2014 VT 11


Hogaboom v. Jenkins v. Town of
Milton (2012-367)
 
2014 VT 11
 
[Filed 21-Feb-2014]
 
NOTICE:  This opinion is
subject to motions for reargument under V.R.A.P. 40 as well as formal revision
before publication in the Vermont Reports.  Readers are requested to
notify the Reporter of Decisions by email at: JUD.Reporter@state.vt.us or by
mail at: Vermont Supreme Court, 109 State Street, Montpelier, Vermont
05609-0801, of any errors in order that corrections may be made before this
opinion goes to press.
 
 

2014 VT 11

 

No. 2012-367

 

Loren and Kathryn Hogaboom


Supreme Court


 


 


 


On Appeal from


     v.


Superior Court, Chittenden
  Unit,


 


Civil Division


 


 


Trevor Jenkins 


March Term, 2013


 


 


     v.
 
Town of Milton
 
 


 


Geoffrey
  W. Crawford, J.


 

Grant C. Rees, Milton, for Plaintiffs-Appellants.
 
Ebenezer Punderson of Deppman & Foley, P.C., Middlebury,
for Defendant-Appellee Jenkins.
 
 
PRESENT:  Reiber, C.J., Dooley, Skoglund, Burgess and
Robinson, JJ.
 
 
¶ 1.            
ROBINSON, J.   The question in this case is whether a
town violated a taxpayer’s due process rights by conducting a tax sale of the
delinquent taxpayer’s real property after registered mail notifying the
taxpayer of the impending tax sale was returned undelivered.  The
Chittenden Superior Court, Civil Division held that it did.  We affirm.
¶ 2.            
We assume the following facts, which are undisputed unless otherwise
noted.  Appellee taxpayer, Trevor Jenkins, has at all times relevant to
these proceedings owned and lived on property at 480 East Road in the Town of
Milton.  Taxpayer failed to pay property taxes for the 2007-2008 and
2008-2009 tax years.  The Town mailed him three delinquent tax notices, in
June 2008, June 2009, and January 2010, respectively, advising him to take
additional steps to avoid a tax sale.
¶ 3.            
On March 4, 2010, the Town sent taxpayer a “Tax Sale Notice” indicating
that the “Delinquent Tax Collector [had] submitted [taxpayer’s] account(s) for
tax sale.”  The notice listed the amount due on his account, including the
delinquency itself; interest calculated at a rate of one percent on the
delinquency; and other charges not listed on prior notices, including postage,
publication, warrant, recording, and over $600 in attorney’s fees.  The
notice included a calculation of interest on the delinquency due through April
6, 2010, with no explanation of the significance of that date.  This
notice did not contain information regarding the date or location of the
anticipated tax sale.
¶ 4.            
These notices were sent to taxpayer by first-class mail.  Taxpayer
denies receiving them, and the Town states that the notices were not returned
to the Town.
¶ 5.            
On March 8, 2010, the Town’s attorney sent taxpayer a “Notice of Tax
Sale” by registered mail, return receipt requested.  This notice did
contain details of the tax sale, indicating that the sale would take place on
April 6, 2010 and providing the exact time and location.  On March 24,
2010, nearly two weeks before the tax sale, the notice sent to taxpayer by
registered mail was returned to the Town’s attorney unclaimed after two
attempts at delivery.
¶ 6.            
The Town’s attorney also recorded notice of the sale in the Town land
records, posted notice in the Milton Town Offices, and advertised the sale in
the Milton Independent on three nonconsecutive days in March 2010.  The
Milton Independent is a free weekly publication mailed to Town residents. 
Taxpayer says that he did not see any of these published notices.
¶ 7.            
The Town proceeded with the sale and, on April 6, 2010, Loren and
Kathryn Hogaboom purchased taxpayer’s property at auction with a bid of
$5902.20.
¶ 8.            
On the day following the tax sale, the Town’s attorney sent a letter by
first-class mail informing taxpayer that his property had been sold in a tax
sale, he had one year from the date of sale to redeem the property, and interest
would accrue on the purchase amount at a rate of one percent per month. 
This letter was not returned to the Town’s attorney.  Taxpayer did not
redeem the property during the one-year period, and the Town issued a deed to
purchasers on April 26, 2011.
¶ 9.            
Purchasers filed a complaint for ejectment on July 27, 2011, seeking a
writ of possession for the property.  Taxpayer admitted his failure to pay
taxes but denied ever having received notice of the tax sale.  He filed a
counterclaim against purchasers and a third-party complaint against the Town,
seeking a declaratory judgment setting aside the tax sale as void. 
Purchasers and the Town both filed motions for summary judgment, contending
that notice to taxpayer satisfied the requirements of due process.[1]
¶ 10.         The
trial court denied the summary judgment motions, concluding that although the
Town complied with the statutory notice requirements of 32 V.S.A. § 5252,
the Town failed to provide sufficient notice to taxpayer to satisfy the
constitutional requirement of due process.  In particular, relying on the
U.S. Supreme Court’s decision in Jones v. Flowers, 547 U.S. 220 (2006),
the trial court explained that the Town’s failure to take additional steps
prior to the tax sale, once the notice of tax sale sent by registered mail was
returned unclaimed, rendered its notice to taxpayer insufficient for due
process purposes, and that the Town’s post-sale, pre-redemption notice did not
remedy the constitutional infirmity.  Based on this analysis, the trial
