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Horton v. Washington County Tax Claim Bureau

Supreme Court of Pennsylvania

December 16, 2013

Gerald W. HORTON and Susan M. Horton, Husband and Wife,
v.
WASHINGTON COUNTY TAX CLAIM BUREAU and E.D. Lewis. Appeal of E.D. Lewis.

Argued April 9, 2013.

Appeal from the Order of the Commonwealth Court entered May 21, 2012, at No. 75 CD 2011, affirming the Order of the Court of Common Pleas of Washington County dated December 29, 2010 at No. 2009-10264. Appeal allowed November 9, 2012 at 291 WAL 2012. Trial Court Judge: Debbie O'Dell Seneca, President Judge. Intermediate Court Judges: Dan Pellegrini, Kevin P. Brobson, Patricia A. McCullough, JJ.

Page 884

Matthew W. Fuchs, Esq., MacDonald, Illig, Jones & Britton, L.L.P., Erie, for E.D. Lewis.

Blane Alan Black, Esq., Monongahela, for Washington County Tax Claim Bureau.

Joshua Rathe Lorenz, Esq., Meyer, Unkovic & Scott, L.L.P., Pittsburgh, for Gerald W. Horton and Susan M. Horton.

CASTILLE, C.J., SAYLOR, EAKIN, BAER, TODD, McCAFFERY, ORIE MELVIN, JJ.

OPINION

McCAFFERY, Justice.

The issue before the Court is a matter of statutory interpretation of Section 602 of the Real Estate Tax Sale Law [1] which sets forth the requirements for notice prior to an upset tax sale for non-payment of delinquent taxes. Specifically, we must determine if the Commonwealth Court correctly held that " proof of mailing" in subsection 602(e)(2) refers exclusively to United States Postal Service (hereinafter " USPS" ) Form 3817, also known as a Certificate of Mailing.

The relevant facts are not at issue and are summarized below. See Horton v. Washington County Tax Claim Bureau, No. 2009-10264 (Ct. Common Pleas, filed 12/29/10) (hereinafter " Trial Court Opinion" ). The property at issue is Unit 1021 in the Fairways Condominium at Southpointe (hereinafter the " Property" ), located in Cecil Township, Washington County, Pennsylvania. The Property was purchased by Gerald W. and Susan M. Horton (hereinafter, collectively, " Appellees" ) on June 22, 2006, for $200,000 cash. It was used for purposes related to their business, USG Insurance Services, Inc., which was based in Florida, with a local office in Washington County. The Property was occasionally occupied by business associates and family; mail was not delivered to the address. The deed to the Property contained three errors: (1) Gerald W. Horton's name was listed as " Jerry W. Horton; " (2) Susan M. Horton's name was listed as " Susan W. Horton; " and (3) a Certificate of Residence filed with the deed to the Property identified Appellees' " precise residence" as 1021 Eagle Point Drive, Canonsburg, PA, 15317 (the Property's address) even though, at all times

Page 885

relevant to this case, Appellees resided in Florida.

At no time relevant to the instant dispute did the Washington County Tax Claim Bureau (hereinafter the " Bureau" ) receive or determine the correct information as to the location of Appellees' residence. Appellees made no real estate tax payments on the Property for the years 2007 and 2008. On September 23, 2009, still having received no tax payments, the Bureau sold the Property in a tax upset sale. The buyer was E.D. Lewis (hereinafter " Appellant" ), who purchased the Property for $10,298.96 without competitive bidding.

