Ind. Land Trust Co. v. XL Inv. Props., LLC

Citation155 N.E.3d 1177
Decision Date27 October 2020
Docket NumberSupreme Court Case No. 20S-MI-62
Parties INDIANA LAND TRUST COMPANY, f/k/a Lake County Trust Company TR #4340, Appellant-Movant, v. XL INVESTMENT PROPERTIES, LLC, and LaPorte County Auditor, Appellees-Respondents.
CourtSupreme Court of Indiana

ATTORNEYS FOR APPELLANT: Greg A. Bouwer, Jeff Carroll, Koransky Bouwer & Poracky, P.C., Dyer, Indiana

ATTORNEY FOR APPELLEE XL INVESTMENT PROPERTIES, LLC: Matthew J. Hagenow, Anthony G. Novak, Newby, Lewis, Kaminski & Jones, LLP, LaPorte, Indiana

ATTORNEY FOR APPELLEE LAPORTE COUNTY AUDITOR: J. Alex Bruggenschmidt, Thomas C. Buchanan, Buchanan & Bruggenschmidt, P.C., Zionsville, Indiana

ATTORNEYS FOR AMICUS CURIAE STATE OF INDIANA: Curtis T. Hill, Jr., Attorney General of Indiana, Thomas M. Fisher, Solicitor General of Indiana, Julia C. Payne, Deputy Attorney General, Indianapolis, Indiana, Kian Hudson, Deputy Solicitor General, Indianapolis, Indiana


On Petition to Transfer from the Indiana Court of Appeals, No. 18A-MI-2150

David, Justice.

Before the State sells a delinquent property, the Due Process Clause of the Fourteenth Amendment requires that the owner of the property be given adequate notice reasonably calculated to inform him or her of the impending tax sale. While actual notice is not required, the government must attempt notice in a way desirous of actually informing the property owner that a tax sale is looming. If the government becomes aware that its notice attempt was unsuccessful—such as through the return of certified mail—it must take additional reasonable steps to notify the owner of the property if practical to do so.

In this case, property taxes went unpaid on a vacant property from 2009 to 2015 resulting in over $230,000 in outstanding tax liability. The county auditor—through a third-party service—sent simultaneous notice of an impending tax sale via certified letter and first-class mail to the tax sale notice address listed on the deed for the property. The owner of the property, however, had moved from its original address several times and never updated its tax address for the property with the county auditor. The certified letter came back as undeliverable, but the first-class mail was never returned. After a skip-trace search was performed for a better address and notice was published in the local newspaper, the property eventually sold and a tax deed was issued to the purchaser. The original owner was ultimately notified of the sale when the purchaser filed a quiet title action and searched for a registered agent. The original owner then moved to set aside the tax deed due to insufficient notice.

The central question before our Court today is whether the LaPorte County Auditor gave adequate notice reasonably calculated to inform Indiana Land Trust Company of the impending tax sale of the property. As a corollary question, we also confront whether the Auditor was required under the circumstances of this case to search its own records for a better tax sale notice address when the notice sent via certified mail was returned as undeliverable. We find the Auditor provided adequate notice and was not required to search its internal records. We therefore affirm the trial court's denial of Indiana Land Trust's motion to set aside the tax deed.

Facts and Procedural History

Peter Dellaportas is a real estate developer and the president of Midwest Investment, Inc. At some point in the early 1990's, Dellaportas purchased 140 acres of property on the former site of a municipal airport in Michigan City in LaPorte County, Indiana. Dellaportas began dividing the property and developing the parcels for various commercial tenants. Relevant to the current dispute, Lot 2 was a nearly 30-acre undeveloped plat contained within the greater development.1

In 1993, Dellaportas transferred the property to Indiana Land Trust #4340 (hereinafter "Trust 4340" or "the Trust"). On the deed memorializing the transaction, a written notation directed that tax bills be sent to:

Midwest Investment, Inc.
415 North LaSalle Dr., Suite 700
Chicago, Illinois 60610
Attn: Mark Youngman, President.

App. Vol. 2 p. 8. Though Dellaportas testified that this address was accurate in 1993, Midwest Investment, Inc. moved from the tax notice address in the mid-1990s and several times after that. As of 2016, Midwest Investment moved to its presumably-still-current address at Clark Street in Chicago, Illinois.

Property taxes were paid on Lot 2 from 1993 through 2008, but no payments were made from 2009 through 2015. As of July 31, 2015, the property had accrued an outstanding tax liability of $230,017.26. An adjacent property—also placed in Trust 4340—underwent a tax sale and was ultimately redeemed by the Trust after it received notice of the sale from the purchaser's attorney.2 Although Midwest Investment updated its tax notice address for Trust 4340 with the LaPorte County Auditor with respect to the adjacent property, the records for Lot 2 were apparently never updated within the Auditor's system.

