JD Wealth v. U.S. Bank Nat'l Ass'n

681 S.W.3d 320

JD WEALTH LLC, Respondent,

v.U.S. BANK NATIONAL ASSOCIATION, ND, et al., Appellant.

No. ED 111572

Missouri Court of Appeals, Eastern District, DIVISION TWO.

FILED: December 19, 2023

Appeal from the Circuit Court of St. Louis County, Honorable Dean P. Waldemer, Judge

For Appellant: Charles S. Pullium, 612 Spirit Dr., St. Louis, MO 63005.

For Respondent: Justin A. Welply, 120 S. Central Ave., Ste. 700, St. Louis, MO 63105.

KURT S. ODENWALD, Presiding Judge

Introduction

This appeal addresses rights of parties in tax foreclosure sales on property located in St. Louis County, Missouri—in particular, the conflicting rights of persons having an interest in the tax-foreclosed properties and the rights of those persons purchasing the properties at the tax foreclosure sale.

U.S. Bank National Association, ND ("U.S. Bank") appeals from the trial court’s judgment quieting title in the subject property ("Property") in favor of JD Wealth LLC ("JD Wealth") following a tax foreclosure sale. U.S. Bank was the lender on a Deed of Trust whose lien on the Property was extinguished in a quiet-title action after JD Wealth purchased the Property at a tax foreclosure sale. U.S. Bank raises three points on appeal. First, U.S. Bank argues the trial court erred in quieting title in favor of JD Wealth because the tax sale was invalid in that the St. Louis County Collector of Revenue ("Collector") did not provide due-process notice of the tax sale to U.S. Bank or to the trustee on the Deed of Trust, U.S. Bank Trust Company, National Association ("U.S. Bank Trustee"). U.S Bank next contends the trial court erred in quieting title because JD Wealth failed to provide Section 140.405 ¹ right-of-redemption notice to U.S. Bank Trustee, the trustee named on the Deed of Trust. Lastly, U.S. Bank maintains the trial court erred by misapplying Section 140.330 in permitting JD Wealth to dismiss U.S. Bank Trustee as a defendant because U.S. Bank Trustee was a necessary party to the quiet-title action.

Because the lender and beneficiary on a deed of trust is the entity holding a security interest in the property, not the trustee, JD Wealth was not required to provide Section 140.405 right-of-redemption notice to U.S. Bank Trustee. Moreover, U.S. Bank Trustee’s only role was to forward the notice to U.S. Bank, and U.S. Bank stipulated that it received the right-of-redemption notice directly from JD Wealth. Therefore, the trial court properly found that JD Wealth’s failure to send the right-of-redemption notice to U.S. Bank Trustee did not adversely impact U.S. Bank’s re- demption rights. Accordingly, the trial court did not err in finding the tax sale valid and quieting title in favor of JI) Wealth. Correspondingly, U.S. Bank Trustee was not a necessary party to the quiet-title action because U.S. Bank, the Deed of Trust beneficiary, was a party to the action. For that reason, the trial court did not err in permitting JD Wealth to dismiss U.S. Bank Trustee. Finally, we hold the tax sale was not invalidated by the Collector’s alleged failure to send notice of the tax sale to U.S. Bank or U.S. Bank Trustee because such notice is not required by the Jones-Munger Act,² which requires only that the tax-sale purchaser send notice of the right to redeem before any lienholder’s property rights are extinguished, and it is uncontroverted that U.S. Bank received the required due-process notice from JD Wealth the statutory redemption period. The trial court thus did not err in quieting title in favor of JD Wealth. Accordingly, we affirm the trial court’s judgment.

Factual and Procedural History

We present the facts in the light most favorable to the trial court’s judgment.³

U.S. Bank was the holder of a Deed of Trust executed by the Former Owners of the Property in September 2009. The Deed of Trust identified the Former Owners as the Grantor and U.S. Bank as the Grantee. The Deed of Trust identified U.S Bank as the Lender and U.S. Bank Trustee as the Trustee. The Deed of Trust listed separate mailing addresses for U.S. Bank and U.S. Bank Trustee.

The Former Owners failed to pay property taxes, and the Collector conducted a tax sale on August 24, 2020, pursuant to the administrative procedures of the Jones-Munger Act governing tax foreclosures in St. Louis County. A representative for U.S. Bank ("U.S. Bank Representative") testified that U.S. Bank received no notice of the tax sale before it occurred. U.S. Bank maintains the Collector provided no notice of the tax sale to either U.S. Bank or U.S. Bank Trustee.

