Detroit Land Development Company Inc v. Wayne County Treasurer ( 2018 )

STATE OF MICHIGAN
COURT OF APPEALS
DETROIT LAND DEVELOPMENT COMPANY, UNPUBLISHED
INC, August 16, 2018
Plaintiff-Appellant,
v No. 338823
Wayne Circuit Court
WAYNE COUNTY TREASURER, LC No. 17-003316-CH
Defendant-Appellee.
Before: SWARTZLE, P.J., and CAVANAGH and M. J. KELLY, JJ.
PER CURIAM.
Plaintiff, Detroit Land Development Company, Inc. (DLD), appeals by right the trial
court order granting summary disposition under MCR 2.116(I)(2) to defendant, Wayne County
Treasurer. For the reasons stated in this opinion, we affirm.
I. BASIC FACTS
In November 2011, DLD acquired the property commonly known as 5852 W. Fort Street,
Detroit, Michigan. Although the tax ID number listed on the quit claim deed was 16000310-1,
that tax ID number was retired and the property was split into two new tax ID numbers:
16000311, with an address of 5852 W Fort Street, and 16000310, with an address of 5872 W.
Fort Street.1
The Treasurer filed a petition for foreclosure on the 5852 W. Fort Street address, and a
judgment of foreclosure was entered by the trial court on March 28, 2013. On August 29, 2013,
the Michigan Land Bank Fast Track Authority purchased the property from the Treasurer. There
is no evidence on the record that DLD contested the foreclosure or otherwise appealed the
judgment of foreclosure.
1
According to the record before us, it is not clear when the City of Detroit retired the tax ID
number listed on DLD’s November 2011 quit claim deed. Based on an affidavit from a city
appraiser, however, it is clear that the property was split starting with the 2009 tax year.
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Subsequently, the Treasurer filed a petition for foreclosure on the 5872 W. Fort Street
property, and a judgment of foreclosure was entered by the trial court on March 28, 2014. On
September 3, 2014, the Michigan Land Bank Fast Track Authority purchased the property from
the Wayne County Treasurer. DLD apparently challenged the foreclosure proceedings with
regard to this property, but its case was dismissed without prejudice after the trial court found
that DLD’s due process rights were not violated and that the foreclosure proceedings and
judgment were valid.
Relevant to this appeal, on February 21, 2017, DLD filed a complaint against the
Treasurer, seeking to quiet title for both Fort Street properties. DLD moved for summary
disposition under MCR 2.116(C)(9) and MCR 2.116(C)(10), asserting that the properties were
prematurely foreclosed, that the County violated due process by failing to take reasonable
additional steps after its mailed notice was returned undeliverable, and its due process was
violated because it did not receive constitutionally adequate notice that the County was dividing,
taking, and selling its property.
In response, the Treasurer argued that DLD’s claim should be dismissed for a number of
reasons, including that it had provided constitutionally adequate notice of the foreclosure
proceeding so DLD’s challenge was nothing more than an improper collateral attack on the 2013
and 2014 judgments of foreclosure. In support of its arguments, the Treasurer provided
documentary evidence indicating that it had mailed notice of the forfeiture for delinquent taxes
and foreclosure proceedings to DLD’s record address,2 that it had published notice in the legal
news for three weeks for each property, and that a process server had attempted to personally
serve notice. Further, the process server personally visited both Fort Street properties and, upon
finding them unoccupied, left notice of the foreclosure proceedings in a conspicuous place on
each property, as demonstrated by an affidavit and a photograph of the notice.
After hearing oral argument on DLD’s motion, the trial court granted the Treasurer
summary disposition for several reasons, including that DLD was not denied due process under
Jones v Flowers, 547 U.S. 220; 126 S. Ct. 1708; 164 L. Ed. 2d 415 (2006), and the entirety of
DLD’s claim was an improper collateral attack.
II. APPELLATE JURISDICTION
The Treasurer raises a jurisdictional challenge. It argues that the order granting summary
disposition is, in effect, a postjudgment order stemming from the 2013 and 2014 judgments of
foreclosure, and so it does not constitute a final order appealable as of right. We disagree.
