Douglas v. Roper

374 So.3d 652

James L. DOUGLAS, Jr., and Shiloh Creek, LLC

v.Karen ROPER, in her capacity as Revenue Commissioner for Calhoun County; Don Hudson, in his capacity as Chairman of the Calhoun County Commission; Calhoun County Commission; Don Armstrong, in his capacity as Property Tax Commissioner of Shelby County; Edward Carter, in his capacity as Finance Manager for Shelby County; Jon Parker, in his capacity as Chairman of the Shelby County Commission; and Shelby County Commission

1200503

Supreme Court of Alabama.

June 24, 2022

Rehearing Denied October 21, 2022

West Codenotes

Limitation Recognized

Ala. Code § 40-10-28

Robert H. Rutherford, William S. Hereford, Warren C. Matthews, and E. Travis Ramey of Burr & Foreman LLP, Birmingham, tor appellants.

Kendrick E. Webb, Jamie Helen Kidd Frawley, and Fred L. Clements, Jr., of Webb McNeill Walker PC, Montgomery, for appellees Karen Roper, in her capacity as Revenue Commissioner for Calhoun County; Don Hudson, in his capacity as Chairman of the Calhoun County Commission; and Calhoun County Commission.

Frank C. Ellis, Jr., J. Bentley Owens III, and William R. Justice of Ellis, Head, Owens, Justice & Arnold, Columbiana, for appellees Don Armstrong, in his capacity as Property Tax Commissioner of Shelby County; Edward Carter, in his capacity as Finance Manager for Shelby County; Jon Parker, in his capacity as Chairman of the Shelby County Commission; and Shelby County Commission.

Charles W. Prueter of Waller Lansden Dortch & Davis, LLP, Birmingham; Michael Forton, dir. of advocacy, Legal Services Alabama, Huntsville; and Christina M. Martin and Laura M. D’Agostino of Pacific Legal Foundation, Palm Beach Gardens, Florida, for amici curiae Pacific Legal Foundation and Legal Services Alabama, in support of the appellants.

BOLIN, Justice.

James L. Douglas, Jr., and Shiloh Creek, LLC, appeal from summary judgments entered in favor of Karen Roper, in her capacity as Revenue Commissioner for Calhoun County; Don Hudson, in his capacity as Chairman of the Calhoun County Commission;¹ and the Calhoun County Commission (collectively referred to as "the Calhoun County defendants"); and in favor of Don Armstrong, in his capacity as Property Tax Commissioner of Shelby County; Edward Carter, in his capacity as Finance Manager for Shelby County; Jon Parker, in his capacity as Chairman of the Shelby County Commission; and the Shelby County Commission (collectively referred to as "the Shelby County defendants"), on Douglas’s and Shiloh Creek’s claims seeking, among other things, excess funds resulting from separate tax sales of real properties owned by Douglas and Shiloh Creek and relief under 42 U.S.C. § 1983.

I. Facts and Procedural History

Property taxes are billed on October 1 of each year in this state, and they become delinquent on December 31. § 40-1-3, Ala. Code 1975. Counties in this state have a statutory remedy to collect past-due taxes by selling the property at auction to a purchaser with the highest bid. § 40-10-1 et seq., Ala. Code 1975. Tax sales often generate purchase prices that exceed the minimum-bid amount, which consists of the total of unpaid taxes, accrued interest, and other costs related to the sale of the property. Following a tax sale, the minimum-bid portion of the purchase price paid by the purchaser at the tax sale is distributed to the various taxing authorities who are entitled to receive the taxes owed on the property. If the tax sale generates funds in excess of the minimum-bid amount, those excess funds are held by the county treasurer for distribution pursuant to § 40-10-28, Ala. Code 1975. A landowner may redeem property sold at a tax sale if the owner pays an amount equal to the amount paid by the purchaser at the tax sale (including any funds paid in excess of the minimum-bid amount), plus any subsequent taxes paid by the purchaser, interest payable at 8%, and any additional costs and fees incurred by the purchaser. § 40-10-122, Ala. Code 1975. The excess funds generated from a tax sale are closely related to the right of redemption, and the recovery of those excess funds is an important part of the redemption process. William S. Hereford & James H. Haithcock III, Money for Nothing: Who is Entitled to Excess Paid at a Tax Sale?, 73 Ala. Law. 424 (2012).

