Opinion
99-CV-1946 (DRH)
February 28, 2003
MARK A. SCHNEIDER, ESQ., Attorney for Plaintiffs, Plattsburgh, New York.
MAYNARD, O'CONNOR, SMITH ROBERT A. RAUSCH, ESQ., CATALINOTTO, Attorney for Defendants, Albany, New York.
MEMORANDUM-DECISION AND ORDER
Plaintiffs, Clinton County property owners, brought this class action pursuant to 42 U.S.C. § 1983 alleging that defendant Clinton County violated their Fourteenth Amendment rights to due process in foreclosure proceedings in 1999. See Memorandum-Decision and Order filed Oct. 11, 2001 (Docket No. 67) ("MDO"), familiarity with which is assumed. On July 10, 2002, a jury returned a verdict finding in favor of those class members to whom notices of foreclosure were mailed to incorrect addresses. Verdict (Docket No. 131) at i. Notice of this action was then given to potential class members. Docket Nos. 137, 138, 140. Eighteen potential class members ("claimants") filed proofs of claim. Docket No. 153. Of those, two were previously dismissed by stipulation and three have been settled.
The class was certified as "[a] class of persons whose real property was taken by Clinton County by a tax foreclosure by the default judgment of August 29, 1999 and whose property was offered for sale at the November 15, 1999 tax sale conducted by Clinton County." Docket No. 35.
Farbotko v. Clinton County, New York, 168 F. Supp.2d 31 (N.D.N.Y. 2001).
Before trial, the claims of four plaintiffs were settled. Docket No. 79. The jury also found in favor of the two plaintiffs whose claims were presented at the trial. Verdict at ii-iv.
Lucie M. Akey, Harold J. Boyle, Christopher Brown, Jude and Sheila Chamberlain, Pro-Design Homes Apts., Inc., Leonard A.P. Dupigny, Marion A. Elder, Donald and Madelaine Favreau, Jere C. Grant, Beverly A. Grant, Lance W. Macomber, Robert P. Masterjoseph, Christopher P. McDonald, Robert E. and Catherine M. Miller, Rose N. Rohan, Raymond and Linda Shepard, Andrew Stergiou, and Delores Wald.
Jude and Sheila Chamberlain and Pro-Design Homes Apts., Inc. Docket No. 152.
Christopher Brown, Rose N. Rohan and Delores Wald.
A trial concerning the remaining thirteen claims was held in Plattsburgh, New York on February 23, 2003. By stipulation, the trial was held without a jury. At the outset, defendants moved to dismiss six of the remaining claims pursuant to Fed.R.Civ.P. 37(d) for failure to comply with an order to serve responses to defendants' discovery demands (Docket No. 150). That motion was granted. The trial then proceeded concerning the seven remaining claims. In accordance with Fed.R.Civ.P. 52, what follows constitutes the Court's findings of fact and conclusions of law as to the seven remaining claimants. For the reasons which follow, judgment is granted to defendants as to each of these claims.
Jere C. Grant, Beverly A. Grant, Robert P. Masterjoseph, Robert E. and Catherine M. Miller, Raymond and Linda Shepard, and Andrew Stergiou.
The motion was granted in the alternative for failure to prosecute because each such claimant failed to appear for the trial on February 24, 2003. See Fed.R.Civ.P. 41(b).
Lucie M. Akey, Harold J. Boyle, Leonard A.P. Dupigny, Marion A. Elder, Donald and Madelaine Favreau, Lance W. Macomber, and Christopher P. McDonald.
I.
The Due Process Clause of the Fourteenth Amendment mandates that a property owner be given notice of foreclosure proceedings before property may be foreclosed. See Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 795 (1983); Mullane v. Central Hanover Bank Trust Co., 339 U.S. 306, 313-14 (1950). For purposes of this case, notice was sufficient if sent by ordinary first class mail to property owners and any other person with an interest in the property supplemented by procedures for both newspaper publications and posting in defendants' offices as well as in the county courthouse. Mennonite, 462 U.S. at 800; Mullane, 339 U.S. at 319; Weigner v. City of New York, 852 F.2d 646, 650 (2d Cir. 1988); Kennedy v. Mossafa, No. 24, 2003 WL 443797 (N.Y. Ct. of Appeals dec. Feb. 25, 2003). Mailed notice must be sent to the addresses that were "reasonably ascertainable from the public record." See Schroeder v. City of New York, 371 U.S. 208, 212-13 (1962); N.Y. Real Prop. Tax Law § 1125(1) (McKinney 2000). That record included not only the addresses on file with defendants but those maintained by the town or village in which the property in question was located. See MDO at 15 and cases cited therein; see also Kennedy, 2003 WL 443797.