court entered judgment for taxpayer pursuant to Vermont Rule of Civil Procedure
56(f), declared the tax sale null and void, gave taxpayer thirty days to pay
the Town certain principal and interest, and ordered purchasers to deliver a
quitclaim deed and property transfer tax return to taxpayer upon payment in
full by the Town.  Purchasers appealed.
¶ 11.         In
reviewing a decision granting summary judgment, this Court applies the same
standard as the trial court.  White v. Quechee Lakes Landowners’ Ass’n,
170 Vt. 25, 28, 742 A.2d 734, 736 (1999).  Summary judgment will be
granted “if the movant shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” 
V.R.C.P. 56(a).  A court may, after giving notice and a reasonable time to
respond, grant summary judgment for a nonmovant, grant a motion for summary
judgment on grounds not raised by a party, or consider summary judgment on its
own after identifying material facts that may be genuinely in dispute. 
V.R.C.P. 56(f).  
¶ 12.         On
appeal, purchasers argue that the notice provided by the Town after the auction
but before the Town actually transferred the property to purchasers upon
expiration of the redemption period, coupled with the delinquency notices
previously sent to the taxpayer, were sufficient to satisfy due process.  Purchasers
contend that the requirement of Flowers that a governmental entity take
additional steps to provide notice after a mailed notice is returned unclaimed
does not apply in this case because the taxpayer here received significantly
more notice than the property owner in Flowers.  Even if Flowers
applies, purchasers argue that the pivotal action requiring advance notice to
taxpayer was not the tax sale itself but, rather, the transfer of title to the
purchasers upon termination of the redemption period.  The transfer of
title at the end of the redemption period was the relevant deprivation of
property, and the notice provided to taxpayer after the sale, but before that
transfer, was therefore sufficient to satisfy due process. [2]
¶ 13.         Taxpayer
responds that the Town’s post-sale notice attempts were constitutionally inadequate. 
He argues that, because the tax sale triggers accrual of one-percent interest
on the highest bid, the sale changes a delinquent taxpayer’s position to the
extent that constitutionally adequate notice is required prior to the sale.
¶ 14.         The principle
that a state must provide “ ‘notice and opportunity for [a] hearing
appropriate to the nature of the case’ ” before depriving a person of
life, liberty, or property forms the bedrock of procedural due process. 
See, e.g., Jones v. Flowers, 547 U.S. 220, 223 (2006) (quoting Mullane
v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 313 (1950)).  As
the U.S. Supreme Court has noted, due process is “not a technical conception
with a fixed content unrelated to time, place and circumstances.”  Mathews
v. Eldridge, 424 U.S. 319, 334 (1976) (quotation omitted).  Instead,
it is “flexible and calls for such procedural protections as the particular
situation demands.”  Id. (quotation omitted).  When applying
the “cryptic and abstract words of the Due Process Clause” to determine whether
notice is constitutionally adequate, the precise form of notice and its content
therefore depend on the balancing of the public and private interests
involved.  Mullane, 339 U.S. at 312-14; Mathews, 424 U.S. at
333-35.  
¶ 15.         Due
process requires “notice reasonably calculated, under all the circumstances, to
apprise interested parties of the pendency of [an] action and afford them an
opportunity to present their objections.”  Mullane, 339 U.S. at
314.  Due process does not require actual notice; however, “process which
is a mere gesture is not due process.”  Mullane, 339 U.S. at 315;
see also Flowers, 547 U.S. at 226 (citing Dusenbery v. United States,
534 U.S. 161, 170 (2002)).  “The means employed must be such as one desirous
of actually informing the absentee might reasonably adopt to accomplish
it.”  Mullane, 339 U.S. at 315.  
¶ 16.         Nobody
suggests that the general procedure required by statute and followed by the
Town in this case did not, in the first instance, provide taxpayer notice that
was reasonably calculated under the circumstances to apprise him of a pending
sale and give him an opportunity to raise objections.  The hitch here is
that prior to the auction to sell taxpayer’s property, subject to his right to
redeem, the critical notice—the only one actually confirming that a tax sale
had been scheduled, and specifying the date, time and location of that
sale—came back to the Town unclaimed.[3]  
¶ 17.         The
U.S. Supreme Court, in Jones v. Flowers, addressed the question of what
due process requires when notice of a tax sale sent to a property owner is
returned undelivered.  Flowers, 547 U.S. at 223.  The central
question in this case is whether and how the Court’s decision in Flowers
applies to these facts.  In Flowers, twice over a two-year period,
a taxing authority attempted to notify a delinquent taxpayer of a public tax
sale of his property by certified mail that was returned unclaimed.  The
taxpayer did not reside at the property where the notice was mailed, but his
ex-wife did.  The taxing authority published notice of a public sale of
the property in a local publication and, after no bids were submitted in
response to the published notice, sold the property in a private sale. 
Upon learning of the sale after the redemption period had passed, the taxpayer