This Court has jurisdiction of an appeal of right from a final judgment or order, MCR
7.203(A)(1), which is defined in part as “the first judgment or order that disposes of all of the
claims and adjudicates the rights and liabilities of all the parties . . . .” MCR 7.202(6)(i). Here,
the trial court’s order granting the Treasurer summary disposition is the first judgment that
2
DLD’s lawyer confirmed at oral argument that the address used by the Treasurer was the
correct address.
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disposes of all the claims and adjudicates the rights and liabilities of all parties with respect to
DLD’s 2017 lawsuit. The mere fact that DLD’s claim of appeal is, essentially, seeking relief
from the judgments entered in two previous cases does not change the nature of the trial court’s
order in this case. Accordingly, the Treasurer’s challenge to our jurisdiction is without merit.
III. SUMMARY DISPOSITION
A. STANDARD OF REVIEW
The parties dispute whether DLD’s claim in the trial court was an improper collateral
attack on the judgments of foreclosure that were entered in 2013 and 2014. DLD contends that it
is entitled to bring the present lawsuit because the Treasurer did not provide it with
constitutionally adequate notice of the foreclosure proceedings. In response, the Treasurer
contends that it provided DLD was adequate notice. We review de novo a trial court’s decision
on a motion for summary disposition. Barnard Mfg Co, Inc v Gates Performance Engineering,
Inc, 285 Mich. App. 362, 369; 775 NW2d 618 (2009).
B. ANALYSIS
Property tax foreclosures are governed by the General Property Tax Act (GPTA), MCL
211.1 et seq. MCL 211.78k(7) provides that a party may appeal a judgment of foreclosure
within 21 days of its entry. In re Petition by Wayne Co Treasurer for Foreclosure, 478 Mich. 1,
7; 732 NW2d 458 (2007). In general, “[i]f a property owner does not redeem the property or
appeal the judgment of foreclosure within 21 days, then MCL 211.78k(6) deprives the circuit
court of jurisdiction to alter the judgment of foreclosure.” Id. at 8. Rather, a circuit court has
jurisdiction to alter a judgment of foreclosure only in limited circumstances involving the denial
of due process such as when “the foreclosing entity fails to provide constitutionally adequate
notice” of the foreclosure proceeding. Id. at 10–11. Stated differently, the portion of MCL
211.78k that purports “to limit the circuit court’s jurisdiction to modify judgments of foreclosure
is unconstitutional and unenforceable as applied to property owners who are denied due
process.” Id. at 11. And “any proceeding under the act conducted without due process is
invalid.” In re Wayne Co Treasurer, 265 Mich. App. 285, 293; 698 NW2d 879 (2005).
In Sidun v Wayne Co Treasurer, 481 Mich. 503, 509-512; 751 NW2d 453 (2008), our
Supreme Court explained that
Proceedings that seek to take property from its owner must comport with
due process. A fundamental requirement of due process in such proceedings is
“notice reasonably calculated, under all the circumstances, to apprise interested
parties of the pendency of the action and afford them an opportunity to present
their objections.” Mullane v Central Hanover Bank & Trust Co, 339 U.S. 306,
314; 70 S. Ct. 652; 94 L. Ed. 865 (1950). Interested parties are “entitled to have the
[government] employ such means ‘as one desirous of actually informing [them]
might reasonably adopt’ to notify [them] of the pendency of the proceedings.”
Dow v Michigan, 396 Mich. 192; 240 NW2d 450 (1976), quoting Mullane, supra
at 315. That is, the means employed to notify interested parties must be more
than a mere gesture; they must be means that one who actually desires to inform
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the interested parties might reasonably employ to accomplish actual notice.
Mullane, supra at 315. However, “[d]ue process does not require that a property
owner receive actual notice before the government may take his property.” Jones,
supra at 226. In this case, the county treasurer attempted to notify plaintiff of the
foreclosure proceedings, but actual notice was not achieved. Thus, the issue is
whether the methods employed by the county treasurer were sufficient to satisfy
due-process requirements.
