T. L. Barker and J. Barker v. Chester County TCB and CJD Group, LLC , 143 A.3d 1069 ( 2016 )

IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Thomas L. Barker :
and Julia Barker, :
Appellants :
:
v. : No. 1384 C.D. 2015
: Argued: May 12, 2016
Chester County Tax Claim Bureau :
and CJD Group, LLC :
BEFORE: HONORABLE MARY HANNAH LEAVITT, President Judge
HONORABLE MICHAEL H. WOJCIK, Judge
HONORABLE JAMES GARDNER COLINS, Senior Judge
OPINION
BY PRESIDENT JUDGE LEAVITT FILED: July 27, 2016
Thomas L. Barker and Julia Barker (Taxpayers) appeal an order of the
Court of Common Pleas of Chester County (trial court) denying their petition to set
aside the December 9, 2013, upset tax sale of two properties to CJD Group, LLC.
Taxpayers assert that the upset sale was invalid because it did not conform to the
requirements of the Real Estate Tax Sale Law.1 Specifically, they assert that their
agreement of September 5, 2013, with the Chester County Tax Claim Bureau for
the installment payment of their past due taxes stayed the upset sale. We agree and
reverse.
Taxpayers own a parcel located at 356 Church Street and another at
153 East Morgan Street in Phoenixville, Pennsylvania. The parcels are identified,
respectively, as Parcel Nos. 1509_03610000 and 1509_07510000. The Tax Claim
Bureau listed both properties for upset sale on September 9, 2013, because of
delinquent taxes.
1
Act of July 7, 1947, P.L. 1368, as amended, 72 P.S. §§5860.101 - 803.
On September 5, 2013, Thomas Barker executed an installment
agreement (2013 Agreement) with the Tax Claim Bureau to resolve Taxpayers’
overdue real estate taxes on eight properties they own, including the two scheduled
for sale on September 9, 2013. The other six properties had not been scheduled for
an upset sale when the agreement with the Tax Claim Bureau was made.
The terms of the 2013 Agreement were straightforward. Taxpayers
agreed to make an immediate payment of $15,000, to be apportioned among the
eight properties as follows:
Parcel ID Total Owed 2011 Owed
1505_03950000 $10,138.85 $5,256.48 ($2,100 paid)
1509_03610000 $ 6,498.06 $3,394.02 ($1,400 paid)
1509_03670000 $ 8,959.85 $4,580.11 ($1,900 paid)
1509_07520000 $ 2,943.25 $1,575.57 ($700 paid)
1509_07510000 $ 8,934.49 $4,640.37 ($1,900 paid)
1512_01900000 $ 8,201.19 $4,265.25 ($1,700 paid)
1512_01900100 $ 8,058.20 $4,192.02 ($1,700 paid)
2706G00900000 $15,330.61 $7,990.34 ($3,600 paid)
Reproduced Record at 116a (R.R. __). The 2013 Agreement further stated that
[O]wner agrees to pay the balance due of prior liened taxes in
installments as follows:
 The amount of $15,000 at the time of Agreement
 The remaining balance of 2011 real estate taxes
owed by December 6, 2013
 The remaining balance of 2012 real estate taxes
owed by June 30, 2014
***
2
The Tax Claim Bureau … in consideration of said payments
and the within Agreement by the said owner to pay the balance
due of said taxes in installments as aforesaid as well as pay both
current and future taxes due to all taxing authorities, agrees that
sale of said parcels for delinquent taxes shall initially be
continued to December 9, 2013 and then stayed for 2013 so
long as the said Agreement on the part of the said owner herein
made is being fully complied with.
R.R. 116a.
On November 1, 2013, the Tax Claim Bureau sent a letter to
Taxpayers reminding them of the upcoming installment payment of the 2011 taxes
scheduled for December 6, 2013. Its letter advised:
As was explained at the time the installment agreement was
executed, these properties will be exposed at the December 9,
2013 Continued Upset Tax Sale if the terms of the agreement
are not fully met.
R.R. 117a. On December 11, 2013, Taxpayers learned that the Church Street and
East Morgan Street properties had been sold at the December 9, 2013, upset tax
sale.
Taxpayers filed objections, and the trial court conducted a hearing.
