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Indyway Investment v. Cooper

California Court of Appeals, Second District, Third Division
Apr 1, 2008
No. B192944 (Cal. Ct. App. Apr. 1, 2008)

Opinion


INDYWAY INVESTMENT, Plaintiff and Appellant, v. DENNIS COOPER and COUNTY OF LOS ANGELES, Defendants and Respondents. No. B192944 California Court of Appeal, Second District, Third Division April 1, 2008

NOT TO BE PUBLISHED

Appeal from a judgment of the Superior Court No. NC035452 of Los Angeles County, Judith Vander Lans, Judge. Affirmed.

Artiano & Associates, James Artiano, Eric Nakasu and Grace Lou for Plaintiff and Appellant.

Raymond G. Fortner, Jr., County Counsel and Joyce M. Aiello, Assistant County Counsel for Defendants and Respondents.

CROSKEY, J.

Plaintiff and appellant Indyway Investment is a trust that owned several properties in Long Beach. Indyway did not pay taxes on four of its properties. It initially lost two properties in a tax sale; that sale is not at issue in this appeal. The remaining two tax-defaulted properties were placed in a tax sale in 2003. Prior to the tax sale, the Los Angeles County tax collector sent notice to Indyway at: (1) the properties themselves; (2) the address for Indyway on file with the county assessor; and (3) an additional property owned by Indyway. The tax collector searched for other addresses for Indyway in various locations, including an internet “Superpages” search. While the tax collector did not send notice to a post office box claimed by Indyway as its official mailing address, Indyway did have actual notice of the 2003 tax sale. The tax sale proceeded, and Dennis Cooper purchased the properties at the auction. He received tax deeds for the properties. Indyway brought suit against Cooper and the County, seeking to cancel the tax deeds and quiet title to the property. Indyway took the position that the County had failed to comply with the statutory requirements for a proper tax sale of the property, particularly with respect to notice of the auction. Indyway further argued that its constitutional due process rights were violated by the County’s failure to give it notice of the auction at Indyway’s claimed official address. The matter proceeded to a bench trial. The trial court found in favor of the defendants, entering a judgment quieting title in favor of Cooper. Indyway appeals. On appeal, we conclude that many of Indyway’s challenges to the County’s perceived lack of compliance with statutory prerequisites are simply not cognizable, due to the conclusive effect that must be given to the tax deeds. With respect to Indyway’s contention that it was deprived of property without due process, we conclude that the trial court’s finding that Indyway had actual notice is supported by substantial evidence, defeating Indyway’s assertion. We therefore affirm.

Indyway, however, was to receive the excess proceeds from the tax sale.

FACTUAL AND PROCEDURAL BACKGROUND

1. Overview of Tax Sale Law

Before we discuss the specific claims made by Indyway, a brief overview of the tax sale process is helpful. Each year, before June 8, the tax collector is required to publish notice of impending default for failure to pay taxes on property for which it does not appear that the property taxes will have been paid by June 30. (Rev. & Tax. Code, § 3351.) At 12:01 a.m. on July 1, taxes on real property which have not been paid “shall by operation of law be declared in default.” (Rev. & Tax. Code, § 3436.) Notice of default is to be published (Rev. & Tax. Code, § 3371) and may be sent to the assessee (Rev. & Tax. Code, § 3384).

Five years after the property is defaulted, the tax collector has the power to sell it. (Rev. & Tax. Code, § 3691, subd. (a)(1)(A).) This triggers further notice requirements, both by publication (Rev. & Tax. Code, §§ 3361, 3362) and to the assessee (Rev. & Tax. Code, § 3365). Additionally, the tax collector shall “execute a notice” on a form prescribed by the Controller, “whenever a parcel becomes subject to the power of sale” under Revenue and Taxation Code section 3691. (Rev. & Tax. Code, § 3691.1) The notice is recorded with the county recorder, and then forwarded to the tax collector (Rev. & Tax. Code, § 3691.4), who shall file that notice in his or her office “and keep a record to show the subsequent disposition of the property.” (Rev. & Tax. Code, § 3691.5.)

