLRL requires three events to take place: (1) a judgment of foreclosure; (2) a tax sale; and (3) a judgment confirming the tax sale.

Pursuant to section 92.720, the collector filed a foreclosure action to enforce the tax lien. After Owner defaulted, the circuit court entered a judgment of foreclosure and directed the parcel to be sold to satisfy the tax lien. In accordance with section 92.810, the Sheriff of the City of St. Louis sent Owner notice of the pending tax sale via first-class mail to his last-known address, which was the address of the parcel being foreclosed and was the address provided by Owner when he acquired title. The parcel was sold at a sheriff's tax sale to Lewis Mitchell Company (Purchaser) for $7,600. When Owner failed to redeem the property prior to the tax sale, he was “barred and forever foreclosed of all his right, title and interest” to the parcel. Section 92.750. Purchaser, pursuant to section 92.840, filed a motion to confirm the sale with the circuit court. Prior to the confirmation hearing, Purchaser sent Owner notice of the hearing to the same address used by the sheriff. The circuit court, following the mandate in section 92.840, found that the purchase price was adequate consideration for the parcel and confirmed the sale.

Five months later, Owner filed a motion to set aside the tax sale and the confirmation judgment. Owner made no objection about not receiving notice of the foreclosure suit or judgment. Instead, he claimed error in not receiving notice of the tax sale and the confirmation hearing, arguing his constitutional right to due process was violated. The circuit court held an evidentiary hearing on his motion. A real estate agent testified that she was the agent for Owner's parcel and that there was a sign in the front yard indicating that it was for sale. Owner testified that he did not live at the property, but because he was renovating the house, he was there frequently.² He never notified the assessor of any change of address. Owner also testified that he never received a tax bill for the parcel or a notice of the sheriff's tax sale.³ No other evidence regarding the notice was presented.

The circuit court overruled the motion to set aside the confirmation judgment and the tax sale. The circuit court deemed Owner's testimony that he never received notice credible, but it found that the notices were sent to the address in the “records of the Assessor” as provided by Owner. The circuit court denied Owner relief pursuant to Jones v. Flowers, because he failed to present evidence that the tax sale notice was returned indicating that the sheriff knew or had reason to know that the notice was ineffective.

Owner filed a motion for a new trial, claiming newly discovered evidence. He attached four exhibits to the motion. Three exhibits were envelopes that were sent to the parcel's address after the tax sale. All three envelopes were returned undelivered. The fourth exhibit was an affidavit from a mail carrier that stated that no mail was delivered to the parcel's address because it was vacant. The circuit court overruled the motion because Owner failed to demonstrate that the evidence could not have been obtained in time for trial by exercising due diligence.

Owner appeals to this Court, arguing that the circuit court erred in overruling his motion to set aside the tax sale and confirmation judgment. He claims that the notice provisions of the MLRL, as applied to him, violate his rights to due process.⁴ This Court has jurisdiction pursuant to article V, section 3 of the Missouri Constitution.

II. Standard of Review

The circuit court's overruling of the motion to set aside the tax sale and confirmation judgment will be sustained unless there is no substantial evidence to support it or unless it is against the weight of the evidence, it erroneously declares the law, or it erroneously applies the law. Murphy v. Carron, 536 S.W.2d 30, 32 (Mo. banc 1976). This Court will reverse the judgment as against the weight of the evidence with caution and with a firm belief that the judgment is wrong. Id.

III. Owner Failed to Present Evidence Regarding Knowledge of the Ineffective Notice

Owner claims that, because he failed to receive notice of either the tax sale or the confirmation hearing, the application of the MLRL violates his constitutional due process rights.⁵ He contends that the sheriff had reasonable, additional options for notifying him of the pending tax sale. ⁶ Owner's argument relies on the requirements for constitutionally sufficient notice, as set forth in Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950), and Jones v. Flowers.

No person may be deprived of property without due process of law. U.S. Const. amend. XIV; Mo. Const. art. I, sec. 10. “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, 339 U.S. at 314, 70 S.Ct. 652. In Jones v. Flowers, the United States Supreme Court recognized that the Mullane standard for constitutionally sufficient notice does not require that the property owner actually receive notice. 547 U.S. at 226, 126 S.Ct. 1708. A government entity must take reasonable, additional steps to notify the property owner if it knows or has reason to know that the notice was ineffective. Id. at 234, 126 S.Ct. 1708; see also Schlereth v. Hardy, 280 S.W.3d 47, 50 (Mo. banc 2009).

A. Notice of the Tax Sale

Owner offered no evidence at trial that the sheriff's notice was not reasonably calculated to apprise him of the tax sale or that the sheriff knew or should have known that the notice was ineffective. The address the sheriff used was the parcel's address, which Owner provided in the recorded deed as the address for receiving real estate tax notices.⁷ See section 59.330. Despite that address being the address of the vacant home, Owner never corrected the address with officials.

The dissent cites Robinson v. Hanrahan, 409 U.S. 38, 93 S.Ct. 30, 34 L.Ed.2d 47 (1972), and Conseco Finance Servicing Corp. v. Missouri Department of Revenue, 195 S.W.3d 410 (Mo. banc 2006), for the proposition that first-class mail was constitutionally insufficient under the facts of those cases. Yet in both cases the government had knowledge that the notice was sent to a residence to which the person entitled to notice did not have access. In Robinson, the state knew that the person entitled to receive notice was incarcerated, 409 U.S. at 40, 93 S.Ct. 30, and in Conseco, the state knew that the manufactured home to which the notice had been sent was abandoned by the persons entitled to receive notice. 195 S.W.3d at 416. In contrast, here, there was no evidence that the sheriff had knowledge that Owner could not have received notice at the address to which notice was sent.⁸

Owner pleaded in his motion to set aside the tax sale and confirmation judgment that he did not receive notice of either. He also pleaded that there were reasonable, additional methods that the sheriff could have used to notify him of the pending tax sale. Owner proposed three additional methods: (1) the sheriff could have used the address Owner provided for the building permits he obtained from the city; ⁹ (2) the sheriff could have driven by the property, which would have revealed that this property was for sale and that Owner could have been contacted through the real estate agent; or (3) the sheriff could have posted notice on the property.¹⁰

Without knowledge that the notice was not reasonably...