A notification method may be reasonable and constitutional if employing
the method is “reasonably certain to inform those affected,” or, when
circumstances do not reasonably permit such notice, if the method employed is
not substantially less likely to provide notice than other customary alternative
methods. Mullane, supra at 315. Notably, Mullane recognized that the
reasonableness of a particular method could vary, depending on what information
the government had. That case concerned a New York law that merely required
notice by publication to inform beneficiaries of a common trust fund that the fund
was subject to judicial settlement. Id. at 309-310. The Court held that while
notice by publication was constitutionally sufficient with regard to beneficiaries
whose interests or addresses were unknown, notice by publication was
insufficient for beneficiaries whose names and addresses were known by the
government. “Where the names and post-office addresses of those affected by a
proceeding are at hand, the reasons disappear for resort to means less likely than
the mails to apprise them of its pendency.” Id. at 318. Notice by publication was
inadequate in the case of known beneficiaries “because under the circumstances it
is not reasonably calculated to reach those who could easily be informed by other
means at hand.” Id. at 319.
Moreover, even if a statutory scheme is reasonably calculated to provide
notice in the ordinary case, the United States Supreme Court has nevertheless
“required the government to consider unique information about an intended
recipient. . . .” Jones, supra at 230. The Court has explained that the “ ‘notice
required will vary with [the] circumstances and conditions.’ ” Id. at 227 (citation
omitted). The government’s knowledge that its attempt at notice has failed is a “
‘circumstance and condition’ that varies the ‘notice required.’ ” Id. (citations
omitted). In such a case, the adequacy of the government’s efforts will be
evaluated in light of the actions it takes after it learns that its attempt at notice has
failed. The Court explained, “[W]hen mailed notice of a tax sale is returned
unclaimed, the State must take additional reasonable steps to attempt to provide
notice to the property owner before selling his property, if it is practicable to do
so.” Id. at 225. “What steps are reasonable in response to new information
depends upon what the new information reveals.” Id. at 234. For example, when
certified mail is returned as “unclaimed,” it means either that the addressee still
lives at that address but was not home when the mail was delivered and did not
retrieve it, or that the addressee no longer resides at that address. Id. Under those
circumstances, a reasonable follow-up measure aimed at the first possibility
would be to resend the notice by regular mail. Id. Reasonable follow-up
measures directed at the possibility that the addressee had moved would be to post
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notice on the front door or to send notice addressed to “occupant.” Id. at 235.
Although the government must take reasonable additional steps to notify the
owner, it is not required to go so far as to “search[] for [an owner’s] new address
in the . . . phonebook and other government records such as income tax rolls.” Id.
at 235-236. Ultimately, the Court did not prescribe the form of service that
should be adopted in any given case, but simply observed that for purposes of its
holding—which found the state’s follow-up actions insufficient—it sufficed that
additional reasonable steps were available for the state to employ before taking
the property. Id. at 238.
DLD argues that it was provided with insufficient notice. First, it contends that the notice
provided was not reasonably calculated to apprise it of the impending foreclosure because the
Treasurer knew that DLD did not actually receive notice. However, although there is evidence
that the mailed notice was not received,3 there is no indication in the record that the Treasurer
was aware that the newspaper notice and the notice posted in a conspicuous place on the
properties were not seen by DLD. Moreover, actual notice is not required. Sidun, 481 Mich. at
509.
DLD also contends that the Treasurer took no additional, reasonable steps to notify it
about the foreclosure proceedings after the certified mail was returned as undeliverable. The
record belies that claim. The Treasurer submitted documentary evidence that, in addition to
mailing notice to DLD’s record address, it published notice in the Detroit Legal News for three
consecutive weeks for each property. A process server also went to each property to personally
deliver notice. The server averred that it found the property unoccupied and abandoned, but
posted notice in a conspicuous place and took a photograph of the notice. Thus, contrary to
DLD’s contentions, the Treasurer took additional, reasonable steps to provide it with notice
about the foreclosure proceedings.
