Ex parte J.C. King III PETITION FOR WRIT OF CERTIORARI TO THE COURT OF CIVIL APPEALS ( 2023 )

Rel: May 19, 2023
Notice: This opinion is subject to formal revision before publication in the advance sheets of Southern
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SUPREME COURT OF ALABAMA
OCTOBER TERM, 2022-2023
_________________________
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_________________________
Ex parte J.C. King III
PETITION FOR WRIT OF CERTIORARI
TO THE COURT OF CIVIL APPEALS
(In re: Anderson Realty Group, LLC
v.
J.C. King III)
(Jefferson Circuit Court: CV-20-903660;
Court of Civil Appeals: 2201014)
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STEWART, Justice.
This case concerns the redemption of residential real property sold
at a tax sale, and, in particular, it concerns the definition of the term
"preservation improvements" as used in the applicable redemption
statute, § 40-10-122, Ala. Code 1975. The property at issue ("the
property") had served as a rental home located in a residential
neighborhood. The property owner, J.C. King III, stopped paying
property taxes in 2015 after a fire extensively damaged the property and
rendered it uninhabitable. The State of Alabama purchased the property
at a 2016 tax sale, and in 2019 the property was ultimately sold in its
uninhabitable state to Anderson Realty Group, LLC ("ARG").
ARG spent $88,812 to extensively renovate and restore the property
to a habitable condition,1 and in 2020 it filed a complaint in the Jefferson
Circuit Court seeking to quiet title to the property. King filed a
counterclaim to redeem the property and disputed whether the extensive
renovations to the property could be considered "preservation
improvements" due to be included in the redemption amount pursuant to
1ARG installed new framing, roofing, wiring, plumbing, air
conditioning, windows, doors, siding, and gutters.
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§ 40-10-122(c). The trial court agreed with King, holding that
"preservation improvements" included only those amounts expended by
ARG to keep the property from further deterioration, 2 the value of which
it concluded was $10,000, and it entered a judgment setting the
redemption amount accordingly. ARG appealed, and the Court of Civil
Appeals reversed that judgment, holding that the trial court had erred in
limiting the "preservation improvements" to the cost of repairs
undertaken to keep the property in the same condition it was in at the
time of the tax sale. Anderson Realty Grp., LLC v. King, [Ms. 2201014,
June 10, 2022] __ So. 3d __, __ (Ala. Civ. App. 2022). We granted King's
petition for the writ of certiorari to consider, as a matter of first
impression, the meaning of the phrase "preservation improvements" as
defined in § 40-10-122(d).
Standard of Review
" 'On certiorari review, this Court accords no presumption of
correctness to the legal conclusions of the intermediate appellate court.
2There was testimony that ARG did $10,000 to $12,000 worth of
work that could be characterized as merely maintaining the property, i.e.,
general clean-up work, securing tarps over the roof, landscaping, and
lawn maintenance.
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Therefore, we must apply de novo the standard or review that was
applicable in the Court of Civil Appeals.' " Ex parte Patel, 988 So. 2d 957,
959 (Ala. 2007) (quoting Ex parte Toyota Motor Corp., 684 So. 2d 132,
135 (Ala. 1996)). Here, the question whether the trial court properly
interpreted the phrase "preservation improvements" is a question of law
subject to de novo review. See McKinney v. Nationwide Mut. Ins. Co.,
33 So. 3d 1203, 1206 (Ala. 2009) (noting that a trial court's interpretation
of a statute is a question of law reviewed de novo).
Analysis
When property is sold at a tax sale to a party other than the state,
a process for the redemption of that property is provided by § 40-10-122.
Generally, to redeem property under that section, the party seeking
redemption must pay an amount of money equal to the amount for which
the property was sold (including any funds paid in excess of the
minimum-bid amount), plus any subsequent taxes paid by the purchaser
at the tax sale, with interest -- currently, payable at the rate of 8% per
annum from the date of the sale -- as well as other costs and fees. § 40-
10-122(a). Moreover, the requirements for statutory redemption of
property sold at a tax sale had generally remained the same since the
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earliest enactment of the statute, regardless of the character or location
of the property at issue. See, e.g., § 608, Ala. Code 1886; § 3111, Ala.
Code 1923; and Title 51, § 305, Ala. Code 1940.
In 2002, however, the legislature passed Act No. 2002-426, Ala.