sued, arguing that the failure to provide notice of the tax sale, and of his
right to redeem, resulted in the taking of his property without due process. 
Id. at 224.  The Court held that “when mailed notice of a tax sale
is returned unclaimed, the State must take additional reasonable steps to
attempt to provide notice to the property owner before selling [the] property,
if it is practicable to do so.”  Flowers, 547 U.S. at 225. 
The Court acknowledged that due process only requires notice that is reasonably
calculated to reach the intended recipient when sent, and does not require that
a property owner receive actual notice before the government may sell the owner’s
property.  Id. at 226.  However, once the government learns
that its attempt at notice has failed, it must take the kind of additional
reasonable steps that someone “desirous of actually informing” the property
owner would take.  Id. at 230.    
¶ 18.         We
reject purchasers’ argument that the Court’s holding in Flowers does not
apply to this case.  Purchasers argue that this case can be distinguished
from Flowers because taxpayer here resided at the property and, because
of the post office’s notices of attempted delivery of the registered tax sale
notice, received more notice than the taxpayer in Flowers. 
Purchasers essentially argue that the notices of attempted delivery put
taxpayer on inquiry notice of the impending sale.  In Flowers, the
U.S. Supreme Court rejected a similar argument that due process was satisfied
because the property owner’s knowledge of his or her delinquency put the owner
on inquiry notice of a pending tax sale.  Flowers, 547 U.S. at
232-33.  Here, the notice on taxpayer’s door of an attempted delivery of
registered mail did not alert taxpayer to the fact that his property was
scheduled for a tax sale and the date, time, and location of that sale. 
Nor did it notify him of his rights, such as the right to request that only a
portion of the property be sold.  The facts that taxpayer lived at the
property and may have seen the notices of attempted delivery do not
meaningfully distinguish this case from Flowers.  Whether taxpayer
actually saw or disregarded the notices is not the issue; the relevant inquiry
is whether, from the perspective of the Town, return of the unclaimed
registered mail triggered a requirement that the Town take additional steps to
notify taxpayer before the tax sale.     
¶ 19.         Purchasers
also suggest that the multiple notices of delinquency the Town sent to taxpayer
distinguish this case from Flowers.  In that case, the government
sent only two certified mail notices over a two-year period, both of which were
returned unclaimed.  The only other notice the taxing authority provided
was a posting in a local publication.  By contrast, purchasers argue, the
Town in this case provided notice of tax delinquency by first-class mail on
four occasions prior to the sale.  However, the notices sent by
first-class mail, which may have been sufficient to notify taxpayer of the risk
of sale, did not notify taxpayer that an actual sale had been scheduled. 
Accordingly, we conclude that Flowers applies to this case and that the
Town was required to take additional reasonable steps once the registered mail
notice was returned unclaimed.   
¶ 20.            Having
decided that the Town was required to take additional reasonable steps, we now
turn to the question of whether those steps were required prior to the tax
sale, or whether the Town’s letter to taxpayer after the auction, but before
the end of the redemption period and the actual transfer of the property to
purchasers, was sufficient to satisfy the requirement.  Purchasers argue
that notice of the details of the sale is sufficient if it is provided after
the sale but prior to the transfer of title at the end of the statutory
redemption period.  In so arguing, purchasers rely on our decision in Ran-Mar,
Inc. v. Town of Berlin, 2006 VT 117, 181 Vt. 26, 912 A.2d 984.  In Ran-Mar,
Inc., this Court addressed the issue of whether a town may retain proceeds
from a tax sale pending redemption.  In holding that retention was not an
unconstitutional taking, we concluded that a purchaser does not take title and
there has been no transfer of property until the end of the one-year redemption
period.  Ran Mar, Inc., 2006 VT 117, ¶¶ 10, 12.  On the
basis of this holding, purchasers argue that the actual deprivation of property
for which notice is constitutionally required does not occur until the end of
the redemption period, so that the Town’s notice to taxpayer in this case
preceded the deprivation and was thus timely.
¶ 21.         Purchasers
further rely on a decision of the Arkansas Court of Appeals based on a similar
set of facts in Morris v. LandNPulaski, LLC, 309 S.W.3d 212 (Ark. Ct.
App. 2009).  Like here, pre-sale notice in Morris was returned
unclaimed; the tax collector proceeded with the sale without taking any
additional steps to provide the property owner notice. The tax collector then
provided the taxpayer post-sale notice via regular mail.  The Arkansas
Court of Appeals concluded that the post-sale notice was constitutionally
adequate because it was sent during the redemption period, “before there had
been a deprivation of . . . property.”  Morris,
309 S.W.3d at 217.  In so holding, the court relied on testimony that
“ ‘nobody’s position changes with respect to the property until the
remaining redemption period expires.’ ”  Id.  
¶ 22.         The
