in-re-the-petition-of-john-oberleas-for-issuance-of-tax-deed-tax-sale ( 2014 )

Pursuant to Ind. Appellate Rule 65(D), this
Memorandum Decision shall not be
regarded as precedent or cited before any
court except for the purpose of
establishing the defense of res judicata,
collateral estoppel, or the law of the case.
ATTORNEYS FOR APPELLANT:
Jul 29 2014, 10:39 am
CRAIG D. DOYLE
AMANDA J. PORTER
KURT V. LAKER
Doyle Legal Corporation, P.C.
Indianapolis, Indiana
IN THE
COURT OF APPEALS OF INDIANA
IN RE: THE PETITION OF )
JOHN OBERLEAS FOR ISSUANCE )
OF TAX DEED, )
)
TAX SALE CERTIFICATES )
#801063, 801066, 801067, 801068, )
)
PARCEL NO. 006-00168-00; 006-01232-00 )
006-01233-00; 006-01234-00 )
)
Appellee-Respondent, )
_________________________________________ )
RUSHMORE LOAN MANAGEMENT )
SERVICES, LLC, )
)
Appellant-Petitioner, )
)
vs. ) No. 80A05-1402-MI-70
)
JOHN OBERLEAS, )
)
Appellee-Respondent. )
APPEAL FROM THE TIPTON CIRCUIT COURT
The Honorable Thomas R. Lett, Judge
Cause No. 80C01-1009-MI-460
July 29, 2014
MEMORANDUM DECISION – NOT FOR PUBLICATION
BAKER, Judge
Rushmore Loan Management Services, LLC (Rushmore) appeals from the trial
court’s denial of its Indiana Trial Rule 60(B) motion, in which it asked the trial court to
set aside an order directing issuance of tax deeds and the tax sale of a property in which it
had obtained an interest. Rushmore contends that property owner John Oberleas’s tax
deeds ought to be declared invalid because of his failure to substantially comply with the
notice provisions in Indiana Code sections 6-1.1-25-4.5 and -4.6 and to provide the
record owners and those with substantial property interest in the property due process.
Notwithstanding Rushmore’s contention, the evidence demonstrates that Rushmore’s
motion was not filed within a reasonable time as required by Indiana Trial Rule 60(B).
Therefore, we affirm the trial court’s denial of Rushmore’s motion.
FACTS
Prior to the proceedings related to this case, Nedra J. Thomas and Virgil L. Hayes
owned real property (the Property), consisting of five parcels collectively known as 1118
South 725 West, Goldsmith, Indiana. Thomas and Hayes executed a note in 2008
promising to repay a loan from Taylor, Bean, & Whitaker Corp. The note was secured
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by a mortgage and held all five parcels of 1118 South 725 West, including the residence.
The mortgage was then assigned to BAC Home Loans on April 8, 2010; Bank of
America, N.A. is the successor by merger to BAC.
On October 4, 2010, four of the five parcels of the Property owned by Thomas and
Hayes were offered for tax sale because the taxes on the Property were not paid in a
timely fashion. Oberleas, who lived next door to the Property, was the high bidder at the
tax sale and was issued a tax sale certificate for each of the four parcels that he
purchased. The parcels essentially comprised the land surrounding the residence (e.g. the
yard and the garage), but not the residence itself.
In a letter dated July 25, 2011, Oberleas sent notice of his purchase (4.5 Notice)
via certified mail to the record owners, Thomas and Hayes, and to those who maintained
a substantial property interest in the Property (including BAC) pursuant to Indiana Code
section 6-1.1-25-4.5.1 The 4.5 Notice was sent to Thomas and Hayes at an address in
Muncie that Oberleas’s lawyer obtained through the Tipton Auditor’s Office. However,
the letter was returned to Oberleas unclaimed, meaning that Thomas and Hayes never
received it. There is no indication in the record that any of the other 4.5 Notices sent to
those with a substantial interest in the Property were not received.