Originally, the provisions regarding this notice provided for notice to be given to the Controller, with the form to be forwarded from the recorder to the Controller, who would keep it in his or her records. (Rev. & Tax. Code, fmr. §§ 3691.1, 3691.4, 3691.5.) The provisions were amended in 1998 to eliminate the Controller as the recipient of the notice.

Once the property is subject to the power of sale, the tax collector is required to attempt to sell the property, unless it has been redeemed or is otherwise not subject to sale. (Rev. & Tax. Code, § 3691, subd. (a)(1)(A).) The tax collector shall first attempt to sell the property within four years of when it becomes subject to sale. (Rev. & Tax. Code, § 3692, subd. (a).) The property is to be sold at public auction to the highest bidder. (Rev. & Tax. Code, § 3693.)

Between 45 and 120 days prior to the sale, the tax collector is required to send notice of the sale by certified mail, return receipt requested, to “the last known mailing address, if available, of parties of interest.” (Rev. & Tax. Code, § 3701.) “Parties of interest” include lienholders and holders of record title. (Rev. & Tax. Code, § 4675.) “The tax collector shall make a reasonable effort to obtain the name and last known mailing address of parties of interest. [¶] The validity of any sale under this chapter shall not be affected if the tax collector’s reasonable effort fails to disclose the name and last known mailing address of parties of interest or if a party of interest does not receive the mailed notice.” (Rev. & Tax. Code, § 3701.) Notice of the intended sale must also be published in newspapers. (Rev. & Tax. Code, § 3702.)

If the property is the primary residence of the assessee, the tax collector shall also make a reasonable effort to personally contact the assessee, but failure to do so will not invalidate the subsequent sale. (Rev. & Tax. Code, § 3704.7)

Certain governmental entities can obtain the property, but only if they seek to do so before the date of the first publication of the notice of intended sale in the newspaper. If a governmental entity seeks to use the property for public use, that entity can file with the tax collector and county board of supervisors an objection to the sale and an application to purchase the property. If those documents are filed before the first publication of the notice of intended sale, the tax collector may not proceed with the public auction sale of the property. (Rev. & Tax. Code, §§ 3695.4.) The entity’s application triggers a process governed by Chapter 8 of Part 6 of Division 1 of the Revenue and Taxation Code – the chapter entitled “Deed to State, County or Public Agencies.” (The parties refer to this as a “Chapter 8” sale, as opposed to an auction sale pursuant to Chapter 7 of the same Part.) Under a “Chapter 8” sale, the property is sold to the governmental entity for an agreed-upon price. (Rev. & Tax. Code, § 3775.)

Additionally, the tax collector may remove a parcel from the tax sale upon the recommendation of the county counsel, when it is deemed to be in the best interest of the county. (Rev. & Tax. Code, § 3698.8.) “The tax collector shall notify the controller, in writing, whenever a parcel is removed from a tax sale.” (Ibid.)

If the property is not removed from the sale, and is not redeemed before close of business on the business day preceding the sale, the property is sold at auction to the highest bidder. (Rev. & Tax. Code, § 3706.) Indeed, the right of redemption terminates at the close of business on the last business day before the sale; it is revived only if the property is not sold. (Rev. & Tax. Code, § 3707.)

When the property is sold at auction, and the tax collector has been paid in full, the tax collector shall issue a deed to the purchaser, and record the deed. (Rev. & Tax. Code, §§ 3708, 3708.1.) “Except as against actual fraud, the deed duly acknowledged or proved is conclusive evidence of the regularity of all proceedings from the assessment of the assessor to the execution of the deed, both inclusive.” (Rev. & Tax. Code, § 3711.)