Jonathan Schuck, Director, testified on behalf of the Tax Claim Bureau. Both
Taxpayers also testified.
Schuck first testified about Taxpayers’ Morgan Street property, parcel
1509_03610000. On August 30, 2010, Mrs. Barker entered into an installment
agreement (2010 Agreement) to stay the sale of the Morgan Street property
scheduled for upset sale in September 2010.2 The 2010 Agreement required the
2
Mrs. Barker entered into six separate agreements on August 30, 2010. Schuck claimed that
Mrs. Barker defaulted on all of the agreements, but he did not testify about the other five
agreements.
3
first payment in September 2010 to be followed by a second payment on October
1, 2010, a third on January 1, 2011, and the balance on April 1, 2011. On March
25, 2011, Taxpayers remitted a payment of $4,611.54 that discharged the full
balance owed under the 2010 Agreement.
Schuck testified that Mrs. Barker contacted him in September 2013 to
request an installment agreement on eight properties, for which their taxes were
past due. Schuck agreed. However, he testified that this installment agreement
was not governed by Section 603 of the Real Estate Tax Sale Law, which gives
taxpayers one year to get current on their delinquent taxes once they make a
payment of 25% of the amount of delinquent taxes.3
3
Section 603 states:
Any owner or lien creditor of the owner may, at the option of the bureau, prior to
the actual sale, (1) cause the property to be removed from the sale by payment in
full of taxes which have become absolute and of all charges and interest due on
these taxes to the time of payment, or (2) enter into an agreement, in writing, with
the bureau to stay the sale of the property upon the payment of twenty-five per
centum (25%) of the amount due on all tax claims and tax judgments filed or
entered against such property and the interest and costs on the taxes returned to
date, as provided by this act, and agreeing therein to pay the balance of said
claims and judgments and the interest and costs thereon in not more than three (3)
instalments all within one (1) year of the date of said agreement, the agreement to
specify the dates on or before which each instalment shall be paid, and the amount
of each instalment. So long as said agreement is being fully complied with by the
taxpayer, the sale of the property covered by the agreement shall be stayed. But
in case of default in such agreement by the owner or lien creditor, the bureau,
after written notice of such default given by United States mail, postage prepaid,
to the owner or lien creditor at the address stated in the agreement, shall apply
all payments made against the oldest delinquent taxes and costs, then against the
more recent. If sufficient payment has been made to discharge all the taxes and
claims which would have caused the property to be put up for sale, the property
may not be sold. If sufficient payment has not been received to discharge these
taxes and claims, the bureau shall proceed with the sale of such property in the
manner herein provided either at the next scheduled upset sale or at a special
(Footnote continued on the next page . . . )
4
Schuck testified that the 2013 Agreement was not governed by
Section 603 because Taxpayers had defaulted on the 2010 Agreement. Section 603
provides that a taxpayer who defaults on an installment agreement is not eligible
for another installment agreement until three years have elapsed. Because three
years had not elapsed since their default on the 2010 Agreement, Taxpayers were
not eligible for a Section 603 agreement in September 2013. Schuck testified that
the 2013 Agreement was nothing more than a 90-extension of the upset sale, from
September 9, 2013, to December 9, 2013.
Schuck testified that he discussed the 90-day extension with Mrs.
Barker in a series of e-mails. It was Mr. Barker who came to the Tax Claim
Bureau to sign the 2013 Agreement, at which time Schuck went over its terms.
When Taxpayers missed the December 6, 2013, payment of the 2011 taxes on all
eight properties, the Church Street and East Morgan Street properties proceeded to
an upset sale on December 9, 2013.
Schuck testified about the Tax Claim Bureau’s notifications to
Taxpayers. He confirmed that it did not inform Taxpayers, who paid the entire
balance owed under the 2010 Agreement before the stated deadline, that they had
defaulted on that agreement. He also confirmed that he did not inform Mr. Barker
that if full payment of the 2011 taxes on eight properties were not fully paid by
December 6, 2013, that two of the properties covered by the 2013 Agreement
(continued . . . )
upset sale, either of which is to be held at least ninety (90) days after such default.
If a party to an instalment agreement defaults on the agreement, the bureau shall
not enter into a new instalment agreement with that person within three (3) years
of the default.
