Cont'l Res. v. Fair

1

317 Neb. 391

CONTINENTAL RESOURCES, PLAINTIFF AND THIRD-PARTY DEFENDANT, APPELLEE, v. KEVIN L. FAIR, DEFENDANT AND THIRD-PARTY PLAINTIFF, APPELLANT, and HEATHER HAUSCHILD, SCOTTS BLUFF COUNTY TREASURER, IN HER OFFICIAL CAPACITY, ANDTHE COUNTY OF SCOTTS BLUFF, THIRD-PARTY DEFENDANTS, APPELLEES.

No. S-21-074

Supreme Court of Nebraska

August 23, 2024

1. Summary Judgment: Appeal and Error. An appellate court reviews the district court's grant of summary judgment de novo, viewing the record in the light most favorable to the nonmoving party and drawing all reasonable inferences in that party's favor.

2.___:___ . An appellate court will affirm a lower court's grant of summary judgment if the pleadings and admitted evidence show that there is no genuine issue as to any material facts or as to the ultimate inferences that may be drawn from those facts and that the moving party is entitled to judgment as a matter of law.

Appeal from the District Court for Scotts Bluff County, Leo P Dobrovolny, Judge.

Caitlin Cedfeldt, Jennifer Gaughan, Mark T. Bestul, and Michael W. Meister, of Legal Aid of Nebraska, and Christina M. Martin and Deborah J. La Fetra, of Pacific Legal Foundation, pro hac vice, for appellant.

Gregory C. Scaglione, Cody B. Nickel, and Casandra M Langstaff, of Koley Jessen, P.C., L.L.O., for appellee Continental Resources.

Daniel J. Zieg, Chief Deputy Lancaster County Attorney, and David Eubanks, Scotts Bluff County Attorney, for Heather Hauschild and Scotts Bluff County.

Michael T. Hilgers, Attorney General, Eric J. Hamilton, and Lincoln J. Korell for appellee State of Nebraska.

Heavican, C.J., Cassel, Stacy, Funke, Papik, and Freudenberg, JJ., and Thompson, District Judge.

PER CURIAM.

In an earlier opinion, we affirmed the district court's rejection of various constitutional claims Kevin L. Fair asserted concerning the issuance of a tax deed to his property. See Continental Resources v. Fair, 311 Neb. 184, 971 N.W.2d 313 (2022), cert. granted and judgment vacated ___U.S.___, 143 S.Ct. 2580, 216 L.Ed.2d 1191 (2023). One of Fair's claims was that the issuance of the tax deed violated the Takings Clauses of the U.S. and Nebraska Constitutions. Fair's theory was that the issuance of the tax deed effected a taking without just compensation because it deprived him of all interest in his property, which he alleged was worth substantially more than the amount of his underlying tax debt. Fair filed a petition for certiorari in the U.S. Supreme Court, and while his petition was pending, the Court held in Tyler v. Hennepin County, 598 U.S. 631, 143 S.Ct. 1369, 215 L.Ed.2d 564 (2023) (Tyler), that a Minnesota woman who alleged that a county sold her condominium for $40,000 to satisfy a $15,000 property tax bill had alleged a plausible takings claim. The U.S. Supreme Court subsequently granted certiorari in Fair's case, vacated our judgment, and remanded the cause to this court for further consideration in light of Tyler. See Fair v. Continental Resources, ___ U.S. ___, 143 S.Ct. 2580, 216 L.Ed.2d 1191 (2023).

Having now reconsidered our earlier opinion in light of Tyler, we conclude that the district court erred by granting summary judgment to Continental Resources (Continental) on Fair's takings claim. We therefore affirm in part, and in part reverse and remand the cause for further proceedings.

I. BACKGROUND

In our initial opinion, we set forth an overview of Nebraska's tax certificate sale process, as well as a detailed summary of the factual and procedural history of this case. We do not repeat all of that here, but instead summarize those details relevant to our opinion in this case.

1. NEBRASKA TAX CERTIFICATE SALE PROCESS

Because tax certificate sales proceedings are governed by the law in effect at the time a tax certificate is sold, see HBI, L.L.C. v. Barnette, 305 Neb. 457, 941 N.W.2d 158 (2020) (superseded by statute on other grounds as stated in Castillo v. Libert Land Holdings 4, 316 Neb. 287, 4 N.W.3d 377 (2024)), we describe the process as it existed under statutes in effect in March 2015, when the tax certificate for the property at issue in this case was sold. We note that these statutes were substantially amended in subsequent years. See, e.g., 2023 Neb. Laws, L.B. 727; 2019 Neb. Laws, L.B. 463. The parties agree these amendments have no bearing on the issues involved in this case.