Where defendants proffer evidence that the notice to a claimant was properly addressed and mailed in accordance with regular office procedures, defendants are entitled to the presumption that the notice was received. See Meckel v. Continental Resources Co., 758 F.2d 811, 817 (2d Cir. 1985); Sendel v. Diskin, 716 N.Y.S.2d 471, 473 (3d Dep't 2000) (citing N.Y. Real Prop. Tax Law §§ 1125(1), 1134, 1137); Law v. Benedict, 603 N.Y.S.2d 75, 77 (3d Dep't 1993) (citations omitted); Best v. City of Rochester, 600 N.Y.S.2d 405, 405 (4th Dep't 1993). Rebuttal of the presumption requires a "specific factual denial of receipt." Nunley v. City of Los Angeles, 52 F.3d 792, 796 (9th Cir. 1995); see also Bourgal v. Robco Contracting Enterprises, Ltd., 17 F. Supp.2d 129, 132 (E.D.N.Y. 1998). This presumption may not be rebutted by a mere denial of receipt. Meckel, 758 F.2d at 817; Sendel, 716 N.Y.S.2d at 473 (citations omitted); Law, 603 N.Y.S.2d at 77. If defendants fail to establish their entitlement to the presumption or, if found to exist, the presumption is rebutted by a claimant, defendants may nevertheless prevail as to that claimant if they demonstrate that the claimant nevertheless received actual notice of the foreclosure proceedings. Cf. 380 Front Street No. 20 Corp. v. County of Dutchess, 694 N.Y.S.2d 748, 749 (2d Dep't 1999) (collecting cases).
II.
A. Boyle, Dupigny, Elder and the Favreaus
The evidence establishes that as to potential class members Harold J. Boyle, Leonard A.P. Dupigny, Marion A. Elder, and Donald and Madelaine Favreau, defendants duly sent notices of the foreclosure proceedings to each such claimant by first class mail at the address listed in the records of Clinton County and the town or village in which the property in question was located. None of the notices mailed to any of these claimants was returned to defendants undelivered by the United States Postal Service. The evidence at the July 2002 trial established that the notices were properly addressed and mailed to these claimants in accordance with regular office procedures, thus entitling defendants to the presumption that these notices were received. The presumption is further supported by the facts that each potential class member knew or should have known that taxes were due on their respective properties and that notices of the foreclosure proceedings were published and posted. Neither Boyle nor Dupigny appeared at the trial on February 24, 2003 or offered any evidence to rebut the presumption that they each received notice of the foreclosure proceedings. Moreover, the evidence at trial established that defendants previously foreclosed on Dupigny's property in 1995. The property was thereafter sold to Shaun and Lynne Owens. The Owens never recorded a deed. Therefore, when defendants commenced the 1999 foreclosure proceedings for the Owens' tax delinquency, notice was sent to Dupigny as well as to the Owens. However, Dupigny's interest in the property had been extinguished by the 1995 foreclosure. See N.Y. Real Prop. Tax Law § 1131 (McKinney 2000); Trial Ex. D-69. The January 1999 notice did not operate to revive that extinguished interest. For these reasons, therefore, defendants are entitled to judgment against Boyle and Dupigny.
The jury at the July 2002 trial made the same finding. Verdict at I(A).
Elder and the Favreaus testified that they failed to receive the notices of foreclosure mailed by defendants in January 1999. However, as noted above, the presumption may not be rebutted by a mere denial of receipt. Neither Elder nor the Favreaus offered any other evidence to rebut the presumption of receipt. Accordingly, defendants are entitled to judgment as to both Elder and the Favreaus.