2. The Facts of Indyway’s Loss of Its Property

Indyway is a trust established in 1992; the trustors were Rudy and Melissa Diaz; the initial trustee was Deron Brunson. In 1996, a second trustee, Kedar Cohen, would be appointed to serve along with Brunson. According to the trust document, all properties owned by Indyway must be purchased only in silver dollars of a specific level of purity. The trust document indicates that, by purchasing property in this manner, it “creates a special status whereby [the property] is exempt from normal taxation such as property taxes.” (Emphasis omitted.) Shortly after execution of the trust, the Diazes deeded five properties to Indyway, in exchange for 21 silver dollars. The properties consisted of four neighboring properties on 15th Street in Long Beach, and a fifth property at 2725 Baltic Avenue. We refer to the latter property as the “Baltic” property. The 15th Street properties are referred to by the last two digits of their assessor’s parcel numbers: 13, 14, 15, and 16. The Deed indicates that Indyway’s address is a post office box in North Hollywood (“the North Hollywood box”). It is the eventual tax sale of properties 15 and 16 that is at issue in this appeal.

A version of the trust document was introduced into evidence at trial. Brunson and Melissa Diaz both testified that their signatures were on the exhibit. While both witnesses, when confronted with certain language in the trust, denied that the exhibit was the actual trust document, their authentication of their signatures constituted sufficient evidence that the exhibit was, in fact, the trust document.

The Baltic property is residential; Indyway paid property taxes on it. The four 15th Street properties are commercial; Indyway paid no taxes on those properties. After Indyway had been in default for five years, the properties became subject to the power of sale. There is no dispute that the County made all necessary publications and complied with all notice requirements to this point. On August 15, 1997, the tax collector recorded notices of power to sell the tax-defaulted property. (Rev. & Tax. Code, § 3691.1)

Indyway argues that the County violated Revenue and Taxation Code section 2610.5, which requires the tax collector to annually provide the taxpayer with a tax bill. Yet that statute also provides, “Failure to receive a tax bill shall not relieve the lien of taxes, nor shall it prevent the imposition of penalties imposed by this Code.” Indyway makes no argument as to how, given this language, the failure to receive a tax bill somehow invalidates a subsequent tax sale.

Parcels 13, 14, 15 and 16 were initially scheduled for sale in 1998. After the auction had been noticed, Melissa Diaz obtained a commitment for a loan, the proceeds of which would be used to pay the back taxes on the properties. As such, the properties were removed from the scheduled tax sale. However, the tax payments did not materialize. The four properties were then scheduled for sale in 2000.

On October 13, 1999, the tax collector’s office wrote to Melissa Diaz, in apparent response to her inquiry regarding the tax status of all four parcels. She was informed of the amount of taxes outstanding with respect to each property. The letter was addressed to Diaz at the Baltic property. It states, in part, “We understand that . . . you have asked that all notices be sent to the above address.” The letter enclosed “Change of Mailing Address cards” for each of the four parcels, directing Diaz to mail them, when completed, to the assessor’s office. Indyway would eventually offer evidence suggesting that it properly completed the change of address cards and mailed them to the assessor’s office, indicating a new address for Indyway of a post office box in Long Beach (“the Long Beach box”). However, the trial court rejected this evidence, specifically concluding that Indyway “did not change its official mailing address with the County Assessor from [the North Hollywood box] to [the Long Beach box].”

The County concluded that it had given inadequate notice of auction with respect to parcels 15 and 16 for the 2000 sale, and withdrew them from the auction. The sale proceeded, however, with respect to parcels 13 and 14, which were sold at auction. Indyway challenged the sale, sending numerous letters to the County tax collector seeking various documents and explanations. These letters were sent on Indyway letterhead which identified the Long Beach box as Indyway’s address. The County responded by letters addressed to Indyway at the Long Beach box.

As the dispute regarding parcels 13 and 14 proceeded, the County scheduled parcels 15 and 16 for sale in an auction to be held on August 11, 2003. It therefore was necessary for the tax collector to “make a reasonable effort to obtain the name and last known mailing address of parties of interest,” to be sent notices of auction. The tax collector began its effort to compile a mailing list for notices of auction in April 2003. The effort consisted of two parts. First, the tax collector purchased a “Parties of Interest Report” from an independent vendor, who searched the property records and prepared a title report for each property. Second, the tax collector assigned a staff member, Son Leao, to conduct independent research to supplement the reports. While, conceivably, the tax collector could have used its mailing list for the 15 and 16 properties from one of the prior auctions as its starting point, the tax collector’s policy was to start fresh with new title reports.