72 P.S. §5860.603 (emphasis added).
5
would be sold on December 9, 2013. Finally, he confirmed that when Taxpayers
missed the December 6, 2013, payment, the Tax Claim Bureau did not notify them
of their default or that two of the properties would be sold three days later.
Mr. Barker testified. He stated that he arrived at the Tax Claim
Bureau on September 5, 2013, with a check for $15,000. He was given the 2013
Agreement and time to read it. Mr. Barker assumed the 2013 Agreement was the
same as the 2010 Agreement. Mr. Barker was not advised that the two properties
scheduled for sale in September would be sold in December if the 2011 taxes owed
on all eight properties were not paid by December 6, 2013.4
The trial court found, based on Schuck’s testimony, that Taxpayers
did not make a timely interim payment on the 2010 agreement. However, the trial
court did not address whether, in light of Taxpayers’ full payment by the last
scheduled payment date, the late interim payment constituted a default within the
meaning of Section 603 of the Real Estate Tax Sale Law. The trial court
sidestepped the issue of whether Taxpayers were eligible in 2013 for a Section 603
installment agreement. It observed, rather, that a tax claim bureau can agree to any
type of payment plan, such as the 90-day installment agreement offered to
Taxpayers in 2013.
The trial court concluded that the 2013 Agreement was not governed
by Section 603 of the Real Estate Tax Sale Law and that Taxpayers should have
known that the 2013 Agreement, with a 90-day duration, was different from the
2010 Agreement. The trial court noted that the 2010 Agreement was captioned
4
Approximately six weeks after the record was closed, Taxpayers sought to reopen the case to
take further evidence on the issue of whether Taxpayers actually defaulted on the 2010
Agreement. Their request was denied.
6
“Agreement to Stay Tax Sale” and referred to Section 603. By contrast, the 2013
Agreement was captioned “Installment Agreement” and did not refer to Section
603.
On appeal to this Court,5 Taxpayers contend that the trial court erred.
First, the Tax Claim Bureau did not establish that Taxpayers defaulted on the 2010
Agreement. Second, the trial court incorrectly presumed that the Tax Claim
Bureau did not have to stay the sale scheduled for September 9, 2013, when
Taxpayers presented a payment of $15,000. Third, the 2013 Agreement violated
due process by not giving Taxpayers one year to get current and not providing for a
notice of default. Fourth, the trial court erred in refusing to reopen the record to
take additional evidence.
We begin with a review of the Real Estate Tax Sale Law. We have
explained that the statute was not enacted to deprive citizens of their property or to
create investment opportunities for those who attend tax sales but, rather, to assist
the collection of taxes. Stanford–Gale v. Tax Claim Bureau of Susquehanna
County, 816 A.2d 1214, 1216 (Pa. Cmwlth. 2003). The United States Supreme
Court has held that due process is implicated in any taking of property for the
collection of taxes, stating that
[p]eople must pay their taxes, and the government may hold
citizens accountable for tax delinquency by taking their
property. But before forcing a citizen to satisfy his debt by
forfeiting his property, due process requires the government to
provide adequate notice of the impending taking.
5
Our review is to determinine whether the trial court committed an error of law, abused its
discretion, or rendered a decision without supporting evidence. Darden v. Montgomery County
Tax Claim Bureau, 629 A.2d 321, 323 (Pa. Cmwlth. 1993).
7
Jones v. Flowers, 547 U.S. 220, 234 (2006). Because of these due process
concerns, this Court has explained that
the focus is not on the alleged neglect of the owner, which is
often present in some degree, but on whether the activities of
the Bureau comply with the requirements of the statute.
Smith v. Tax Claim Bureau of Pike County, 834 A.2d 1247, 1251 (Pa. Cmwlth.
2003). A failure by a tax claim bureau to comply with each and every statutory
requirement will nullify a sale. Id. at 1252.
In their first issue, Taxpayers assert that they were wrongly denied a
payment plan that conformed to Section 603 of the Real Estate Tax Sale Law.
Taxpayers explain that under the 2010 Agreement, they were required to make a
second payment on October 1, 2010, a third payment on January 2, 2011, and a
final payment of the remaining balance on April 1, 2011. R.R. 111a. They did not
make two intermediate payments on time, but those payments were included in the
$4,611.54 they paid one week before the final payment was due. Because they
paid the entire balance when due, they did not default on the 2010 Agreement.