As the highest bidder at the tax sale, JD Wealth purchased the Property for $30,000 and received a tax certificate, entitling JD Wealth to acquire title to the Property if unredeemed by any other interest holders. Per its obligations under Section 140.405, JD Wealth conducted a title search and discovered several lienholders, including U.S. Bank. According to the parties’ stipulated facts, JD Wealth mailed Section 140.405 redemption-right notices to U.S. Bank and other lienholders.

U.S. Bank timely received the notice of redemption rights for the Property from JD Wealth. But U.S. Bank mishandled the documentation internally such that notice was never forwarded to the proper department. As a result of its mishandling of the notice, U.S. Bank failed to redeem its interest in the Property.

JD Wealth did not provide notice of redemption rights to U.S. Bank Trustee. A representative from JD Wealth ("JD Wealth Representative") testified that JD Wealth attempted to give notice to U.S Bank Trustee but mistakenly sent the notice of redemption rights to the wrong address. When the mistake was brought to JD Wealth’s attention at trial, the JD Wealth Representative stated that JD Wealth did not make a follow-up inquiry as to whether U.S. Bank Trustee received the notice of redemption rights because "the lender [U.S. Bank] received their copy [of the notice] so we felt that our duty was sufficiently met."

As required by statute, JD Wealth submitted an affidavit to the Collector attesting that it provided Section 140.405 notice of redemption rights to all parties entitled to such notice in the manner required by law. JD Wealth thereafter obtained and recorded a Collector’s Deed for the Property.

On February 9, 2022, JD Wealth initiated the present action to quiet title in the Property as well as for ejectment. Initially, JD Wealth named U.S. Bank Trustee as a defendant and did not name U.S. Bank as a defendant. JD Wealth moved for default judgment against all defendants. Counsel for U.S. Bank and U.S. Bank Trustee entered appearance for both parties and filed a joint answer with the consent of JD Wealth. The trial court entered a default judgment against all defendants except U.S. Bank and U.S. Bank Trustee.

The case proceeded to a bench trial in January 2023. The day before trial, JD Wealth dismissed U.S. Bank Trustee and proceeded solely against U.S. Bank. At trial, the two parties adduced evidence through exhibits, the testimony of their representatives, and stipulations reprising the aforementioned facts.⁴ JD Wealth submitted its Collector’s Deed as prima facie evidence of its superior interest in the Property. The U.S. Bank Representative testified that JD Wealth’s failure to provide notice of redemption rights to U.S. Bank Trustee deprived U.S. Bank of the opportunity to receive notice of redemption rights from U.S Bank Trustee. The U.S. Bank Representative further testified that U.S. Bank relies on U.S. Bank Trustee to forward redemption notices in a manner that facilitates its redemption of tax-sale properties, thereby protecting U.S Bank from losing its interest in such properties. The U.S. Bank Representative acknowledged that U.S Bank could not speak for what U.S. Bank Trustee did or would have done in this scenario but that, in his experience, U.S. Bank Trustee typically forwards notices of summons, defaults, and redemption rights to U.S. Bank. The U.S. Bank Representative further testified that U.S. Bank did not receive any notice from the Collector prior to the tax sale occurring. The U.S. Bank Representative acknowledged that JD Wealth plays no part in when or if U.S. Bank or U.S. Bank Trustee receives notice prior to the tax sale.

Following trial, the trial court entered judgment quieting title in the Property in favor of JD Wealth. The trial court found that the facts conclusively showed U.S. Bank received notice of its light of redemption from JD Wealth but failed to exercise that right within the statutory period. The trial court further found no evidence was adduced indicating what role or interest, if any, U.S. Bank Trustee would have in the tax-sale proceeding other than forwarding the statutory notice of redemption to U.S. Bank, which had already received such notice directly from JD Wealth. In quieting title in favor of JD Wealth, the trial court concluded that neither U.S. Bank nor U.S. Bank Trustee had any right, title, lien, or interest in the Property. U.S. Bank now appeals.

Points on Appeal

U.S. Bank raises three points on appeal. Point One asserts the trial court erred in quieting title in the Property in favor of JD Wealth because the tax foreclosure sale was invalid in that the Collector did not provide notice of the sale to U.S. Bank or U.S. Bank Trustee, resulting in a violation of U.S. Bank’s constitutional due-process rights. Point Two argues the trial court erred in quieting title in favor of JD Wealth by misapplying the law as to unclaimed certified mail. Specifically, US Bank maintains that JD Wealth failed to provide the requisite statutory notice of its purchase of the Property under Section 140.405 to U.S. Bank Trustee, which was listed as Trustee on the Deed of Trust, and that such failure invalidated the foreclosure sale and voided the Collector’s Deed. Point Three posits the trial court erred in quieting title in favor of JD Wealth by misapplying the law with respect to JD Wealth’s dismissal of U.S. Bank Trustee ...