reliance of the court in Morris on the fact that nobody changed position
immediately following the tax sale in Arkansas is telling.  The
constitutional question here is whether the government deprived taxpayer of a
property interest without sufficient notice.  In determining when the
relevant deprivation of a property interest occurred here, we consider whether
the April 6, 2010 tax sale effected a sufficient change in taxpayer’s property
rights to require additional notice prior to the sale after the notice of tax
sale was returned undelivered.  
¶ 23.         Under
Vermont’s statutory scheme, a tax sale has some implications for a delinquent
taxpayer’s property rights wholly apart from the eventual transfer of title to
the property upon expiration of the redemption period.  Vermont law
provides that for one year following a tax sale, a property owner may redeem
the property by paying “the sum for which the land was sold” in addition to
interest on that amount at the rate of one percent per month.  32 V.S.A.
§ 5260.  The tax sale price can include not only the total delinquent
taxes and the interest owed on those taxes, but also collector’s fees,
including the cost of travel and expenses to carry out the sale; attorney’s
fees and costs; interest; and various other fees.  32 V.S.A. § 5258; Westine
v. Whitcomb, Clark & Moeser, 150 Vt. 9, 12, 547 A.2d 1349, 1351
(1988); see also Ran-Mar, Inc., 2006 VT ¶ 8 (concluding that fees,
including those mischaracterized as penalties by the taxing authority, are
“explicitly collectible by tax sale under § 5254(a)).  The attorney’s
fees that may be assessed against the taxpayer can amount to up to fifteen
percent of the total uncollected tax.  32 V.S.A. § 5258.  
¶ 24.         On the
one hand, taxpayer’s liability for his delinquent taxes, interest on those
delinquent taxes, various collector’s fees, and even attorney’s fees do not
change at the time of the tax sale.  In this case, the delinquency, and
the interest that had accrued on the delinquency, existed before the sale, and
taxpayer’s obligation to pay them in order to redeem and retain his property
persisted after the sale until the expiration of the redemption period. 
By the same token, the tax collector’s authority to assess additional fees,
including attorney’s fees up to fifteen percent of the uncollected taxes,
begins when the tax collector records the warrant and levy for delinquent
taxes—an event that precedes the actual tax sale.  32 V.S.A. § 5258. 
The taxpayer’s obligation to pay these fees in order to keep his property
likewise did not change at the time of the tax sale; once the tax collector
recorded the warrant and levy, the taxpayer had to pay these costs in order to
avoid a tax sale, and also had to pay these costs, which were folded into the
tax sale price, in order to redeem.
¶ 25.         On
the other hand, the base on which the one-percent interest charged to taxpayer
is assessed does change at the time of the tax sale.  Following the
tax sale, a taxpayer seeking to redeem property is liable for interest at the
rate of one percent not only on the delinquency itself, but on the sum of the
delinquency, accrued interest through the date of sale, various collector’s
fees, and attorney’s fees.  The tax sale itself increases the base against
which interest is assessed.[4]   
¶ 26.         In
light of this fact, the tax sale is not an arbitrary line in the sand; it
brings about substantial and previously non-existent obligations for a taxpayer
seeking to redeem his or her property—a sufficient change in the taxpayer’s
property rights to trigger the due process notice requirement.  We
recognize that the dollar value of the additional interest payable by a
taxpayer seeking to redeem property on account of the increased base against
which the interest is assessed may in some cases be modest.  But the
corresponding requirements of due process are likewise limited.  See Mullane,
339 U.S. at 313-14 (balancing individual interest sought to be protected by due
process and government’s interest in determining extent of notice requirement
in particular circumstances).     
¶ 27.         We
conclude that once notice of a tax sale is returned unclaimed, a town must take
additional reasonable steps to apprise the taxpayer of the impending tax sale
before the sale occurs.  This notice must be more than a “mere gesture”
and must be reasonably calculated to provide the taxpayer notice of the
impending sale.  This holding need not empower delinquent taxpayers to
avoid tax sales by refusing receipt of registered mail.  The U.S. Supreme
Court in Flowers identified a number of reasonable steps to provide
notice that could not be defeated by an intransigent taxpayer, including
re-sending notice by regular mail, posting notice on the taxpayer’s front door,
or addressing otherwise undeliverable mail to “occupant.”  Flowers,
547 U.S. at 234-35.  Service by sheriff is also a reasonable and
cost-effective option to ensure that a property owner is not deprived of property
without adequate notice.[5]  The burden on the Town in this
case to take one of these additional steps in the nearly two weeks between the
time the registered notice was returned and the tax sale was slight.  
¶ 28.         Purchasers
argue that the superior court’s decision elevated form over substance.  In
the due process context, when we are talking about divesting an individual of
property, and in some cases home and hearth, the form and adequacy of notice is
not a trivial concern.
Affirmed. 

