Legal Resources Agency, LLC v. Armstrong, DA 07-0437.

• Decision Date: 29 July 2008
• Docket Number: No. DA 07-0437.,DA 07-0437.
• Citation: 191 P.3d 368,2008 MT 262,345 Mont. 115
• Parties: LEGAL RESOURCES AGENCY, LLC, a Montana limited liability company, Plaintiff and Appellee, v. Louise Cecilia ARMSTRONG, et al., and Raymond Bean, Defendants and Appellants.
• Court: Montana Supreme Court

191 P.3d 368

2008 MT 262

345 Mont. 115

LEGAL RESOURCES AGENCY, LLC, a Montana limited liability company, Plaintiff and Appellee, v. Louise Cecilia ARMSTRONG, et al., and Raymond Bean, Defendants and Appellants.

No. DA 07-0437.

Supreme Court of Montana.

Submitted on Briefs June 18, 2008.

Decided July 29, 2008.

Rehearing Denied September 3, 2008.

For Appellant: J. Devlan Geddes, Jim Barr Coleman, Goetz, Gallik & Baldwin, P.C., Bozeman, Montana, J.G. Shockley, J.G. Shockley, P.C., Victor, Montana.

For Appellee: Martin S. King, Worden, Thane, P.C., Missoula, Montana.

Justice PATRICIA O. COTTER delivered the Opinion of the Court.

¶ 1 Raymond Bean (Bean) appeals from an entry of default and a grant of summary judgment in favor of Legal Resources Agency, LLC (LRA), in the Twenty-First Judicial District, Ravalli County. We affirm.

FACTUAL AND PROCEDURAL BACKGROUND

¶2 Louise Cecelia Armstrong (Armstrong) was the fee simple owner of a 10-acre parcel of real property (Property) located on North Burnt Fork Road near Stevensville, Montana. Armstrong had failed to pay taxes on the Property starting in the second half of 2000, and has not paid taxes on the Property to this day. On July 17, 2001, Ravalli County held a tax sale proceeding on the Property. At that time, no person came forth to pay any of the delinquent taxes on the Property. Accordingly, Ravalli County was held to be the purchaser of a tax lien on the Property pursuant to § 15-17-214, MCA.

¶ 3 On September 15, 2005, LRA obtained an assignment of rights, title, and interest in the Property upon payment of delinquent taxes and other associated fees. The assignment was recorded in Ravalli County on September 27, 2005. LRA then sought a tax deed to the Property. Under § 15-18-212(1)(a), MCA, LRA was required to notify all interested parties, owners, and occupants of the Property that a tax deed might be issued unless the property tax lien was redeemed within the period of redemption as set forth by statute. Section 15-18-111, MCA, specifies who is entitled to redeem a property tax lien. It reads in pertinent part as follows:

(1) [R]edemption of a property tax lien acquired at a tax lien sale or otherwise may be made by the owner, the holder of an unrecorded or improperly recorded interest, the occupant of the property, or any interested party within 36 months from the date of the first day of the tax lien sale or within 60 days following the giving of the notice required in 15-18-212, whichever is later.

. . .

(3) For the purposes of this chapter, an "interested party" includes a mortgagee, vendor of a contract for deed or the vendor's successor in interest, lienholder, or other person who has a properly recorded interest in the property. A person who has an interest in property on which there is a property tax lien but which interest is not properly recorded is not an interested party for the purposes of this chapter.

Section 15-18-111(1) and (3), MCA (emphasis added).

¶ 4 On January 6, 2006, LRA sent notice by certified mail to Armstrong at her last known address in Stevensville that a tax deed might be issued on the Property. The Property had two legal street addresses: 528 North Burnt Fork Road, and 530 North Burnt Fork Road. LRA sent certified notice to 528 North Burnt Fork Road. Both that notice and the notice sent to Armstrong were returned as undeliverable. Notice of the tax deed was then published in the Ravalli Republic on January 13 and 20, 2006. On March 13, 2006, LRA was issued a tax deed for the Property and recorded it on March 17, 2006.

¶ 5 On May 26, 2006, LRA filed a quiet title action in Ravalli County District Court against Armstrong and any unknown persons who might claim any title, right, or interest in the Property. On June 1, 2006, LRA also filed a lis pendens action against the same parties. LRA was eventually able to locate Armstrong through a process server in Boise, Idaho, and gave her personal notice of the quiet title action on June 5, 2006.