Prior to the upset tax sale, the Bureau made a variety of efforts, many of which are required by the Real Estate Tax Sale Law, to try to locate and notify Appellees. Specifically, these efforts included the following. On April 2, 2008, the Bureau mailed a courtesy letter regarding the 2007 unpaid taxes to Appellees at the Property's address; the letter was returned by USPS as " No Such Number." Subsequently, at various times over the next year, the Bureau checked several sources, some sources more than once, in an unsuccessful attempt to determine Appellees' whereabouts.[2] On May 29, 2009, the Bureau mailed, via first-class to Appellees at the Property's address, a courtesy pre-sale warning letter advising of the sale scheduled for September 23, 2009, and containing a payment due date of June 30, 2009; the letter was returned by USPS as " Return to Sender— Attempted— Not Known— Unable to Forward." On July 14, 2009, as required by statutory provision 72 P.S. § 5860.602(e)(1), the Bureau sent tax upset sale notices via certified mail, restricted delivery, to each Appellee at the Property's address; each notice was returned by USPS as " Not Deliverable as Addressed— Unable to Forward." On July 22, 2009, as required by statutory provision 72 P.S. § 5860.602(e)(3), a Bureau agent posted the Property; his affidavit indicated that personal service had not been made as there was no answer at the Property. On August 20, 2009, as required by statutory provision 72 P.S. § 5860.602(a), the Bureau gave notice in three local newspapers of the scheduled September 23, 2009 tax upset sale of the Property. On August 27, 2009, as required by statutory provision 72 P.S. § 5860.602(e)(2), second notices of the impending tax upset sale of the Property were sent via first-class mail to each Appellee at the Property's address; each notice was returned by USPS as " Not Deliverable as Addressed— Unable to Forward." On September 8, 2009, the Bureau filed with the Prothonotary's Office a petition to waive personal service. [3]

Page 886

On September 23, 2009, the tax upset sale was conducted as scheduled, and the Property was sold to Appellant.[4] In October 2009, the Bureau mailed several post-sale notices to Appellees at the Property's address via certified mail; all were returned via USPS as not deliverable.

After the tax upset sale, Appellant retained David Holland, Esq., to file a quiet title action against Appellees. Mr. Holland was unable to locate Appellees through USPS; utility companies; or several internet sites, including the on-line data service Accurint, Social Security obituaries, and telephone directories. Notes of Testimony, 4/22/10, (" N.T." ) at 167-69, 172. Mr. Holland was also unable to learn any information about Appellees' whereabouts when he did an internet search of the Property's address; the search came up with the name " USG Insurance" and a telephone number that yielded merely a recorded message directing one to enter a remote access code. Id. at 173-74. In addition, an internet search for a condominium association related to the Property did not yield any helpful information. Id. at 169-70. In a further attempt to locate a condominium association office, Mr. Holland then asked Appellant " to canvas the neighborhood" around the Property. Id. at 170. Appellant " drove around the neighborhood," found a sales office, and made inquiry. Id. From the sales office, Mr. Holland obtained a phone number in Columbus, Ohio, through which, after several calls, he learned of Appellees' business address in Florida. Id. at 171-72, 181; see Trial Court Opinion at 6-7 ¶ 16. On October 19, 2009, Appellant's counsel served the quiet title action upon Appellees via certified mail, restricted delivery, at their Florida business address. On November 18, 2009, Appellees filed a petition to open and/or set aside the tax upset sale.

The trial court conducted a hearing on the matter on April 22, 2010. Yvonne Orsatti, the Bureau's financial operations manager at the time of the tax upset sale, testified as to the Bureau's procedures prior to and after the tax upset sale. N.T. at 4-38, 72-83. Appellee Mr. Horton testified that he had received no final closing documents, including the deed and title insurance policy, from his settling agent following his purchase of the Property in 2006. Id. at 92-93, 96. In addition, he testified that he had never received any tax bill for the Property, any notice of his tax delinquencies, or any notice of the tax upset sale. Id. at 110-12, 115-16, 139. He admitted that the deed to the Property contained three errors, that those errors would make it difficult to locate Appellees, and that the Bureau had not been responsible for the errors. [5] Id. at 93-95, 125-31; Trial Court Opinion at 7 ¶ 18.