 


 


FOR THE COURT:


 


 


 


 


 


 


 


 


 


 


 


Associate
  Justice

 





[1]  Purchasers and the Town also
argued below that taxpayer’s claims were time-barred by the statute of
limitations, but have not appealed the trial court’s rejection of this
argument. 


[2]  Purchasers also argue that
taxpayer had actual notice of the impending tax sale, or that there is at least
a genuine dispute as to whether taxpayer had actual notice such that summary
judgment was not appropriate.  Because this argument was not raised below,
we do not address it here.  Garilli v. Town of Waitsfield, 2008 VT
91, ¶ 7, 184 Vt. 594, 958 A.2d 1188 (mem.).  


[3]  The March 8 notice was also the
only one that notified taxpayer of his right to request that a portion of his
property be sold to satisfy his delinquent tax obligations.  Because
taxpayer has not raised that issue on appeal, we do not address it here.  


[4]  Although not at issue in this
case, there are other reasons to exercise caution in condoning post-sale but
pre-redemption notice in satisfaction of due process requirements in the tax
sale context.  For instance, the tax sale forfeits a taxpayer’s statutory
right to request that only a portion of the property be sold to satisfy the
debt.  See 32 V.S.A. § 5254(b).  We need not determine what
other property rights of the taxpayer are impacted by the tax sale, prior to
redemption or expiration of the redemption period, because we conclude that the
assessment of increased costs to the taxpayer seeking to keep the property is a
sufficient deprivation of property to require due process notice. 
  


[5]  As the trial court noted below,
the notice to a delinquent taxpayer required by 32 V.S.A. § 5252(3) prior to a
tax sale of that individual’s property, and provided by the Town here, would
not have supported a small claims judgment for $100.  See V.R.S.C.P. 3(b)
(requiring personal service in small claims action if defendant does not
acknowledge receipt of mailed summons and complaint).  