B. Akey
Lucie M. Akey and her husband, Franklin Akey, owned and managed twenty to thirty properties in Clinton County through the 1990s. Their daughter, Debbie M. Akey, was responsible for the day-to-day management of the properties, including the payment of taxes. At all times material herein, the Akeys managed their properties from an office in Plattsburgh. Prior to 1992, that office was located at 640 Cornelia Street. One of the properties was located in the Town of Champlain and was held solely in the name of Lucie M. Akey. In 1992, the Akeys moved their office to 14 Margaret Street. According to Debbie Akey, she notified the Town of Champlain, but not Clinton County, of the change of address. However, the Town never changed the address to Margaret Street for the Champlain property and through 1999, notices regarding the tax delinquency on this property continued to be mailed by the town and county to the Cornelia Street address.
The Akeys became delinquent on the taxes for the Champlain property. Notice of the foreclosure proceedings in January 1999 for that property was mailed to Lucie Akey at the Cornelia Street address. The envelope containing the notice was returned undelivered to defendants by the Postal Service. Trial Ex. D-48. Defendants then searched the Town of Champlain tax roll for the same property and determined that the Town also listed the Cornelia Street mailing address for Lucie Akey for that property. See Trial Ex. D-49. The foreclosure proceedings resulted in a sale of the property at auction. At that time the Akeys owed approximately $4,500.00 in back taxes, penalties and interest. Lucie Akey purchased back the property at the auction for $15,000.00.
Plaintiffs offered evidence that in August 1994, the Town of Champlain mailed a tax bill for this property to Lucie Akey at a third Plattsburgh address, 1623 Military Turnpike. Trial Ex. P-68. The street address on the envelope was crossed out and the Margaret Street address was handwritten in its place. Id. Plaintiffs contend that this establishes that the Town records correctly listed the Margaret Street address for this property. However, there is no evidence that the handwritten notation was made by a town official rather than the Postal Service or the resident at 1623 Military Turnpike. Moreover, the town tax rolls for the years 1994-99 each listed the Champlain property to Lucie Akey with the Cornelia Street mailing address. See Trial Exs. D-49-54. Thus, the town tax rolls continued to list the Cornelia Street mailing address for this property for Lucie Akey throughout this period.
The Akeys learned of the foreclosure proceedings shortly before the property was sold and offered to redeem the property by paying the outstanding taxes, penalties and interest. Defendants declined.
Due process imposes a reasonableness standard and "does not mean that all risk of non-receipt must be eliminated." Weigner, 852 F.2d at 649; see also Kennedy, 2003 WL 443797 ("The key word is `reasonabl[e],' which balances the interests of the State against the rights of the parties"). As described above, notice sent by first class mail supplemented by publication and posting satisfies due process requirements. When a mailed notice is returned undelivered, a municipality is required to use due diligence to ascertain the current address of the property owner. See Mullane, 339 U.S. at 317; Kennedy, 2003 WL 443797; see also N.Y. Real Prop. Tax Law § 1125(1); Mennonite, 462 U.S. at 798 n. 4. This requirement is satisfied if defendants searched for alternate addresses in the tax rolls of the town or village where the property is located. See MDO at 13-15. Due process does not require a search of other records, such as telephone books, voter registration lists or motor vehicle records, because property owners are charged with the knowledge that taxes are regularly due and municipalities are entitled to rely on the information contained in their own records. Girrbach v. Levine, 522 N.Y.S.2d 276, 277-78 (3d Dep't 1987) (citations omitted); see also Kennedy, 2003 WL 443797 ("Ownership carries responsibilities").
In any event, Lucie Akey was not listed in the telephone book at the time of the foreclosure proceedings at issue herein.
Here, defendants sent notice of the foreclosure proceedings to Lucie Akey at the mailing address last listed in their records and supplemented that mailed notice with notice by publication and posting. When the mailed notice was returned undelivered, defendants searched the tax rolls of the Town of Champlain where the property in question was located but determined that the Town listed the same mailing address. This would appear to satisfy the minimum requirements of due process as described above. However, for at least two reasons, plaintiffs contend that in the circumstances of the Akey property, due process required defendants to take additional steps.
First, plaintiffs contend that due process required defendants to check the tax rolls of all towns and villages in Clinton County to ascertain the mailing addresses used for the Akeys' other properties. If defendants had done so, they would have discovered the Margaret Street address. However, there are fourteen towns and four villages in Clinton County, each with its own tax roll. While the tax rolls for all eighteen towns and villages were available to defendants in defendants' offices, the tax rolls at that time were maintained separately by town or village and would have required a roll-by-roll search of documentary records. Due process does not require such extraordinary efforts. Mennonite, 462 U.S. at 798 n. 4. Defendants' search of the tax rolls of the town where the property was located sufficed to meet the minimum requirements of due process in these circumstances. Second, Debbie Akey testified that following the move to Margaret Street in 1992, she notified the Town of Champlain of the new address for her mother. The town never noted any such change and continued to list the Cornelia Street address as the mailing address for Lucie Akey for that property. Crediting Debbie Akey's testimony, plaintiffs contend that the failure of the town to note the change of address should be attributed to defendants.
