In re Sale of Real Estate by Lackawanna Cnty. Tax Claim Bureau

255 A.3d 619

IN RE: SALE OF REAL ESTATE BY LACKAWANNA COUNTY TAX CLAIM BUREAU

Judicial Tax Sale Property Situate at 911 Albright Avenue Scranton, PA 18508

Tax Map No. 14508-040-030

Real Owner: Gloria Brown

No. 1346 C.D. 2019

Commonwealth Court of Pennsylvania.

Argued February 9, 2021

Decided May 10, 2021

Lee M. Herman, Media, for Appellant.

Joseph J. Joyce, III, Pittston, for Appellee Lackawanna County Tax Claim Bureau.

Mark J. Conway, Dunmore, for Appellee Kroperland, Inc.

BEFORE: HONORABLE RENÉE COHN JUBELIRER, Judge, HONORABLE PATRICIA A. McCULLOUGH, Judge (P.), HONORABLE CHRISTINE FIZZANO CANNON, Judge

OPINION BY JUDGE COHN JUBELIRER

Gloria Brown (Ms. Brown) appeals from the Order of the Court of Common Pleas of Lackawanna County (common pleas) that denied Ms. Brown's Motion for Post-Trial Relief (Post-Trial Motion). Common pleas previously denied Ms. Brown's Petition to Set Aside Judicial Tax Sale (Petition to Set Aside) of her property located at 911 Albright Avenue, Scranton, PA, 18508 (Property), agreeing with the Lackawanna County Tax Claim Bureau (Bureau) and Kroperland, Inc. (Purchaser) that the Petition to Set Aside was barred by the six-month statute of limitations applicable to challenges to judicial sales pursuant to Section 5522(b)(5) of the Judicial Code, 42 Pa.C.S. § 5522(b)(5), and that the discovery rule did not toll the statute of limitations.¹

On appeal, Ms. Brown argues that common pleas’ Order should be reversed because the Bureau did not comply with the mandatory notice requirements of Section 607.1(a) of the Real Estate Tax Sale Law (Law),² which deprived Ms. Brown of due process and deprived common pleas of jurisdiction to approve the judicial sale resulting in the sale being void ab initio . Ms. Brown asserts that because jurisdictional challenges can be raised at any time, the statute of limitations does not bar the Petition to Set Aside. The Bureau and Purchaser do not argue that there was strict compliance with the Law's notice requirements but assert that any deviation therefrom is not jurisdictional in nature. Therefore, they maintain, Ms. Brown was required to establish that her Petition to Set Aside is not barred by the statute of limitations before she can raise her non-jurisdictional claims of lack of notice/service and, having not done so, common pleas’ Order should be affirmed.

I. BACKGROUND

A. Facts

In February 2017, the Bureau filed a Petition to Sell Tax Delinquent Property at Judicial Sale Free and Clear of All Liens and Encumbrances (Petition to Sell) relating to the Property, of which Ms. Brown was record owner. (Reproduced Record (R.R.) at 12a.) The Petition to Sell recited that the Property had been exposed to an upset tax sale on September 26, 2016, for the nonpayment of taxes for the 2014 and 2015 tax years, (id. at 20a), the sale did not obtain a sufficient bid to pay the set upset price, and there had been no request for stay or removal of the Property from sale or discharge of the tax claim by Ms. Brown or any of her heirs, successors, or assigns, lien creditors or any of those heirs, successors, or assigns, or other interested person, (id. at 12a-13a). The Bureau stated that the judicial sale would occur on March 27, 2017, and asked common pleas to issue a Rule on all parties of interest to appear and show cause why the Property "should not be sold free and clear of their respective tax and municipal claims, liens, mortgages, charges, estates and encumbrances." (Id. at 14a.) Common pleas issued the requested Rule, setting the returnable date as March 16, 2017. (Id. at 11a.)

The Bureau attempted to serve the Rule and Petition to Sell personally on Ms. Brown at the Property, but the Sheriff's Return dated February 13, 2017, reflected that personal service was unsuccessful and included the notation "not found[,] vacant 2/13/2017." (Id. at 10a.) At the Bureau's request, common pleas issued an order approving alternative service for numerous properties set for judicial sale, including the Property, by both publication and United States First-Class Mail to the last known address of the property owner and indicating that such service would be sufficient. (Original Record (O.R.) at Item 3.) Thus, the Bureau published notice of the judicial sale and attempted to serve Ms. Brown by mailing the materials to the Property, which was her last known address despite knowing, based upon the Sheriff's Return, that the Property was vacant. The Bureau filed an affidavit by its counsel on March 13, 2017, stating that it had mailed the Rule and Petition to Sell to Ms. Brown on March 10, 2017. (Id. at Item 4.) Satisfied that the Law's requirements were met, common pleas approved the judicial sale of the Property by order dated March 20, 2017. (Id. at Item 5.) The Property was sold at the judicial sale on March 27, 2017, to Purchaser for $8,000. (R.R. at 43a.) However, as reflected in the Bureau's records, the mailed notice was subsequently returned as "Unable to Forward." (Id. at 42a.) A deed from Bureau to Purchaser dated June 6, 2017, was recorded on June 30, 2017. (Id. at 44a-47a.)

