Sass Muni-V, LLC v. Desoto Cnty.

Decision Date02 April 2015
Docket NumberNo. 2013–CA–01490–SCT.,2013–CA–01490–SCT.
Citation170 So.3d 441
PartiesSASS MUNI–V, LLC v. DESOTO COUNTY, Mississippi, W.E. Davis, DeSoto County Chancery Clerk, City of Horn Lake, Mississippi, Joey Treadway, Tax Collector of DeSoto County, Parker Pickle, Tax Assessor of DeSoto County, Marshall Investments Corporation a/k/a Marshall Investments Corporation of Minnesota, E. Franklin Childress, Jr., R. Spencer Clift, III, K. David Waddell, as Substitute Trustees and MIC–Rocky, LLC.
CourtMississippi Supreme Court

Timothy M. Kalom, Biloxi, R. Hayes Johnson, Jr., Lewie G. Negrotto, IV, Gulfport, attorneys for appellant.

Joseph D. Neyman, Jr., Hernando, Robert E. Quimby, Billy C. Campbell, Jr., Southaven, Jacob A. Dickerson, attorneys for appellees.

Before WALLER, C.J., KITCHENS and COLEMAN, JJ.

Opinion

WALLER, Chief Justice, for the Court:

¶ 1. SASS Muni–V, LLC, appeals from the DeSoto County Chancery Court's order dismissing its complaint seeking to void its 2008 tax-sale purchase of real property. Because the trial court erred in finding that SASS lacked standing to pursue its claims, we reverse the trial court's dismissal of SASS's complaint and remand this case for further proceedings.

FACTS & PROCEDURAL HISTORY

¶ 2. The instant case arises out of the tax sale of a piece of property located in the City of Horn Lake in DeSoto County. Until August 2003, Millennium of Mississippi, LLC, owned the property in question. On August 4, 2003, Millennium conveyed the property to DeSoto County Development, LLC, by warranty deed. At that time, DeSoto Development granted Marshall Investments Corporation, and Fred Spencer, as trustee, a deed of trust lien and mortgage on the property. Marshall Investments then appointed Franklin Childress Jr., Spencer Clift III, and K. David Waddell as substitute trustees for the deed of trust. Subsequently, DeSoto Development defaulted on its mortgage, and Marshall Investments foreclosed on the property. Marshall Investments purchased the property at the foreclosure sale and, in December 2007, executed a substitute trustee's deed to MIC–Rocky, LLC.

¶ 3. DeSoto County and the City of Horn Lake levied $520,508 in ad valorem taxes on the property for the tax year ending December 31, 2007. These taxes were never paid and became delinquent on February 1, 2008. The property was offered for sale at public auction by the DeSoto County tax collector on August 25, 2008, to collect the delinquent taxes. SASS was the successful bidder at the auction, with a bid of $530,508.1

¶ 4. No purported property owner or lienholder attempted to redeem the property within the two-year statutory redemption period. On August 30, 2011, approximately a year after the expiration of the redemption period, SASS filed a complaint in DeSoto County Chancery Court, asking the court to declare the tax sale void and to order a refund of the purchase price. SASS's request for a refund was based on thee separate theories, which were enumerated as separate “counts” in SASS's complaint. First, SASS alleged that the tax sale was void, because the chancery clerk had failed to provide notice of the expiration of the redemption period to MIC–Rocky, the purported owner of the property, and Marshall Investments and DeSoto Development, the purported lienholders, as required by the tax-sale statutes.

Second, and alternatively, SASS claimed that DeSoto Development was the true owner of the property and was entitled to notice, because MIC–Rocky did not exist as a legal entity at the time the property was conveyed to it. Finally, SASS argued that the assessments on the property were grossly disproportionate to the true value of the property, constituting a violation of the Fifth and Fourteenth Amendments of the United States Constitution. The complaint named four distinct groups of defendants: (1) DeSoto County, the DeSoto County tax collector, the DeSoto County tax assessor, and the DeSoto County chancery clerk (“the County Defendants); the City of Horn Lake (“the City Defendant); Marshall Investments, MIC–Rocky, and several individual trustees (“the Corporate Defendants); and the Mississippi Department of Revenue and the State of Mississippi (“the Nominal Defendants).2

¶ 5. The City and County Defendants each filed answers to SASS's complaint. The Corporate Defendants filed a motion to dismiss SASS's complaint pursuant to Mississippi Rule of Civil Procedure 12(b)(6). In their motion, the Corporate Defendants claimed they had no legal or equitable interest in the property due to the expiration of the redemption period. They also argued that SASS's complaint failed to set forth the elements of any cause of action against them and did not request any relief from them.