It appears from the trial that since the 1999 foreclosure proceedings at issue here, defendants have computerized the tax rolls of the towns and villages in Clinton County and that a search of those rolls by the name of a property owner for a more current mailing address may now be greatly simplified. In that circumstance, defendants might reasonably be required to search the tax rolls of all towns and villages in the county where a notice is returned undelivered. See Kennedy, 2003 WL 443797 (noting that a computerized database of town tax rolls was available to the county to determine current addresses).
Plaintiffs agree that the Akeys never notified defendants of the change of address.
However, even crediting Debbie Akey's testimony and whether based on a theory of agency, constructive notice or otherwise, plaintiff's contention fails. There is no evidence that defendants were responsible in any way for any such failure by the town to note a change of address. The primary source for Lucie Akey's address remained defendants' own tax records with the tax roll of the town providing a secondary source in the event, as occurred here, that the notice mailed to the address maintained by defendants was returned undelivered.
Moreover, in the circumstances presented here, notice was additionally provided by publication and by posting. The Akeys were involved in the business of property ownership and management for many years and were not casual or inexperienced property owners. In fact, according, to Debbie Akey, they had in fact been involved in the payment of delinquent tax bills on various properties numerous times, including properties for which a Cornelia Street mailing address was used after 1992. See note 16 infra. In these circumstances, therefore, the notice provided by defendants and defendants' efforts to obtain a more current mailing address for Lucie Akey upon return of the mailed notice of foreclosure satisfied the minimum requirements of due process.
For these reasons, defendants are granted judgment against Lucie Akey.
C. Macomber
Lance W. Macomber resided in Lyndon, Vermont for which the correct zip code was 05849. Macomber also owned vacant property in the Town of Clinton which in 1999 had an approximate market value of $2,600. The taxes on that property were delinquent for each year from 1995 through 1999 and defendants commenced foreclosure proceedings.
However, the address to which defendants mailed Macomber the January 1999 notice of foreclosure listed an incorrect zip code of 05489. Trial Ex. D-48. Macomber denied receiving notice of the foreclosure proceedings and the property was foreclosed and sold at auction. However, the same property had already been the subject of foreclosure proceedings commenced by defendants in October 1998 for Macomber's tax delinquencies for prior years. The same property was included in the January 1999 foreclosure proceedings because the October 1998 proceedings were then still pending and Macomber remained the owner of record. Separate default judgments against Macomber for the October 1998 and the January 1999 proceedings were entered, both on August 26, 1999. Trial Exs. D-15, 19. Macomber's property was then sold at an auction pursuant to both default judgments. Although Macomber raises questions here concerning the sufficiency of the notice for the October 1998 proceeding, that proceeding was not at issue in this case and the foreclosures and sales which resulted from the October 1998 proceedings remain valid. Therefore, even assuming that Macomber's right to due process was violated in the January 1999 proceedings, the foreclosure based on the October 1998 proceedings remains valid. Thus, Macomber cannot establish either that any violation of due process in the January 1999 proceedings caused the loss of his property or that he suffered any damages as a result of any due process violation.
Macomber acknowledged previously receiving other tax notices mailed to him with the same incorrect zip code, including at least four final notices of redemption. See Trial Exs. D-43-46. A pattern of actual receipt of mail although incorrectly addressed, as here, may suffice to satisfy the notice requirements of due process. See Kennedy, 2003 WL 443797 (finding that property owner's "pattern of paying bills sent to an address that she claims was incorrect gave the Town and County reason to believe that it was still the correct address"). In the alternative, therefore, defendants are entitled to judgment against Macomber on this ground.
Defendants are entitled to judgment against Macomber.