Each county in Nebraska has an automatic lien on property within its boundaries for the property taxes that are due to the government. See Neb. Rev. Stat. § 77-1901 (Cum. Supp. 2014). If taxes on the property become delinquent, statutes direct the county to offer to sell its lien via a tax certificate. See Neb. Rev. Stat. § 77-1806 (Reissue 2009). Statute sets the cost of the certificate as "the amount of taxes, interest, and cost thereon." Neb. Rev. Stat. § 77-1808 (Cum. Supp. 2014).

Once a tax certificate is sold, the original owner is not immediately divested of all rights to the property. The owner has the right to redeem the property by paying the amount listed in the tax certificate plus all other taxes paid by the tax certificate purchaser, any interest, and other fees. See Neb. Rev. Stat. § 77-1824 (Cum. Supp. 2014). Interest on delinquent payments accrues at 14 percent per year. See Neb. Rev. Stat. § 45-104.01 (Reissue 2010).

If the property owner does not redeem the property within 3 years, the tax certificate holder can apply for a tax deed. If redemption has not occurred and the tax certificate purchaser complies with other requirements, the county treasurer is directed to provide a tax deed. See Neb. Rev. Stat. § 77-1837 (Cum. Supp. 2014). Once a tax deed is issued to the tax certificate purchaser, title to the property passes free and clear of any encumbrances. See SID No. 424 v. Tristar Mgmt., 288 Neb. 425, 850 N.W.2d 745 (2014).

If a property owner fails to redeem the property, a tax certificate purchaser may, instead of demanding a tax deed, pursue another option: judicial foreclosure. See Neb. Rev. Stat. § 77-1902 (Cum. Supp. 2014). In the event of a judicial foreclosure sale, surplus proceeds are distributed "in the manner provided by law for the disposition of the surplus in the foreclosure of mortgages on real property." Neb. Rev. Stat. § 77-1916 (Cum. Supp. 2014). If a tax certificate goes unsold, the county attorney is directed to pursue judicial foreclosure. See § 77-1901.

With this background established, we turn to how this process played out in this case.

2. CONTINENTAL OBTAINS TAX DEED

Fair and his wife owned real property in Scotts Bluff County, Nebraska, free of any encumbrances. The Fairs lived in a house on the property. After the Fairs failed to pay property taxes on the property, the county treasurer sold a tax certificate to Continental for the amount of the property's unpaid taxes-$588.21.

Three years later, Continental, pursuant to Nebraska statute, notified the Fairs that if they did not redeem the property by paying the total value of the unpaid taxes, fees, and inter-est-an amount that totaled $5,268.32-Continental would apply for a tax deed and the right of redemption would expire. When the Fairs did not redeem the property, Continental requested a tax deed from the county treasurer. The county treasurer issued a deed to Continental. Under Nebraska law, once the tax deed was issued to Continental, title to the property passed to it free and clear of any encumbrances. See SID No. 424, supra.

3. DISTRICT COURT PROCEEDINGS

Continental thereafter filed a quiet title action against the Fairs. The Fairs responded to Continental's suit by filing an answer, counterclaim, and third-party complaint, which added the county and the county treasurer, in her official capacity, as third-party defendants. Unless more detail is required, we hereafter refer to the county and the county treasurer collectively as "the county." The Fairs also named the Attorney General of the State of Nebraska, in his official capacity, as a third-party defendant.

In their counterclaim and third-party complaint, the Fairs alleged that the issuance of the tax deed violated the Takings Clauses of the U.S. and Nebraska Constitutions, the Due Process Clauses of the U.S. and Nebraska Constitutions, the Excessive Fines Clauses of the U.S. and Nebraska Constitutions, and article I, § 25, of the Nebraska Constitution. Relevant to their takings claims, the Fairs alleged that the issuance of the tax deed to Continental was a taking without a public purpose. Alternatively, the Fairs alleged that if the issuance of the tax deed was for a public purpose, they were nonetheless entitled to just compensation. The Fairs also alleged that Continental "acted under the color of state law" and, along with the county, deprived the Fairs of constitutional rights.

Early in the proceedings, the district court dismissed the Attorney General as a party to the lawsuit. Because Fair was challenging the constitutionality of various statutes, however, the Attorney General continued to participate in the lawsuit pursuant to Neb. Rev. Stat. § 25-21,159 (Reissue 2016), a statute that provides that the Attorney General is "entitled to be heard" if a party seeks a declaration that a statute is unconstitutional.

Continental moved for summary judgment. The summary judgment record included evidence that the total amount of the unpaid taxes, fees, and interest the Fairs owed was $5,268.32 and that, at the time the tax deed was issued, the property's assessed value was $59,759.

The district court entered summary judgment against the Fairs. It found that the Fairs' constitutional claims lacked merit.

Fair's wife died while the lawsuit was pending in the district court. Fair filed a timely appeal, and we moved the...