Red Flower, Inc. v. McKown

• Decision Date: 03 November 2016
• Docket Number: Court of Appeals No. 14CA2409
• Citation: 411 P.3d 1094
• Parties: RED FLOWER, INC., a Kansas corporation, Plaintiff–Appellant and Cross–Appellee, v. Kevin R. MCKOWN, Defendant–Appellee and Cross–Appellant.
• Court: Colorado Court of Appeals

411 P.3d 1094

RED FLOWER, INC., a Kansas corporation, Plaintiff–Appellant and Cross–Appellee,

v.Kevin R. MCKOWN, Defendant–Appellee and Cross–Appellant.

Court of Appeals No. 14CA2409

Colorado Court of Appeals, Div. IV.

Announced November 3, 2016

Rehearing Denied December 29, 2016

Shinn, Steerman & Shinn, Donald L. Steerman, Lamar, Colorado, for Plaintiff–Appellant and Cross–Appellee

Brett R. Lilly, LLC, Brett R. Lilly, Wheat Ridge, Colorado, for Defendant–Appellee and Cross–Appellant

Opinion by JUDGE HARRIS

¶ 1 If a property owner fails to pay his or her property taxes, the county may sell a tax lien on the property to a third party. §§ 39–11–101 to – 109, C.R.S. 2016. After three years, and upon notice to the owner, occupant, and other interested parties, the holder of an unredeemed lien may obtain a treasurer's deed for the property. § 39–11–120(1), C.R.S. 2016.

¶ 2 Plaintiff, Red Flower, Inc., bought tax liens on farmland owned by defendant, Kevin R. McKown. After the redemption period expired, the Baca County Treasurer issued the tax deeds to Red Flower. McKown subsequently challenged the validity of the deeds on the ground that the Treasurer had failed to provide notice to a tenant farmer who grew crops on the property.

¶ 3 The district court ruled that unlike owners and other interested parties—who are subject to a "diligent inquiry" standard of notification—the occupant is entitled to actual notice of the issuance of the treasurer's deed. Because the tenant farmer had not received actual notice, the court voided the deeds.

¶ 4 We disagree with the district court's interpretation of the relevant statute, but we affirm, in part, on the alternative ground that, with respect to one of the deeds, Red Flower's publication notice was deficient. With respect to the other deed, we remand to the district court to determine whether the Treasurer used diligent efforts to notify the tenant farmer of the issuance of the deed.

I. Background

¶ 5 McKown owned 320 acres of farmland in rural Baca County. There were no structures, fencing, corner posts, or other improvements on the property. Access to the property is by "field roads"; the nearest county road is two miles away.

¶ 6 From 2004 until 2011, Don Lohrey farmed the property pursuant to an oral sharecrop agreement. He received the value from two-thirds of the harvest and McKown, as the owner, received the remaining one-third.

¶ 7 Lohrey lived approximately ten miles away from McKown's property, in Walsh, Colorado. During the winter months, Lohrey was present at McKown's farm about once every two weeks. During the growing season, he was on the property more frequently—about once a week. Lohrey had similar oral agreements with six other property owners, and he farmed a total of 5000 acres in the general vicinity.

¶ 8 Though McKown's agreement with Lohrey was not recorded with the county clerk and recorder's office, it was documented in a form required by the United States Department of Agriculture and kept on file at the Baca County Farm Service Agency.

¶ 9 After McKown failed to pay his county property taxes, the Treasurer sold tax liens for the real property and the mineral rights. Red Flower bought the tax lien certificates on November 15, 2007. In August 2010, a few months before the expiration of the redemption period, Red Flower applied for treasurer's deeds. The Treasurer attempted to notify McKown, but her efforts were unsuccessful. She published a series of notices in the newspaper in September 2010 and, in December 2010, she issued the deeds to Red Flower.

¶ 10 The following year, Red Flower filed a C.R.C.P. 105 action to quiet title in the property. McKown appeared and defended on the ground that the tax deeds were invalid, based on insufficient notice to McKown and also to Lohrey, whom the parties stipulated had been in actual possession or occupancy of the property but had not received notice.

¶ 11 The district court found that the Treasurer had made a "diligent inquiry" to find the owner, McKown, as required by the statute, and it entered judgment for Red Flower. A division of this court affirmed that ruling, Red Flower, Inc. v. McKown , (Colo. App. No. 12CA2128, 2013 WL 3783018, July 11, 2013) (not published pursuant to C.A.R. 35(f) ) ( Red Flower I ), but remanded for a determination of whether the Treasurer had complied with the separate requirement to notify the occupant.

