King County for Foreclosure of Liens for Delinquent Real Property Taxes for Years 1985 Through 1988, In re

• Court: Washington Supreme Court
• Writing for the Court: DURHAM; DORE
• Citation: King County for Foreclosure of Liens for Delinquent Real Property Taxes for Years 1985 Through 1988, In re, 811 P.2d 945, 117 Wn.2d 77 (Wash. 1991)
• Decision Date: 13 June 1991
• Docket Number: No. 57375-1
• Parties: In re the Proceedings of KING COUNTY FOR the FORECLOSURE OF LIENS FOR DELINQUENT REAL PROPERTY TAXES FOR the YEARS 1985 THROUGH 1988, and Some Prior Years. Sharon AVRIN, et al., Intervenors, Jack KAHN, et al., Appellants, v. KING COUNTY, et al., Respondents, KEY BANK OF PUGET SOUND, et al., Intervenors.

Page 77

117 Wn.2d 77

811 P.2d 945

In re the Proceedings of KING COUNTY FOR the FORECLOSURE OF LIENS FOR DELINQUENT REAL PROPERTY TAXES FOR the YEARS 1985 THROUGH 1988, and Some Prior Years Sharon AVRIN, et al., Intervenors Jack KAHN, et al., Appellants, v. KING COUNTY, et al., Respondents KEY BANK OF PUGET SOUND, et al., Intervenors.

No. 57375-1.

Supreme Court of Washington En Banc.

June 13, 1991.

Edwards, Sieh, Wiggins & Hathaway, Malcolm L. Edwards, Howard M. Goodfriend, Seattle, for appellants.

Norm Maleng, King County Prosecutor, Jeffery M. Slayton, Deputy Civ. Div., Seattle, for respondent King County.

Sirianni & Youtz, Stephen J. Sirianni, Foster, Pepper & Shefelman, Mark J. Nielsen, Viall & Lee, Wilton S. Viall, III, Seattle, for respondents Washington Mut. Sav. Bank, et al.

C.C. Bridgewater, Cowlitz County Prosecutor, David R. Koss, Deputy, amicus curiae for respondents on Behalf of Washington State Ass'n of County Treasurers.

DURHAM, Justice.

The buyers of the property offered at a tax sale appeal the decision of the trial court which vacated the underlying foreclosure judgment. At issue is compliance with the requirements contained in RCW 84.64.050 that notice of foreclosure and sale in a property tax foreclosure action must include the local address and must be provided to all parties with a recorded interest in or lien of record on the property in question. We remand for further proceedings.

On June 2, 1988, King County issued a certificate of delinquency listing 637 parcels of land for which taxes were delinquent for 3 or more years and filed it with the Superior Court. That act initiated the foreclosure action at issue in this case. Between June 13 and October 27, 1988, the County mailed by certified mail notice of the commencement of the foreclosure to the owner listed on the tax rolls for each parcel of real property in the certificate. The County also ordered title reports on each parcel, and by certified mail notified the record owner or owners who had not already been notified. The County further notified all persons listed in the title report as having a recorded interest or lien in the property, except those with easements or recorded covenants. On October 28, 1988, the summons and notice were published in the Seattle Times.

Market Place North is a mixed use condominium project, containing both commercial and residential condominiums. The property at issue here is one commercial condominium which is part of a block of three contiguous commercial units that occupy the lowest level of one building. The commercial units contain the Seattle Club, which is owned and operated by SAC Downtown Limited Partnership (Owners) and managed by its general partner, Gary Gaffner. They also house the Cafe Sport restaurant operated for the Seattle Club, and a Haagen-Dazs ice cream store. All units front on Western Avenue. Commercial Apartment 1, the unit which is the subject of this suit, contains the Haagen-Dazs and an aerobics exercise room for the Seattle Club.

Gaffner received initial notice of the foreclosure and the sale by registered mail at his home address on June 16, 1988. In October 1988, Gaffner received a second notice, again at his home. Notice of the foreclosure was also sent in October to Washington Mutual Savings Bank, a primary lender and judgment creditor of Owners, and to several others who had recorded interests in the property. Although the address of Commercial Apartment 1 is 2010 Western Avenue, all the notices concerning this property sent or published by the County contained the address 88 Virginia Street. The notices showed the following property description:

UNIT COM'L # 1

MARKET PLACE NORTH CONDOMINIUM

PCT OF VALUE .6492

WESTERN AVE COM'L # 1

PROPERTY ADDRESS 88 VIRGINIA ST

Notice was not sent to Market Place Tower Associates Joint Venture, which held an easement for the security system and passage, nor to Market Place North Condominium Association and MPN-Housing, which held utility and other easements and covenants under the condominium declarations, nor to Clarence Wilde, the beneficiary of a deed of trust from Owners.