¶ 6 Bean is a Missoula resident who deals in mobile homes and automobiles. Bean became acquainted with Armstrong sometime in 2000, and claims that in October 2000 he entered into an agreement with Armstrong to purchase the Property. Since that time, Bean claims he has made monthly payments of roughly $1,200.00 based on the agreement with Armstrong to purchase the Property. Bean also claims that he has occupied the Property since October 2000, has operated a salvage yard there since 2001, and has rented a house on the Property to third parties since January 2005. Although Bean claims to be the owner of the Property, he admits he has never paid taxes on it. Moreover, Bean has never recorded any ownership interest in the Property with the Ravalli County clerk and recorder. Bean claims that he never received any notice of the tax deed sale, or that taxes due on the Property were delinquent. He also maintains that LRA has never attempted to serve him.

¶ 7 On June 26, 2006, after Armstrong received notice of the quiet title and lis pendens actions, she filed a pro se motion to dismiss which was subsequently denied by the District Court. On August 1, 2006, Armstrong filed an answer opposing the quiet title action in which she argued that she had not given up or relinquished her rights in the Property, that LRA did not pursue all available avenues to notify her of the tax deed sale, that she was willing to pay delinquent taxes on the Property, and that the Ravalli County treasurer had failed to take the appropriate steps to notify her that taxes were due on the Property. Although this answer was filed pro se, Bean signed the certificate of service which was dated June 23, 2006.

¶ 8 On September 21, 2006, LRA moved for an order for service of summons by publication in its quiet title action. LRA argued that it had made a diligent search for any parties who might claim any title, right or interest in the Property, and found only Armstrong. The District Court issued an order for service of summons by publication on September 22. That same day, LRA filed a summons for publication. A summons regarding the quiet title action was subsequently published in the Ravalli Republic once per week, for three consecutive weeks beginning on September 29, 2006.

¶ 9 On October 10, 2006, Armstrong filed a response to LRA's motion for service of summons by publication. In her motion, Armstrong asserted that LRA did not make a diligent search for the persons who might claim title to the Property, including Bean, whom Armstrong asserted was the current occupant/purchaser of the Property and was the registered operator of a salvage yard there. Although not licensed to practice law in the state of Montana, Bean himself prepared a motion for Armstrong to include him as a party to the quiet title action which was filed that same day. On November 1, LRA opposed the motion to include Bean as a party to the quiet title action, arguing that if he wished to appear in the quiet title action he was required to make a timely response to the publication of the summons and complaint under the Montana Rules of Civil Procedure.

¶ 10 On November 9, 2006, LRA filed an application for an entry of default against all unknown defendants. It was granted by the clerk of the District Court that same day on the grounds that no unknown persons had appeared in District Court after the required publication of the summons. On November 13, four days after the entry of default and approximately one month after the summons by publication was completed, Bean filed an answer to the quiet title action. On November 15, the District Court denied Armstrong's motion to include Bean as a party to the suit.

¶ 11 On November 28, 2006, LRA moved for an entry of default judgment against all unknown defendants pursuant to M.R. Civ. P. 55(b)(2), and also moved for summary judgment in its quiet title action against Armstrong and Bean pursuant to M.R. Civ. P. 56(a). LRA argued that it had complied with all the statutory and notice requirements to obtain a tax deed to the Property, and that the defendants had failed to pay delinquent taxes on the Property or take the other necessary steps to redeem the tax lien. Bean, appearing as a "person unknown," moved the District Court to set aside the entry of default on the grounds the notice was deficient, and opposed LRA's summary judgment motion arguing that the required statutory procedures for the tax deed sale had not been followed. On May 3, 2007, the District Court held a hearing on these respective motions.

¶ 12 On May 29, 2007, the District Court granted LRA's motions and title to the Property was quieted in its favor. With respect to Armstrong, the District Court concluded that she had notice of the quiet title action, that she did not dispute the taxes assessed against the Property, and that she had not made an attempt to tender payment to redeem the Property. Accordingly, the District Court granted summary judgment on LRA's quiet title action against her. With respect to Bean, the District Court concluded that Bean had failed to pay any taxes on the Property, that he failed to present credible evidence that he was an owner, occupant or an interested party in the Property, and that LRA was not in fact required to provide him with actual notice under the statutes governing the ownership interest in lands acquired through taxes sales in Title 15, chapter 18, MCA. In particular, the District Court noted that Bean did not qualify as an occupant of the Property or an "interested party" under § 15-18-111(3), MCA. (See ¶ 3.)

¶ 13 The District Court further concluded that LRA had properly served notice on the current occupants of the Property as required under § 15-18-212, MCA. As noted above, the Property had two mail boxes, but LRA sent certified notice to only one of those. Bean asserted that LRA was required to send notice to both, and that only the location at 530 North Burnt Fork Road actually had...