1
Indiana Code section 6-1.1-25-4.5 requires notice of a tax sale to be sent via certified mail, within nine
months of the sale, to the owner of record at the last address as indicated by the county auditor and to any
person with substantial property interest of public record. It also specifies the minimum requirements for
such a notice, such as the street address or common description of the land, the parcel number of the tract,
the date the redemption period expires, etc.
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The 4.5 Notice letter explained to the parties that Oberleas had purchased four
parcels of the Property at the tax sale and that the redemption period expired on October
4, 2011. The notice contained the parcel numbers of the lots purchased by Oberleas and
the common address for the Property, although the address was mistakenly missing one
digit. Specifically, the notice read 118 S. 725 W, instead of 1118 S. 725 W.
After the expiration of the redemption period in October, Oberleas filed a verified
petition for tax deeds for the four parcels of the Property he purchased at the tax sale. He
also sent notice of this petition to the interested parties via certified mail (“4.6 Notice”).2
The 4.6 Notice letter stated that the Property had not been redeemed within the one-year
redemption period and that the parties now had 30 days after the petition to file a written
objection. The 4.6 Notice described the Property by including the parcel numbers for the
four lots and the erroneous common address (118 S. 725 W).
The Property was not redeemed within the appropriate time period, and the trial
court ordered issuance of tax deeds on December 8, 2011. Oberleas was then issued the
tax deeds for four parcels of the Property on February 16, 2012.
On September 10, 2012, the trial court entered judgment in rem and entry of
decree of foreclosure in favor of Bank of America against Thomas and Hayes. The
Property was scheduled for a sheriff’s sale, but after Oberleas’s counsel contacted Bank
2
Indiana Code section 6-1.1-25-4.6 provides that “[n]otice of the filing of this petition shall be given to
the same parties and in the same manner as provided in section 4.5 of this chapter . . . Any person owning
or having an interest in the tract or real property may file a written objection to the petition with the court
not later than thirty (30) days after the petition was filed.”
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of America’s attorney to inform him that Oberleas had acquired the parcels by deed, the
Property was not sold at the sheriff’s sale.
Bank of America subsequently transferred the note, mortgage, and judgment to
Rushmore on June 15, 2013. Rushmore then filed its Rule 60(B) motion to set aside its
earlier order regarding the issuance of tax deeds and sale on September 9, 2013. The trial
court denied Rushmore’s motion.
Rushmore now appeals.
DISCUSSION AND DECISION
This Court reviews the denial of a Trial Rule 60(B) motion for an abuse of
discretion. G.B. v. State, 715 N.E.2d 951, 952 (Ind. Ct. App. 1999). We will not find an
abuse of discretion unless the trial court’s decision is clearly against the logic and effect
of the facts and circumstances before it. Id. at 953. “On a motion for relief from
judgment, the burden is on the movant to demonstrate that relief is both necessary and
just.” Id.
Rushmore filed its motion asking the trial court to set aside the order directing
issuance of tax deeds and tax sale pursuant to Trial Rule 60(B)(6). Motions filed
pursuant to this subsection must be filed within a “reasonable time.” T.R. 60(B). The
determination of what constitutes a reasonable time varies with the circumstances of each
case. Levin v. Levin, 645 N.E.2d 601, 604 (1994). Relevant to the question of timeliness
is the basis for the moving party’s delay and prejudice to the party opposing the motion.
Id.
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Here, Rushmore claims that its motion was filed within a reasonable time. In
particular, the record demonstrates that Rushmore filed its Trial Rule 60(B) motion on
September 9, 2013, over 18 months after Oberleas received the tax deeds to the parcels of
Property. Rushmore claims that its motion was filed within a reasonable time because: 1)
Rushmore filed its motion within three months of acquiring an interest in the Property,
which Rushmore claims is not unreasonable given the difficulty a mortgagee may have
connecting a tax sale notice with an erroneous property address to a particular mortgage
loan; and 2) This delay did not result in prejudice because Oberleas will still retain a lien
against the Property parcels in the event that the deeds are invalidated.