D. McDonald
Christopher P. McDonald owned property in the Town of Saranac with two co-owners. Trial Ex. D-70. McDonald resided on Bradley Pond Road in Ellenburg Center, New York. Prior to 1992, McDonald's correct mailing address there was Box 175. Id. In 1992, Clinton Count instituted a 911 emergency response system which required that residences and other buildings be designated by street numbers rather than by box numbers. McDonald's residence was designated as street number 1816. See Trial Ex. P-75. After 1992, McDonald failed to notify either the Town of Saranac or defendants of the new address, assuming that because Clinton County had instituted the street number designation, it would note the change without any action on his part. Taxes on the Saranac property became delinquent and foreclosure proceedings were commenced in January 1999. Notice of those proceedings was mailed to McDonald at his residence using the Box 175 designation rather than the street address of 1816. Trial Ex. P-73. The notice was not returned undelivered. McDonald denied receiving notice of the foreclosure and the proceedings resulted in the foreclosure and sale of the Saranac property.
However, the Saranac property was the subject of foreclosure proceedings by defendants in 1997 for tax delinquencies. Those proceedings resulted in the repurchase of the property by McDonald and his two co-owners and the issuance of a new deed. The mailing address which McDonald listed for himself on the new deed was his residence at Box 175, not the street address of 1816. Trial Ex. D-70.
Defendants are entitled here to the presumption that McDonald received the January 1999 notice of the foreclosure proceedings. The notice was mailed to the Box 175 address listed for McDonald's residence on the tax rolls. Most importantly, the Postmaster for the Ellenburg Post Office credibly testified that McDonald and his residence were personally known to her prior to 1999 and that mail addressed to McDonald at the Box 175 address was "always" delivered to McDonald at his residence even without the correct designated street address of 1816. This testimony was corroborated in part by the testimony of a retired postmaster from a neighboring, similarly small post office who testified that if a postal employee was aware of the correct address, that employee was obliged to deliver the mail to the correct address even if the mailing address was incorrect in some respect.
Prior to January 1999, both McDonald and Akey paid tax bills to defendants with checks listing their correct mailing addresses. See, e.g., Trial Ex. P-75. Both contend that such checks sufficed to notify defendants of their correct addresses. However, according to testimony elicited by defendants, tax bills are occasionally paid with checks by individuals other than the owner of record and the addresses on checks may not themselves be reliable. Moreover, defendants did not retain copies of checks tendered to pay bills. Thus, the submission of a check containing a correct address to pay a tax bill did not serve as notice to defendants of the correct address of McDonald or Akey. See Kennedy, 2003 WL 443797 ("an address on a check or envelope, alone, is not sufficient to put the Town or County on notice that that is the address where notices should be sent").
Even crediting McDonald's denial of receipt of the January 1999 notice, that denial is insufficient to overcome the presumption of receipt here. See Meckel, 758 F.2d at 817; Sendel, 716 N.Y.S.2d at 473 (citations omitted); Law, 603 N.Y.S.2d at 77; see also Kennedy, 2003 WL 443797. Accordingly, defendants are entitled to judgment against McDonald.
III.
Also presently pending is plaintiffs' motion for an award of interim attorney's fees and costs as the prevailing party at the July 2002 trial. Docket No. 141. As this decision resolves all remaining claims, plaintiffs may now apply for a final award and their motion for an interim award is denied without prejudice. Plaintiffs are granted until March 21, 2003 to file and serve any motion for a final award of attorney's fees and costs.
IV.
For the foregoing reasons, it is hereby
ORDERED that
1. The claims of potential class members Jere C. Grant, Beverly A. Grant, Robert P. Masterjoseph, Robert E. and Catherine M. Miller, Raymond and Linda Shepard, and Andrew Stergiou are DISMISSED;.
2. Judgment shall be entered in favor of defendants on the claims of potential class members Lucie M. Akey, Harold J. Boyle, Leonard A.P. Dupigny, Marion A. Elder, Donald and Madelaine Favreau, Lance W. Macomber, and Christopher P. McDonald;
3. Plaintiffs' motion for an award of interim attorney's fees and costs (Docket No. 141) is DENIED without prejudice; and
4. Plaintiffs are granted until March 21, 2003 to file and serve any motion for a final award of attorney's fees and costs, defendants may file and serve any response thereto on or before April 11, 2003, no reply will be permitted, any such motion shall be returnable on April 18, 2003 at 10:00 a.m., and any such motion shall be taken on submission without oral argument.
IT IS SO ORDERED.