Acts 2002 ("the 2002 amendment"), which amended § 40-10-122 to
require that additional amounts be paid to redeem property sold at a tax
sale under two distinct circumstances. First, if the property in question
is located within an "urban renewal or urban redevelopment project area
designated pursuant to Chapters 2 or 3 of Title 24 [of the Alabama
Code]," the redemptioner must pay the cost of certain insurance
premiums associated with the property paid by the purchaser and must
also pay for the value of all "permanent improvements" made on the
property by the purchaser. § 40-10-122(b). "Permanent improvements"
are broadly defined by § 40-10-122(d) to include "all repairs,
improvements, and equipment attached to the property as fixtures."
Second, if the property contains a residential structure, the redemptioner
must pay certain insurance premiums associated with the property paid
by the purchaser and must also pay for the value of all "preservation
improvements" made on the property by the purchaser. § 40-10-122(c).
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"Preservation improvements" are defined as "improvements made to
preserve the property by properly keeping it in repair for its proper and
reasonable use, having due regard for the kind and character of the
property at the time of sale." § 40-10-122(d).
The parties agree that this case is governed by § 40-10-122(c). They
disagree, however, as to the meaning of the term "preservation
improvements." When construing statutory language, the following
principles are applicable:
" ' " '[I]t is this Court's
responsibility in a case
involving statutory
construction to give effect to
the legislature's intent in
enacting a statute when
that intent is manifested in
the wording of the statute
…. " ' " '[I]f the language of
the statute is unambiguous,
then there is no room for
judicial construction and
the clearly expressed intent
of the legislature must be
given effect.' " ' " … In
determining the intent of
the legislature, we must
examine the statute as a
whole and, if possible, give
effect to each section.'
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" ' " Ex parte Exxon Mobil Corp., 926 So.
2d 303, 309 (Ala. 2005). Further,
" ' " 'when determining
legislative intent from the
language used in a statute,
a court may explain the
language, but it may not
detract from or add to the
statute…. When the
language is clear, there is
no room for judicial
construction….'
" ' "Water Works & Sewer Bd. of Selma
v. Randolph, 833 So. 2d 604, 607 (Ala.
2002)." '
"[Archer v. Estate of Archer, 45 So. 3d 1259, 1263 (Ala. 2010)]
([q]uoting Ex parte Birmingham Bd. of Educ., 45 So. 3d 764,
767 (Ala. 2009)[).] Similarly, in Lambert v. Wilcox County
Commission, 623 So. 2d 727, 729 (Ala. 1993), the Court stated:
" ' "The fundamental rule of
statutory construction is that this
Court is to ascertain and effectuate the
legislative intent as expressed in the
statute…. In this ascertainment, we
must look to the entire Act instead of
isolated phrases or clauses … and
words are given their plain and usual
meaning…. Moreover, just as statutes
dealing with the same subject are in
pari materia and should be construed
together, … parts of the same statute
are in pari materia and each part is
entitled to equal weight." '
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"(Quoting Darks Dairy, Inc. v. Alabama Dairy Comm'n, 367
So. 2d 1378, 1380-81 (Ala. 1979).)"
First Union Nat'l Bank of Florida v. Lee Cnty. Comm'n, 75 So. 3d 105,
111-12 (Ala. 2011).
The legislative intent of the 2002 amendment is evident from its
express reference to "urban renewal" and "urban redevelopment" project
areas authorized pursuant to Chapters 2 and 3 of Title 24, Ala. Code
1975. Those chapters are aimed at reducing urban blight, which,
according to legislative findings, "impair economic values and tax
revenues, cause an increase in and spread of disease and crime and
constitute a menace to the health, safety, morals, and welfare of residents
of the state." § 24-2-1(a)(2), Ala. Code 1975; see also § 24-3-1(a)(1), Ala.
Code 1975. For example, the stated purpose of an urban-renewal project
is to create a workable program for
"dealing with the problem of slums and blighted, deteriorated,
or deteriorating areas within the community and for the
establishment and preservation of a well-planned community
with well organized residential neighborhoods of decent
homes and suitable living environment for adequate family
life[] … [and] to eliminate and prevent the development or
spread of slums and blight and deterioration [and] to
encourage needed rehabilitation …."
§ 24-3-6, Ala. Code 1975.