Further, the Tax Claim Bureau never advised them that they were in default of the
2010 Agreement, and notice of default is required by Section 603. As a matter of
law, therefore, Taxpayers did not default on the 2010 Agreement. Even more to
the point, the Tax Claim Bureau never shared with Taxpayers the Bureau’s legal
theory that they were not eligible for a Section 603 agreement in 2013 because of
the way they handled the 2010 Agreement.
The Tax Claim Bureau contends that Taxpayers’ admitted failure to
make interim payments between October 1, 2010, and March 25, 2011, constituted
a default. As such, Taxpayers were not entitled to a Section 603 agreement in
8
2013 and, thus, Schuck properly offered them, instead, a 90-day “extension”
agreement.
Section 603 provides that a taxpayer who pays 25% of the tax due
may have a pending property sale stayed by agreeing to pay “in not more than
three (3) installments all within one (1) year of the date of said agreement,” the
balance owed. 72 P.S. §5860.603. Section 603 further states that
in case of default in such agreement by the owner or lien
creditor, the bureau, after written notice of such default given
by United States mail, postage prepaid, to the owner or lien
creditor at the address stated in the agreement, shall apply all
payments made against the oldest delinquent taxes and costs,
then against the more recent.
Id. (emphasis added).
Here, the Tax Claim Bureau did not prove that Taxpayers defaulted on
the 2010 Agreement.6 Section 603 obligated the Tax Claim Bureau to notify
Taxpayers, in writing, of their default of the 2010 Agreement, and the Tax Claim
Bureau concedes that it never so notified Taxpayers. Section 603 also provides,
that after notice of default, the Tax Claim Bureau is authorized to list the property
at “the next scheduled upset sale.” 72 P.S. §5860.603. If the Tax Claim Bureau
really believed Taxpayers defaulted on the 2010 Agreement, it should have relisted
the property for “the next scheduled upset sale.” Id. It did not do so. In short, the
Tax Claim Bureau did not comply with either Section 603 provision for the
6
The 2010 Agreement required a payment of $1,213.73 on August 30, 2010, a second payment
on October 1, 2010, a third payment on January 2, 2011, and final payment on April 1, 2011.
Taxpayers made the first and final payments early, and the second and third payments late.
However, the entire amount of taxes and costs owed was paid in March with the final installment
and in advance of the deadline. Notably, the 2010 Agreement gave Taxpayers seven months to
complete payments, even though Section 603 gives taxpayers a full year.
9
handling of the alleged default of the 2010 Agreement. Either the Tax Claim
Bureau did not consider the delay in the interim payments to constitute a default or,
by not giving notice to Taxpayers of their “default,” waived its right to claim that
Taxpayers defaulted on the 2010 Agreement. In either case, Taxpayers cannot be
charged with a default of the 2010 Agreement.
Our conclusion that the Tax Claim Bureau did not prove a default of
the 2010 Agreement is determinative of our disposition of Taxpayers’ second
issue, i.e., that they were entitled to an installment agreement in 2013 that
conformed to the requirements of Section 603. Taxpayers contend that Section
603 obligated the Tax Claim Bureau to stay the sale of the Church Street and East
Morgan Street properties upon tender of $15,000. Further, upon default in
December, they were entitled to (1) a notice of the default and (2) a notice that the
two properties would be listed for upset sale. Neither occurred.
The Tax Claim Bureau responds that assuming, arguendo, that a
default did not occur in 2010, Taxpayers were not entitled to a Section 603
agreement because they did not pay 25% of the outstanding taxes owed on their
eight properties. The $15,000 covered 22% of the outstanding taxes. We reject
this argument.
The correspondence between Schuck and Mrs. Barker began with an
e-mail from Mrs. Barker with a subject line “agreement for stay of tax sale.” R.R.
115a. Mrs. Barker’s email then stated that Taxpayers needed agreements for eight
properties, which were listed by number. She then explained:
I have 15K to pay as down payment. We have 2 properties up
for sale and hope to pay these taxes off in full with the sale of
one of the properties.
Please advise.
10
Id. Schuck responded that he was “[w]illing to set-up a 90-day extension
agreement on the below eight parcels for down payment of 15K.” Id.