We find these arguments, particularly the former, unavailing and agree with
Oberleas that the delay is unreasonable. While we do not condone the errors made by
Oberleas and caution that exactitude is important when recording and notifying others of
property interests, Rushmore’s challenge simply comes too late.
One of the factors we consider when assessing whether or not a motion was filed
within a reasonable time is the basis for the moving party’s delay. Here, Rushmore was
not a party in interest during the time of the tax sale or even when the deeds were issued.
In fact, Rushmore did not acquire an interest in the Property until 16 months after the
deeds had been issued to Oberleas. When a mortgagee takes an assignment of a
mortgage, he acquires the status of the mortgage at that time. Further, the mortgagee is
charged with constructive notice of all the facts that a proper examination of the record
would show. Keybank Nat’l Ass’n v. NBD Bank, 699 N.E.2d 322, 327 (Ind. Ct. App.
6
1998). The record clearly shows the Oberleas’s tax deeds were recorded in the Auditor’s
Office on February 16, 2012 under an accurate lot number and property description.
Appellant’s App. 91-97. Therefore, Rushmore had constructive notice of Oberleas’s tax
deeds and thus was not a bona fide purchaser, despite an error in the common address.
See Union State Bank v. Williams, 169 Ind. App. 345, 350, 348 N.E.2d 683, 687 (1976).
Had Rushmore checked the record prior to acquiring the mortgage from Bank of
America, it would have been aware that Oberleas was issued tax deeds for four of the five
parcels on the Property.
Additionally, it is apparent that Oberleas suffered prejudice as a result of the
delay. More specifically, for approximately 18 months, Oberleas believed he was the
rightful owner of the parcels and acted accordingly. He has paid taxes and “mowed,
cleared underbrush and weeds, and provided general care to the [p]arcels.” Appellant’s
App. 123.
Finally, this Court recognizes a general public policy interest in having finality
and closure to such transactions. As this Court previously explained, “[i]n ruling on
a T.R. 60(B) motion, the trial court must balance the alleged injustice suffered by the
party moving for relief against the interests of the winning party and societal interest in
the finality of litigation.” Hoosier Health Sys., Inc. v. St. Francis Hosp. & Health
Ctrs.,796 N.E.2d 383, 388 (Ind. Ct. App. 2003). Although Rushmore may not have had
actual notice of Oberleas’s deeds to the Property parcels, it is charged with constructive
notice; therefore, we do not believe Rushmore suffers grave injustice if Oberleas retains
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ownership of the Property because Rushmore had the opportunity to avoid the problem
much earlier. See Union State Bank, 169 Ind. App. at 350, 348 N.E.2d at 687. In short,
because of society’s interest in the finality of litigation, we cannot indefinitely allow
banks to shift any potential issues associated with a mortgage to subsequent mortgagees
if it operates to the detriment of the tax sale purchaser as it does in this case. Therefore,
we conclude that Rushmore’s motion was not filed within a reasonable period of time.
Moving onto Rushmore’s other claims, it also argues that the property descriptions
in the 4.5 and 4.6 notices Oberleas sent to the record owners, Thomas and Hayes, were
not in substantial compliance with Indiana Code sections 6-1.1-25-4.5 and -4.6 because
they omitted a digit in the common address and failed to provide a full legal description
per the statute. Appellant’s Br. 7. Further, Rushmore argues that the notices were sent to
Thomas and Hayes at an address in Muncie, rather than the proper address on record with
the Auditor’s Office, meaning that the mailing itself was not in compliance with the
statute. Id. at 11. However, we need not address the sufficiency of the 4.5 and 4.6
notices because, even if they possess merit, the issue of reasonable timing discussed
above is dispositive. The sufficiency challenge simply comes too late.
Based on these facts, we cannot say that the trial court abused its discretion in
denying Rushmore’s motion to set aside the issuance of the tax deeds and tax sale.
Accordingly, we affirm the judgment of the trial court.
BARNES, J., and CRONE, J., concur.
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