Owners do not deny that they have failed to pay their property taxes for the years 1985 through 1988. Owners have experienced financial difficulties which also resulted in a judgment and decree of foreclosure in favor of Washington Mutual. That foreclosure had been deferred because Owners had been making payments to Washington Mutual. When Owners received their notice of the delinquency and pending tax foreclosure, they turned to Washington Mutual for assistance in paying their taxes. Washington Mutual, to protect its own interests, agreed to pay the delinquencies and add the amount to Owners' debt.

Washington Mutual consulted a title report in preparing to pay the taxes. Because of a clerical error, the title company left off the last page of the report, so that it did not reflect all three units, but instead showed that foreclosure was pending only on Commercial Apartment AC (Seattle Club). This information was mistakenly confirmed by an independent property tax reporting service. The confusion was compounded because Gaffner personally owned one of the residential units of Market Place North with an address of 88 Virginia Street, the same address listed on the notices for the commercial property here.

Prior to the foreclosure sale, Washington Mutual called the County to find out exactly how much to pay and requested the amount only for the Seattle Club unit. The County advised Washington Mutual that there were two related parcels which also were delinquent, but Washington Mutual did not accept the information or make a payment on the other two units. Because of both the mistaken title reports and the incorrect street address, Washington Mutual believed that there was only one delinquent parcel.

On December 30, 1988, the County obtained a judgment foreclosing its tax liens. The property at issue here was sold at auction on January 13, 1989. At the sale, appellants Jack and Denise Kahn, Robert Edwards and Don Fleming, d.b.a. Friday the Thirteenth Group (Buyers) jointly purchased Commercial Apartment 1.

On January 20, 1989, Washington Mutual moved to vacate the tax foreclosure judgment and was subsequently joined in that motion by Gaffner and by the parties who did not receive notice of the foreclosure. The trial court entered a memorandum opinion on February 17, 1989, vacating the foreclosure judgment. The court relied primarily on CR 60(b) to find that Washington Mutual's mistake was proper grounds for relief from the judgment. The court also held that the notice sent by the County did not meet the requirements of RCW 84.64.050, because it contained the wrong address. Thus, the judgment was void for want of jurisdiction. The trial court expressly declined to reach the constitutional issues regarding the failure of the County to give notice to some parties with a recorded interest in the property, but did note that this lack of notice would at least render the foreclosure void as to those parties.

A motion to reconsider was denied, and the trial court entered an order implementing its memorandum decision on May 15, 1989. The appeal was certified by the Court of Appeals and certification was accepted. ¹ We remand to the trial court for its factual determination of the sufficiency of the property description.

Property Description

It is well settled that a mistake of the taxpayer is insufficient reason to vacate a tax sale. Label v. Cleasby, 13 Wash.App. 789, 794, 537 P.2d 859 (1975). To prevent the upset of tax sales and to assure the stability of tax deeds, RCW 84.64.180 provides that a tax deed is prima facie evidence of the regularity of all proceedings leading up to the tax sale, and prevents the parties from raising any objections to the proceedings except where the tax has been paid, or the property was not liable to the tax. See Schultz v. Kolb, 189 Wash. 187, 193, 64 P.2d 79 (1937). We have also recognized that a tax deed may be invalidated where the action of a public official has prevented payment of the tax. Label, 13 Wash.App. at 792, 537 P.2d 859. None of these circumstances was present here. Instead, the trial court found that the tax was not paid because of Washington Mutual's mistake. This was error, and the judgment may not be vacated on the grounds of mistake, inadvertence, or excusable neglect.

There are, however, certain jurisdictional requirements which are prerequisites to the maintenance of a tax foreclosure action. If the court did not have jurisdiction to enter the foreclosure judgment, the tax sale may have been void. For instance, a county's failure to comply with the statutory provisions prescribing the content and manner of notice in proceedings to collect delinquent property taxes deprives the court of jurisdiction over the tax foreclosure proceeding and renders void any foreclosure sale and tax deed issued. Pierce Cy. v. Evans, 17 Wash.App. 201, 204, 563 P.2d 1263 (1977). Jurisdiction has been found lacking in many situations, for deficiencies such as an inaccurate legal description, insufficient notice of the time to answer, and "failure to give notice in compliance with the letter and spirit of statutory requirements". Evans, at 204, 563 P.2d 1263. The court in Evans concluded:

The clear import of the preceding decisions is that notice complying with statutory dictates is a jurisdictional prerequisite to the entry of a valid judgment and to the enforceability of the foreclosure sale. The question here thus becomes whether [the] County followed the procedures specified in RCW 84.64.050, thereby conferring jurisdiction on the court, so that the court could validly foreclose the delinquent tax lien.

Evans, at 204, 563 P.2d 1263. We adopt this reasoning.

In addition, in order for the superior court to obtain jurisdiction and to enter judgment, any notice must contain a sufficiently accurate...