In In Re Consolidated Return of the Tax Claim Bureau of the County
of Beaver from the August 16, 2011 Upset Sale for Delinquent Taxes, 105 A.3d 76(Pa. Cmwlth. 2014), petition for allowance of appeal denied, 121 A.3d 497 (Pa.
2015), this Court recognized that an upset sale must be stayed where a taxpayer
pays 25% of the taxes due and agrees to an installment plan for the remainder.
Further, where a taxpayer makes a payment of 25% or more, “the tax claim bureau
must advise the taxpayer of the Section 603 option because its failure to do so
‘would deprive the owner of his or her property without due process of law.’” Id.
at 82 (emphasis added) (quoting Darden, 629 A.2d at 323).
Mrs. Barker specifically requested a stay of the tax sale of the two
properties scheduled for the upcoming tax sale. At that time, the total due on the
Church Street property was $6,498.06 and the total due on the Morgan Street
property was $8,934.19. The $15,000 far exceeded 25% of what was owed on
those two properties. At that point, the Tax Claim Bureau was obligated to offer
her a Section 603 agreement and to stay the tax sale for the two properties listed
for sale. It did not do so.
The Tax Claim Bureau argues, in the alternative, that it is not limited
by the terms of Section 603 when it negotiates with delinquent taxpayers. It points
to Section 601(a) of the Real Estate Tax Sale Law, which authorized it to continue
a scheduled upset sale for any reason. The Tax Claim Bureau asserts that it
complied with Section 601(a), which states, in relevant part, as follows:
The bureau shall schedule the date of the sale no earlier than the
second Monday of September and before October 1, and the
sale may be adjourned, readjourned or continued. No
additional notice of sale is required when the sale is adjourned,
11
readjourned or continued if the sale is held by the end of the
calendar year. The bureau may, for convenience and because of
the number of properties involved, schedule sales of property in
various taxing districts or wards on different dates. Except as
otherwise provided in this article, all sales shall be held by the
bureau by the end of the calendar year.
72 P.S. §5860.601(a).
Section 601(a) permits a tax claim bureau to continue any scheduled
sale to the end of the calendar year. There are many reasons why a tax claim
bureau may wish to continue a sale, such as the failure of an upset sale to produce
a bid equal to the amount of the delinquent taxes. When a sale is continued, the tax
claim bureau need not repeat all the notice requirements undertaken for the first
scheduled upset sale. However, Section 601(a)(1) also provides as follows:
(1) The bureau shall sell the property if all of the following are
met:
(i) A tax claim has become absolute.
(ii) The property has not been discharged from
the tax claim nor removed from sale under section
603; or a tax judgment has been entered against the
property prior to January 1, 1948, and is
unsatisfied, and a sale of the property has not been
stayed by agreement under this article.
(iii) The property is not in the possession of the
sequestrator.
72 P.S. §5860.601(a)(1) (emphasis added). Section 601(a) did not authorize the
Tax Claim Bureau’s actions here.
A sale pursuant to Section 601(a) cannot take place where a
property’s sale is not governed by Section 603 of the Tax Sale Law. 72 P.S.
§5860.601(a)(1)(ii). Here, the Tax Claim Bureau was obligated to offer Taxpayers
12
a Section 603 installment plan option when they tendered $15,000. Likewise, the
Tax Claim Bureau was not permitted to sell their two properties under authority of
Section 601(a)(1)(ii) because Taxpayers met the requirements for having their
properties “removed from sale under Section 603.” 72 P.S. §5860.601(a)(1)(ii).
For the above-stated reasons, we reverse the order of the trial court.7
______________________________________
MARY HANNAH LEAVITT, President Judge
7
Because we reverse, we need not address Taxpayers’ additional legal and constitutional claims.
13
IN THE COMMONWEALTH COURT OF PENNSYLVANIA
Thomas L. Barker :
and Julia Barker, :
Appellants :
:
v. : No. 1384 C.D. 2015
:
Chester County Tax Claim Bureau :
and CJD Group, LLC :
ORDER
AND NOW, this 27th day of July, 2016, the order of the Court of
Common Pleas of Chester County, dated June 30, 2015, is hereby REVERSED.
______________________________________
MARY HANNAH LEAVITT, President Judge