B. Petition to Set Aside

On April 4, 2018, Ms. Brown filed the Petition to Set Aside, asserting she had "not receive[d] actual notice of the [j]udicial [s]ale," had "first bec[o]me aware of the [j]udicial [s]ale in late October or early November[ ] 2017[,] and [had] retained counsel to determine how the [P]roperty was sold without providing any notice to her." (Id. at 35a-36a.) Ms. Brown asserted she would repay Purchaser what had been "reasonably expended in connection with the purchase of the Property," her sole asset, the value of which Ms. Brown believed to be more than $70,000 based upon "the Realty Transfer Tax Statement of Value filed in connection with the June 6, 2017 Deed. ..." (Id. at 36a-37a.) She averred that given that value, the sale of the Property for $8,000 was grossly inadequate and was a basis to overturn the sale. (Id. at 37a.)

The Bureau filed an Answer to the Petition to Set Aside, denying the material allegations. (Id. at 52a-53a.) The Bureau also argued that the Petition to Set Aside was barred by the relevant limitations period of six months, which, based on the discovery rule, began to run on the date the deed was recorded on June 30, 2017, citing In re Sale of Real Estate by Lackawanna Tax Claim Bureau (Pa. Cmwlth., No. 2027 C.D. 2013, filed August 1, 2014), slip op. at 14 n.9, 2014 WL 3805796 ( HSBC Bank ), and Deutsche Bank National Trust Co. v. Bendex Properties LLC , No. 3:16-CV-00432, 2018 WL 1532796, *2 (M.D. Pa. March 29, 2018). (R.R. at 53a-55a.) On April 5, 2018, common pleas issued a Rule to Show Cause on the Bureau as to why the Petition to Set Aside should not be granted, returnable on April 25, 2018, and scheduled a hearing for May 22, 2018. (Id. at 34a.)

C. Proceedings Before Common Pleas

Ms. Brown did not appear at the May 22, 2018 hearing but was represented by counsel. The Bureau was represented by counsel, and a Bureau claims processor, Barbara Lynady (Claims Processor), testified.³ The Bureau argued that the Petition to Set Aside should be dismissed for being filed outside the statute of limitations period without consideration of the substantive arguments on the alleged lack of notice. (Id. at 79a, 99a.) Ms. Brown asserted that "absent proper notice to [the taxpayer], [common pleas] lack[ed] jurisdiction to even order a sale" and that, here, "the notice was so defective ... that [common pleas] had no ability to order a sale ... [of the] [P]roperty." (Id. at 80a.) In this circumstance, Ms. Brown argued, "[t]he statute [of limitations] would[ not] have come into play because the sale could[ not] have taken place or should not have been able to take place" because one "can[not] rely on a defective service to create a statute of limitations" issue. (Id. at 80a-81a.) The Bureau responded that, "if [this] was the case[,] the statute of limitations would[ not] ever apply in tax sale cases" because "the argument always is a lack of notice." (Id. ) Ms. Brown argued that accepting this argument "would give the tax claim bureau free reign to ignore the statute completely," resulting in "people los[ing] their property without appropriate notice," which should not be allowed under the strict construction of the notice requirements in taxing statutes. (Id. at 81a-82a.)

The Bureau called Claims Processor to establish the filing and service of the Petition to Sell. (Id. at 82a.) Claims Processor testified that her duties included collecting delinquent taxes and preparing properties for tax sale and that she was familiar with the Bureau's record keeping system. (Id. at 83a.) She agreed that the Bureau had a regular practice of keeping records showing compliance with the Law's notice requirements and had reviewed the file related to the sale of the Property. (Id. ) According to Claim Processor's review of the file, the Bureau attempted to serve the Petition to Sell and Rule on Ms. Brown by both Sheriff and by First-Class Mail, after receiving permission to use alternative service, and these attempts were unsuccessful. (Id. at 84a-86a.) In addition, she testified, the judicial sale was published in both a paper of general circulation and a legal journal in Lackawanna County. (Id. at 86a-87a.) On cross-examination, Claims Processor agreed she was aware that the First-Class Mail was returned. When asked what the Bureau then did to try to find Ms. Brown, Claims Processor testified that "[u]sually ... [they] try to look through the white pages or if there[ is] a different address and it[ is] return[ed] to sender we do[ not] know if the [person is] not there, why it was returned. It was[ not] refused, so we would look to see" "if she lived at another location." (Id. at 92a.) However, Claims Processor could not answer whether this process "was done in this particular case" because this was not her property and each Bureau claims processor had his or her "own properties, and everyone does...