DLD suggests that attempted personal service, posting notice on the property, and
publishing notice in the newspaper is insufficient and references our Supreme Court’s opinion in
Sidun. In Sidun, our Supreme Court held that the Wayne County Treasurer’s efforts to provide
notice of foreclosure proceedings did not satisfy due process. Id. at 515. The Court
acknowledged that the Treasurer had provided the plaintiff notice via certified mail, published
notice in the public-notice section of a community newspaper, and posted notice on the property
because the representative was unable to personally meet with the occupant. Id. at 507. In other
words, the Treasurer took the same steps in Sidun that it did in this case. DLD suggests that, as a
result, we should reach the same outcome as the Sidun Court.
We conclude, however, that the decision in Sidun is distinguishable. In that case, the
property had two owners. Id. at 505. The deed for the property listed both owners, and it listed
an address associated with each owner. Id. at 505-506. Despite having access to the plaintiff’s
address, the Treasurer only sent notice to the address listed for the plaintiff’s co-owner. Id. at
3
The mail log for 5852 W Fort Street indicates that it is “unknown” what happened to the notice.
The mail log for 5872 W Fort Street indicates that the mail was “undeliverable as addressed.”
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515. In reversing, our Supreme Court explained that “[i]f the government provides notice by
mail, due process requires it to be mailed to an ‘address reasonably calculated to reach the person
entitled to notice.’ ” Id. at 514, quoting Dow, 396 Mich. at 211. And, because the deed listed a
separate address for the plaintiff, the Treasurer’s failure to use that listed and known address to
send notice of the foreclosure proceedings to the plaintiff was constitutionally insufficient. Id. at
515.
Unlike Sidun there is no evidence indicating that the Treasurer was aware of a different
address for DLD. The address listed on DLD’s deed was, in fact, the same address that the
Treasurer used to send notice to DLD. Moreover, although DLD presented evidence that it was
not notified that its property was split into two different tax ID numbers by the City of Detroit,
there is no evidence suggesting that the Treasurer was aware that DLD had not been notified. In
other words, unlike the Sidun, in this case, the Treasurer was not actually aware of additional
information that would have aided it in providing DLD with notice of the foreclosure
proceedings. Instead, the record reflects that the Treasurer used the information it had available
to provide DLD with notice of the foreclosure proceedings against both Fort Street properties.
And, although the notices did not include the same tax ID number as listed on DLD’s deed, the
legal description for both properties overlapped with the legal description provided on DLD’s
deed, and DLD was identified in the notices as the owner of the properties.
In sum, based on the information that it had available, the Treasurer made a number of
attempts to notify DLD about the foreclosure proceedings against it. It sent notice to DLD via
certified first class mail. Although the result of that mailing was unknown with respect to one
property and returned as undeliverable as addressed in another, the Treasurer made additional,
reasonable efforts to notify DLD about the foreclosure proceedings. Rather, for three
consecutive weeks, it published notice in the Detroit Legal News, identifying the properties by
their legal descriptions, their common known address, their tax ID number, and that DLD was
the owner. In addition, a process server for the Treasurer personally visited the properties and,
upon finding that the properties were unoccupied and abandoned structures, he posted notice of
the foreclosure proceedings in a conspicuous manner on the properties and photographed the
same. These efforts, under the facts of this case, were sufficient to satisfy due process. And
DLD’s remaining arguments, such as whether various provisions of the GPTA were complied
with constitute an impermissible collateral attack under the present circumstances. Accordingly,
the trial court did not err by finding it lacked jurisdiction over DLD’s claim.4
Affirmed. The Treasurer may tax costs as the prevailing party. MCR 7.219(A).
/s/ Brock A. Swartzle
/s/ Mark J. Cavanagh
/s/ Michael J. Kelly
4
Given our resolution, we decline to address the alternative arguments raised by the Treasurer to
affirm the trial court’s order.
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