Meanwhile, LaPorte County had entered into an agreement with SRI, Incorporated ("SRI") to complete a variety of services, including preparing lists of properties eligible for tax sales, preparing notices, publications, and postings for those lots eligible for tax sale, and conducting tax sales. As part of the arrangement, SRI agreed to mail tax sale notices via certified mail and first-class mail to the property owners. If those notices were returned or not successfully delivered, SRI was required to perform a "skip trace" search to locate a different address for the owner; the LaPorte County Auditor's office also agreed to search its own records for a better address.

On July 31, 2015, SRI generated a report that indicated Lot 2 was delinquent on its property taxes. The same day, SRI sent two identical notices of tax sale—one via certified mail and one via first-class mail—to Trust 4340 at the LaSalle Drive address. While the first-class mailing was not returned to SRI or the Auditor, the certified mail was returned with a postal service NIXIE label reading "NOT DELIVERABLE AS ADDRESSED UNABLE TO FORWARD" and a handwritten notation "REFUSED" on the outside of the envelope. Ex. Vol. I p. 218. Notice was also published in a LaPorte County newspaper on three separate occasions.

SRI testified that after the certified mail was returned as undeliverable, it performed an unsuccessful skip trace search to see if it could find the owner of the property. Apart from SRI's efforts, the LaPorte County Auditor's office did not search its internal records for any additional addresses for Lot 2's owner because it believed it had no obligation to do so after the first-class mail was not returned. Based on these actions, neither SRI nor the Auditor identified a different tax notice address for the parcel.

Lot 2 proceeded to a tax sale in October 2015 but did not sell. A certificate was issued to the county commissioners and Lot 2 was eventually sold via a "Commissioners Sale" to XL Investment Properties, LLC ("XL Investment"). Notice of the Commissioners Sale was published in a local newspaper on December 14, 21, and 28, 2015, and the sale occurred on February 19, 2016.

Once XL Investment received a tax sale certificate for Lot 2, a title search was conducted. On March 28, 2016, a Notice of Redemption from the tax sale was sent by XL Investment via certified mail to Trust 4340 at the LaSalle Drive address but was returned labeled "ATTEMPTED – NOT KNOWN UNABLE TO FORWARD." Ex. Vol. I p. 52. A notice of redemption for the property was also published on March 30, 2016. A notice of filing of the petition for tax deed was sent on July 21, 2016—also to the LaSalle Drive address—but was returned with a NIXIE label that read "REFUSED UNABLE TO FORWARD" and the notation "REFUSED" written on the envelope. Ex. Vol. II p. 94.

XL Investment received an order issuing the tax deed for Lot 2 on August 30, 2016. XL Investment then filed a quiet title action and, after searching for the registered agent of Indiana Land Trust Company in the Secretary of State's files, successfully notified Indiana Land Trust of the sale.3

On March 9, 2017, Trust 4340 filed a motion to set aside the tax deed issued to XL Investment. Among other things, the trial court determined SRI and the Auditor substantially complied with the tax sale notice statute, XL Investments met all statutory requirements to be entitled to the tax deed of the property, the Auditor's mailings satisfied constitutional due process, and Trust 4340's motion was untimely. Accordingly, the trial court denied Trust 4340's motion on August 9, 2018, and Trust 4340 appealed.

In a unanimous opinion, the Court of Appeals reversed on two separate grounds. Indiana Land Trust Co. v. XL Investment Properties, LLC, 130 N.E.3d 630, 638 (Ind. Ct. App. 2019). First, the Court of Appeals held the trial court erred by finding Trust 4340's motion to set aside the tax deed was untimely filed. Id. at 636. Second, the court found "the Auditor was required to search its records for a better address for Trust 4340 after the certified mail notice was returned as not deliverable." Id. at 638. Therefore, the court found the Auditor failed to satisfy due process and the trial court erred by denying Trust 4340's motion. Id. at 637, 638. On rehearing, the Court of Appeals, among other things, declined to vacate its opinion to allow the Attorney General to intervene.

Indiana Land Trust, Co. v. XL Investment Properties, LLC , 134 N.E.3d 439, 441 (Ind. Ct. App. 2019), on reh'g .

XL Investment and the LaPorte County Auditor sought transfer, which we granted, thereby vacating the Court of Appeals opinion. Ind. Appellate Rule 58. The ...

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