¶ 6. SASS served the defendants with discovery requests on March 20, 2012. In response, the Corporate Defendants filed a motion for a protective order to stay discovery pending the outcome of their Rule 12(b)(6) motion. The City and County Defendants also moved for protective orders, arguing that SASS had failed to serve its discovery requests within the period provided by Uniform Chancery Court Rule 1.10(a). SASS then moved to compel discovery and extend the discovery deadline. On August 13, 2012, the chancery court issued an order granting SASS's motion for an enlargement of the discovery deadline. The chancery court also denied the City and County Defendants' motions for protective orders, but temporarily stayed discovery for ninety days to allow them to “file any dispositive motions pursuant to Rule 12.” The chancellor took the Corporate Defendants' motion to dismiss under advisement and stayed discovery as to them.

¶ 7. On September 19, 2012, the County Defendants filed a motion to dismiss SASS's complaint pursuant to Rule 12(b)(6). The County Defendants argued that SASS's complaint failed to state a claim upon which relief could be granted because Mississippi's tax-sale statutes do not afford a tax-sale purchaser the remedy of voiding its purchase and obtaining a refund. The County Defendants also asserted that the tax-sale statutes were enacted for the protection of landowners and lienholders, not tax-sale purchasers. Thus, the County Defendants claimed that SASS lacked standing to pursue its claims. Finally, the County Defendants argued that the applicable statute of limitations had expired prior to the filing of SASS's complaint. The Corporate Defendants filed a joinder in this motion on September 24, 2012.

¶ 8. On September 27, 2012, the City filed its own motion to dismiss pursuant to Rule 12(b)(6). The City echoed the County Defendants' arguments regarding standing and the statute of limitations. In addition, the City argued that SASS's claim was barred by the doctrine of caveat emptor. The Corporate Defendants filed a joinder in this motion on October 5, 2012.

¶ 9. The chancery court held a hearing on the defendants' motions to dismiss on July 31, 2013. At the conclusion of the hearing, the chancellor granted the City and County Defendants' motions to dismiss based on lack of standing and caveat emptor. The trial court acknowledged that this ruling applied to all defendants. The trial court did not issue a ruling on the defendants' statute-of-limitations claims. The chancellor then requested the defendants to prepare an order of dismissal. However, the parties could not agree on the substance of the order, so two separate orders were submitted for the chancellor's review. The first, prepared by the defendants, included a finding that Count III of SASS's complaint was barred by the statute of limitations. The second, prepared by SASS, dismissed the complaint based solely on lack of standing. SASS alleges that the trial court signed the defendants' proposed order of dismissal. However, the record includes only one signed order of dismissal, and that order is based solely on SASS's lack of standing. The order specifically dismissed all defendants from the case, stating, “County Defendants' and City Defendants' motions to dismiss, which the Corporate Defendants have properly joined, are sustained, and this cause of action be, and the same is hereby dismissed.”

¶ 10. SASS now appeals the chancellor's judgment of dismissal to this Court, raising the following issues:

I. Whether a tax-sale purchaser has standing to initiate litigation to set aside a void tax sale and seek a refund in situations where the void tax sale results from the chancery clerk's failure to provide notice in conformity with statutory requirements.
II. Whether any statute of limitations bars SASS from receiving a refund after a void tax sale.
III. Whether the Corporate Defendants properly joined in the motions to dismiss filed by the County Defendants and the City.

¶ 11. The County Defendants, the City Defendant, and the Corporate Defendants each have filed their own briefs in response to SASS's appeal and also have joined in and adopted the arguments in each other's briefs pursuant to Mississippi Rule of Appellate Procedure 28(j). The National Tax Lien Association has filed an amicus curiae brief in favor of SASS.

STANDARD OF REVIEW

¶ 12. Standing is an aspect of subject-matter jurisdiction. Kirk v. Pope, 973 So.2d 981, 990 (Miss.2007) (citations omitted). “The existence of subject-matter jurisdiction ... turns on the well pleaded allegations of the complaint which are taken as true.” Am. Fid. Fire Ins. Co. v. Athens Stove Works, Inc., 481 So.2d 292, 296 (Miss.1985) (citing Luckett v. Miss. Wood Inc., 481 So.2d 288, 290–91 (Miss.1985) ). This Court reviews questions of standing de novo. Gartrell v. Gartrell, 27 So.3d 388, 391–92 (Miss.2009).

DISCUSSION

I. Whether a tax-sale purchaser has standing to initiate litigation to set aside a tax sale on the ground that the chancery clerk failed to notify other parties of the expiration of the redemption period, as required by statute.

¶ 13. “It is well settled that ‘Mississippi's standing requirements are quite liberal’ compared to the standing requirements set...

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