Before the trial court, Appellees argued that the Bureau had not exercised reasonable investigative efforts to locate them, and, as a secondary argument, that the

Page 887

Bureau had not placed contemporaneous notations in the Property file to document the investigative efforts that had been undertaken. N.T. at 184-90 (closing argument) (citing 72 P.S. § 5860.607a).[6]

On December 29, 2010, the trial court granted Appellees' petition to set aside the tax upset sale, holding that the Bureau had not satisfied the notice requirement of 72 P.S. § 5860.602(e)(2), pursuant to In Re: York County Tax Claim Bureau, 3 A.3d 765 (Pa.Cmwlth.2010). Trial Court Opinion at 9, 12. The trial court determined that although the Bureau had complied with the statutory requirements to provide three separate methods of notice prior to a tax upset sale (to wit, publication, certified mail, and posting), it had failed to provide " proof of mailing" of the second notice to Appellees, mailed via first-class on August 27, 2009, as required by subsection 5860.602(e)(2). Id. at 12. Accordingly, the trial court declared the tax upset sale of the Property to be null and void. Id. at 13. Notably, York, the basis for the trial court's holding here, was decided months after the sale and the hearing in the instant case,[7] and no party here raised the subsection 602(e)(2) issue that the Commonwealth Court decided in York.

Appellant appealed to the Commonwealth Court, which affirmed. Horton v. Washington County Tax Claim Bureau, 44 A.3d 710 (Pa.Cmwlth.2012). Agreeing with the trial court, the Commonwealth Court relied on York, supra, to hold that the " proof of mailing" requirement set forth in subsection 602(e)(2) can be satisfied only with a USPS Certificate of Mailing, also known as USPS Form 3817. Id. at 714. Although the Bureau had submitted a United States Postal Service Consolidated Postage Statement with an attachment delineating to whom mailings had been sent on August 27, 2009, as well as the actual envelopes sent to both Appellees and returned with USPS's official stamp, the Bureau had not obtained a USPS Certificate of Mailing and thus, pursuant to York's holding, had failed to satisfy the strict notice requirement set forth in subsection 602(e)(2). Id. at 714-15.[8]

Page 888

Appellant sought allowance of appeal from this Court, which we granted. The sole issue presented for our review is as follows:

Whether the Commonwealth Court erred in affirming the trial court's decision to set aside the upset tax sale on the basis that the bureau failed to provide certificates of mailing under 72 P.S. § 5860.602(E)(2) where the trial court made an express finding that the bureau mailed each taxpayer a notice of tax sale on August 27, 2009 by first class mail, and the trial court's finding is supported by substantial, undisputed evidence?

Horton v. Washington County Tax Claim Bureau, Petition of Lewis, __ Pa. __, 55 A.3d 1054 (2012).

Pursuant to 72 P.S. § 5860.602 (" Notice of sale" ), a tax claim bureau is required to take several steps to attempt to provide notice to a property owner before conducting a tax upset sale due to a delinquency in payment of taxes on the property. The notice provisions of the statute " must be strictly complied with in order to guard against the deprivation of property without due process of law." Krumbine v. Lebanon County Tax Claim Bureau, 541 Pa. 384, 663 A.2d 158, 162 (1995) (citation omitted).

Section 602 specifically requires the following types of notice. At least thirty days prior to a scheduled tax upset sale, the Bureau must give notice of the scheduled sale by publication in two local newspapers and a legal journal. 72 P.S. § 5860.602(a). Also, at least thirty days prior to a scheduled sale, the Bureau must give notice by " United States certified mail, restricted delivery, return receipt requested, postage prepaid, to each owner." 72 P.S. § 5860.602(e)(1). At least ten days prior to the scheduled sale, the property must be posted. 72 P.S. § 5860.602(e)(3). In the instant case, there is no dispute that these three requirements (the publication notice, the certified mail notice, and the posted notice) were all satisfied. Horton, supra at 713; Trial Court Opinion at 11-12.

The dispute here concerns another statutory requirement, to wit, 72 P.S. § 5860.602(e)(2), which mandates the mailing of a second notice if a return receipt is not received from each owner in response to the first, certified mail notice. Subsection 602(e)(2) provides, in relevant part, as follows:

If return receipt is not received from each owner [in response to the certified mail notice required under subsection 602(e)(1), supra ], then, at least ten (10) days before the date of the sale, similar notice of the sale shall be given to each owner who failed to acknowledge the first notice by United States ...

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