¶ 12 On remand, the district court considered the plain language of the statute, which requires that, prior to issuance of a tax deed, the county treasurer serve, by personal service or mail, notice "on [1] every person in actual possession or occupancy" of the property, "and also on [2] the person in whose name [the property] was taxed" if, "upon diligent inquiry, such person can be found in the county or if his residence outside the county is known," and on [3] "all persons having an interest or title of record in" the property if, "upon diligent inquiry, the residence of such persons can be determined." § 39–11–128(1)(a), C.R.S. 2016.

¶ 13 The court determined that the Treasurer's obligation to make "diligent inquiry" applied only to notification of owners and other interested parties, but not to actual occupants. It reasoned that the absence of the qualifier "if, upon diligent inquiry," in the clause referring to occupants meant that the Treasurer was obligated to make all efforts necessary to notify the occupant. Indeed, according to the district court, there was no limit on the efforts required of the Treasurer to provide the occupant with notice of the issuance of the deed.

¶ 14 The court determined—presumably based on the parties' stipulation—that Lohrey qualified as a person in possession of the property. From there, it concluded that because the Treasurer had not complied with her statutory obligation to provide Lohrey with actual notice, the tax deeds were void.

¶ 15 On appeal, Red Flower argues that the district court's construction cannot be squared with the language or intent of the statutory scheme. McKown contends that the district court could have granted summary judgment in his favor for the additional reason that the Treasurer's publication notice was deficient and therefore the deeds were void.

¶ 16 Though we do not fully adopt Red Flower's reasoning, we agree that the district court's interpretation is incorrect. However, we agree with McKown that, at least with respect to the real property deed, publication notice was deficient.

II. The Notice Requirement

¶ 17 Red Flower contends that the district court's interpretation of the notification requirement in section 39–11–128(1)(a) places an illogically high burden on the Treasurer to notify persons in "actual possession or occupancy" of the property. It urges a reading of the statute that essentially adds a "diligent inquiry" element to the clause referring to actual possessors or occupants. Though we disagree with Red Flower's reasoning, we conclude that section 39–11–128 does not require actual notice to any of the listed persons.

A. Standard of Review

¶ 18 We review de novo the district court's interpretation of a statute as well as its decision granting summary judgment. Klinger v. Adams Cty. Sch. Dist. No. 50 , 130 P.3d 1027, 1031 (Colo. 2006) ; Collard v. Vista Paving Corp. , 2012 COA 208, ¶ 16, 292 P.3d 1232.

¶ 19 Red Flower asks us to temper our de novo review by deferring to the Treasurer's interpretation of the statute. We acknowledge the general principle on which Red Flower relies—that courts traditionally defer to an agency's interpretation of a statute it is entrusted to administer, Hertz Corp. v. Indus. Claim Appeals Office , 2012 COA 155, ¶ 12, 296 P.3d 338 —but we conclude that it is inapplicable here. Under this general principle, courts ordinarily defer to the state property tax administrator's interpretation of property tax statutes and the rules promulgated to implement those statutes. See Aberdeen Inv'rs, Inc. v. Adams Cty. Bd. of Cty. Comm'rs , 240 P.3d 398, 403 (Colo. App. 2009) (courts generally defer to the Board of Assessment Appeals' and the Property Tax Administrator's interpretations of tax statutes because "they are charged with administering the tax code"). But county treasurers are not the "agency" charged with administering the state tax code, and so we will not defer to the Treasurer's interpretation of her own obligations under section 39–11–128(1)(a). Moreover, because statutory construction is a question of law, we would not be bound by the agency's interpretation of the statute in any event. Bd. of Cty. Comm'rs v. Colo. Pub. Utils. Comm'n , 157 P.3d 1083, 1088 (Colo. 2007).

B. Interpretation of Section 39–11–128(1)(a)

¶ 20 Our efforts to interpret a statute must always begin with the language of the statute itself. People v. Cooper , 27 P.3d 348, 354 (Colo. 2001). If the statutory language is unambiguous, we look no further and apply the words as written. People v. Summers , 208 P.3d 251, 254 (Colo. 2009). The plainness or ambiguity of statutory language is determined by reference to the language itself, the specific context in which that language is used, and the broader context of the statute as a whole. Robinson v. Shell Oil Co. , 519 U.S. 337, 341, 117 S.Ct. 843, 136 L.Ed.2d 808 (1997). The statutory scheme is read as a whole to give consistent, harmonious, and sensible effect to all of its parts, in accordance with the presumption that the legislature intended the entire statute to be effective. Bryant v. Cmty. Choice Credit Union , 160 P.3d 266, 274 (Colo. App. 2007). We avoid constructions that are at odds with the legislative scheme or that lead to illogical or absurd results. Id.

¶ 21 The supreme court has construed section 39–11–128(1)(a)'s notice requirement in this way:

With regard to notice, the General Assembly requires that several steps be taken. Prior to the issuance of a tax deed, the county treasurer must serve, by personal service or mail, notice "on every person in actual

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