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Furthermore, abandoned, tax-delinquent properties are associated
with blight and the deterioration of neighborhoods. See, e.g., § 24-2-
2(c)(8), Ala. Code 1975 (defining "blighted property" to include "property
that has tax delinquencies exceeding the value of the property"); § 24-9-
2, Ala. Code 1975 (stating that a purpose of the creation of the Alabama
Land Bank Authority is acquire tax-delinquent properties in order to
rehabilitate the properties and remove blight). However, as
commentators have recognized, the redevelopment and rehabilitation of
tax-delinquent properties can be problematic. See Andrew S. Olds,
Comment, Saving Alabama's Urban Neighborhoods: Revisions to
Alabama's Property Tax Sale Laws, 44 Cumb. L. Rev. 497, 501-02 (2013-
2014). For example, a tax-sale purchaser will be understandably
reluctant to invest funds to restore a property when the previous owner
retains the right of redemption.3 The 2002 amendment, therefore, was
3As one commentator has explained:
"Under Alabama's tax sale redemption laws, a private
developer who buys a tax certificate at the tax sale generally
must wait for a minimum of six years before he can cut off the
right of redemption and bring a successful quiet title action.
As a result of these obstructions, properties that are otherwise
good candidates for redevelopment are out of the investor's
reach. [Such properties] often sit vacant until they develop
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designed to alleviate risks inherent in a tax-sale purchaser's
improvement of a property located in an urban-renewal or urban-
redevelopment project area or of a property containing a residential
structure. For instance, a redemptioner of a property in an urban-
renewal project area would be required to reimburse the tax-sale
purchaser for at least the value of "all repairs, improvements, and
equipment attached to the property as fixtures." § 40-10-122(d) (defining
"permanent improvements").
Likewise, § 40-10-122(c), which was enacted as part of the 2002
amendment, must also be understood as an anti-blight measure intended
to stem the deterioration of residential-housing stock. To that end, the
2002 amendment encourages tax-sale purchasers to preserve residential
properties by requiring redemptioners to reimburse a tax-sale purchaser
for the value of "preservation improvements" made to keep such
catastrophic roof leaks or transient interlopers set fire to the
properties."
Andrew S. Olds, Comment, Saving Alabama's Urban Neighborhoods:
Revisions to Alabama's Property Tax Sale Laws, 44 Cumb. L. Rev. 497,
502 (2013-2014) (footnotes omitted).
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residential property "in repair for its proper and reasonable use." § 40-
10-122(d) (defining "preservation improvements").
Notably, in defining "preservation improvements," the legislature
turned to language from long-standing decisional law concerning
foreclosure redemptions. Section 40-10-122(d) defines "preservation
improvements" as "improvements made to preserve the property by
properly keeping it in repair for its proper and reasonable use, having
due regard for the kind and character of the property at the time of sale."
This definition is drawn directly from the definition of "permanent
improvements," as that term is used in the context of foreclosure
redemptions, and, thus, provides us with an idea as to what the
legislature intended by the language used to define "preservation
improvements" in § 40-10-122(d).
The redemption of property that has been foreclosed upon is
governed by § 6-5-253, Ala. Code 1975. That section requires a
redemptioner to pay "lawful charges," which include the value of
"[p]ermanent improvements." § 6-5-253(a)(1). The definition of
"permanent improvements" as used in foreclosure-redemption cases was
established by this Court in Rodgers v. Dixon, 239 Ala. 72, 74, 193 So.
11SC-2022-0653
741, 743 (1940), and was most recently restated by this Court in E.B.
Investments, L.L.C. v. Pavilion Development, L.L.C., 212 So. 3d 149, 167
(Ala. 2016):
" ' "We have indicated that
necessary permanent improvements
have a well defined meaning in this
jurisdiction, which is to preserve the
property by properly keeping it in
repair for its proper and reasonable
use, having due regard for the
necessities of each subject as to its kind
and character. This includes not only
ordinary repairs to restore the property
after injury, decay, storm, flood, or fire,
etc., but also valuable and useful
additions and improvements to the
property suited to its reasonable
necessities, character and use. … As
to this each case is ruled by its facts."
" '[Rodgers v. Dixon], 239 Ala. [72,] 74, 193 So.
[741,] 743 [(1940)]. In Smith v. Sulzby, 205 Ala.
301, [303,] 87 So. 823[, 824] (1921), this Court
stated: "An improvement, generally speaking, is
anything that enhances the value of the land." '
"Moore v. Horton, 491 So. 2d 921, 923 (Ala. 1986)."