Section 40-10-28, Ala. Code 1975, provides the mechanism by which the land-owner at the time of a tax sale can recover the excess funds generated from the tax sale. The version of § 40-10-28 in effect before August 2013 ("the preamendment version of § 40-10-28") provided as follows:

"The excess arising from the sale of any real estate remaining after paying the amount of the decree of sale, and costs and expenses subsequently accruing, shall be paid over to the owner, or his agent, or to the person legally representing such owner, or into the county treasury, and it may be paid therefrom to such owner, agent or representative in the same manner as to the excess arising from the sale of personal property sold for taxes is paid. If such excess is not called for within three years after such sale by the person entitled to receive the same, upon the order of the county commission stating the case or cases in which such excess was paid, together with a description of the lands sold, when sold and the amount of such excess, the county treasurer shall place such excess of money to the credit of the general fund of the county and make a record on his books of the same, and such money shall thereafter be treated as part of the general fund of the county. At any time within 10 years after such excess has been passed to the credit of the general fund of the county, the county commission may on proof made by any person that he is the rightful owner of such excess of money order the payment thereof to such owner, his heir or legal representative, but if not so ordered and paid within such time, the same shall become the property of the county."

In 2013, the legislature amended § 40-10-28, effective August 1, 2013, to require the landowner at the time of a tax sale to redeem the property sold at the tax sale before the county could pay the owner any excess funds resulting from the tax sale. Section 40-10-28, as amended in 2013, provided, in relevant part:

"(a) On and after August 1, 2013, the excess arising from the sale of any real estate remaining after paying the amount of the decree of sale, including costs and expenses subsequently accruing, shall be paid over to a person or entity who has redeemed the property as authorized in Section 40-10-120[, Ala. Code 1975,] or any other provisions of Alabama law authorizing redemption from a tax sale, provided proof that the person or entity requesting payment of the excess has properly redeemed the property is presented to the county commission within three years after the tax sale has occurred. Until and unless the property is redeemed, the excess funds from the tax sale shall be held in a separate account in the county treasury during the three-year period. If at the end of the three-year period there has been no proper request for the excess funds, those funds and any interestearned on those funds shall be deposited to the credit of the general fund of the county and shall thereafter be treated as part of the general fund of the county. At any time within 10 years after the tax sale has occurred, the county commission shall on proof made by any person or entity that the property has been properly redeemed by the person or entity under the general laws of the state, the county commission shall order the payment of the excess funds to such person or entity and retain any interest earned on those funds, but if not so ordered and paid within such time, the same shall become the property of the county. Following redemption, any excess funds including interest paid as required by this chapter [i.e., § 40-10-1 et seq., Ala. Code 1975], may be remitted to the tax sale purchaser pursuant to the procedures set forth in this chapter."

In 2014, the legislature again amended § 40-10-28, effective July 1, 2014, to provide, in relevant part:

"(a)(1) The excess arising from the sale of any real estate remaining after paying the amount of the decree of sale, including costs and expenses subsequently accruing, shall be paid over to a person or entity who has redeemed the property as authorized in Section 40-10-120[, Ala. Code 1975,] or any other provisions of Alabama law authorizing redemption from a tax sale, provided proof that the person or entity requesting payment of the excess has properly redeemed the property is presented to the county commission within three years after the tax sale has occurred. The county commission may retain any interest earned on those funds. Until and unless the property is redeemed, the excess funds from the tax sale shall be held in a separate account in the county treasury during the three-year period. If at the end of the three-year period there has been no proper request for the excess funds, those funds and any interest earned on those funds shall be deposited to the credit of the general fund of the county and shall thereafter be treated as part of the general fund of the county.

"…

"(b) At any time more than three years but within 10 years after a tax sale, the excess funds arising from the sale shall be paid to either of the following:

"(1) To any person or entity entitled to redeem under Section 40-10-83, [Ala. Code 1975,] or any other provisions of law authorizing redemption from the tax sale, upon proof of a circuit court order granting redemption to the person or entity.

"(2) To the owner of the land at the time of the tax sale or a subsequent owner, upon proof provided to the tax collector or other official performing those duties that the land has been redeemed by negotiated agreement from the purchaser at the tax sale or the purchaser’s successor in interest. Proof of negotiated redemption agreement shall include the following:

"a. A copy

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