(Emphasis added.) Since 1940, Alabama courts have applied the above
language on numerous occasions. For example, in Moore v. Horton, 491
So. 2d 921 (Ala. 1986), the Court, relying on Rodgers, addressed and
rejected an argument -- like that made by King in this case -- that
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"permanent improvements" should not include improvements made to
the property beyond what was necessary to keep it from further
deterioration during the redemption period. 491 So. 2d at 923.
On direct appeal of this case to the Court of Civil Appeals, that court
recognized that, because the definition of "preservation improvements" is
taken from essentially the same definition of "permanent improvements,"
as used and applied for more than 80 years in Alabama decisional law
regarding foreclosure redemption, "the legislature must have intended
that 'preservation improvements' have the same meaning as ascribed by
the Rodgers Court to the term 'permanent improvements' under the
foreclosure-redemption statute, § 6-5-253." Anderson, __ So. 3d at ___.
The majority explained:
"It is … a rule of statutory construction that statutes
should be construed in reference to the principles of the
common law. Dennis v. State, 40 Ala. App. 182, 185, 111 So.
2d 21, 24 (1959); see also Weaver v. Hollis, 247 Ala. 57, 60, 22
So. 2d 525, 528 (1945) (noting that statutes must be read 'in
the light of the common law'); Standard Oil Co. v. City of
Birmingham, 202 Ala. 97, 98, 79 So. 489, 490 (1918)
('[C]ommon-law words [are to be construed] according to their
common-law meaning.'); Cook v. Meyer Bros., 73 Ala. 580, 583
(1883) ('[T]he common law prevails, save so far as it is
expressly or by necessary implication changed by the
statute.'); Antonin Scalia & Bryan A. Garner, Reading Law:
The Interpretation of Legal Texts 320 (2012) ('The age-old
principle is that words undefined in a statute are to be
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interpreted and applied according to their common-law
meanings.'); cf. Ex parte Christopher, 145 So. 3d 60, 65 (Ala.
2013). …
"Applying these principles, we conclude that, because
the definition of 'preservation improvements' as codified in §
40-10-122(d) is the same definition of 'permanent
improvements' set forth in Rodgers and applied for more than
eighty years, the legislature must have intended that
'preservation improvements' have the same meaning as
ascribed by the Rodgers Court to the term 'permanent
improvements' under the foreclosure-redemption statute, § 6-
5-253.
"Here, the tax-sale purchaser obtained its interest in the
house after a 'massive' fire. ARG, the tax-sale purchaser's
successor in interest, then spent a considerable amount of
money toward restoring the house and surrounding property
to its previous condition for its 'proper and reasonable use,'
i.e., a sound, habitable, single-family dwelling. § 40-10-
122(d). Alabama courts have consistently required one
seeking to redeem property that has been foreclosed upon to
pay not only the costs for ordinary repairs to restore the
property after, among other things, a fire 'but also [to pay for]
valuable and useful additions and improvements to the
property suited to its reasonable necessities, character and
use.' Rodgers, 239 Ala. at 74, 193 So. at 743. Therefore, we
conclude that the trial court erred in limiting ARG to the
recovery of the cost of repairs undertaken to keep the property
in the same condition it was in at the time of the tax sale."
Anderson, __ So. 3d at __.
We agree with the above analysis. Consistent with the purpose of
the 2002 amendment of reducing residential blight, the legislature
required redemptioners of property containing a residential structure to
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pay the value of "preservation improvements," a term it defined by
adopting language that this Court has previously interpreted to mean
"valuable and useful additions and improvements to the property,"
Rodgers, 239 Ala. at 74, 193 So. at 743, including improvements beyond
those necessary to merely prevent further deterioration. Moore, 491 So.
2d at 923. Here, ARG engaged in the precise conduct that the 2002
amendment was intended to encourage -- it invested substantial funds to
restore an uninhabitable, abandoned house located in a residential
neighborhood to its "proper and reasonable use" as a sound and habitable
single-family dwelling. § 40-10-122(d). Accordingly, we agree that the
trial court erred in limiting ARG to the recovery of the cost of repairs to
keep the property in the same condition it was in at the time of the tax
sale. 4
Conclusion
For the above reasons, the judgment of the Court of Civil Appeals
is affirmed.
AFFIRMED.
4We
make no judgment as to the precise amount due to redeem the
property or as to the value of the "preservation improvements."
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Parker, C.J., and Shaw, Wise, Bryan, Sellers, Mendheim, Mitchell,
and Cook, JJ., concur.
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