The reports from the independent vendor indicated that there were no deeds of trust on the properties, and no judgments or lien documents against Indyway. The reports included copies of the original deed of the properties to Indyway, which indicated the North Hollywood box as Indyway’s mailing address. Leao supplemented the report by conducting an internet “Superpages” phone book search for “Indyway Investments.” The search revealed no matches. Leao also searched the County tax roll to determine whether Indyway owned any other properties in the County which might provide a mailing address. This search revealed the Baltic property. None of the searches uncovered the Long Beach box as an address for Indyway. The tax collector’s mailing list for properties 15 and 16 ultimately included: (1) the addresses of the two properties themselves; (2) the North Hollywood box; and (3) the Baltic property. However, as the result of an apparent typographical error, the address for the Baltic property on the mailing list for property 16 was incorrectly recorded. The notices of auction were sent on June 26, 2003. When notices of auction were sent, the Baltic property was sent notice only for property 15.

The reports did, however, confirm the 1997 recordation of the notices of power to sell tax-defaulted property.

Notice was also sent to parcel 13, which Indyway no longer owned, and the mortgage broker who had indicated an intent to make a loan on the properties in 1998.

A tenant was living at the Baltic property, although there was substantial evidence that Indyway also possessed an office at that location. Cohen received the notice of auction for property 15 that had been sent to the Baltic property. He indicated that the tenant at the property gave it to him on July 8, 2003, more than one month before the date of the auction.

That day, Cohen wrote the tax collector on behalf of Indyway. Cohen acknowledged receipt of the notice of auction with respect to the 15 property. He argued that the notice of auction had been sent in error, on the theory that the tax collector had been required to record a second notice of power to sell tax-defaulted property. In other words, Cohen took the position that the notice of power to sell which had been recorded in 1997 and was still a matter of record, was not sufficient with respect to the upcoming 2003 sale of the property. Cohen indicated that if the tax collector proceeded with the sale in the absence of a second notice of power to sell, Indyway would bring suit. Cohen added, “This also includes [the 16 property].”

County Counsel apparently responded to the letter on July 22, 2003. This prompted another letter from Cohen to the tax collector, dated August 1, 2003. This letter reasserted Indyway’s position with respect to the necessity of a second recorded notice of power to sell. Additionally, Cohen noted that the Long Beach box is “the only official mailing address that [Indyway] shall recognize for all correspondences.” He confirmed that “[a]ny and all correspondences mailed to any other addresses are invalid and I SHALL NOT recognize them.” As such, Cohen argued that the notice of auction he had received with respect to the 15 property was “not valid,” because it had been sent to the Baltic property. He further added, “And you have NOT sent any Official Notice of Auction for [the 16 property].”

Sharon Perkins was the operations chief of the secured property tax division of the County tax collector. She gave final approval for the 15 and 16 properties to proceed to auction, despite Indyway’s protestations. Perkins based her approval on the facts that the tax collector had made reasonable efforts to send notice as required, and that Indyway had actual notice of the sale of both properties.

On August 6, 2003, a governmental entity expressed interest in purchasing the 15 and 16 properties under a Chapter 8 sale. In response, the properties were temporarily removed from the list of properties available for auction. However, the tax collector quickly determined that this decision was erroneous, in that properties that have been improved are not eligible for Chapter 8 sale. The properties were immediately returned to the list of properties available for auction. During the time in which the properties had been removed, which was less than one day, the tax collector did not send notice to the Controller, which is required when a property is removed from auction.

It also appears that the governmental entity’s request was untimely.

The auction was scheduled for Monday, August 11, 2003. By statute, Indyway had until the close of business on Friday, August 8, 2003 to redeem the property. No payments were made for the delinquent property taxes, and the parcels were therefore sold at auction. Bidding was competitive. Cooper won the auction for the 15 property with a bid of $134,000, and the 16 property with a bid of $69,000.

Cooper had 30 days within which to make full payment, and ultimately did so, on August 20 and September 2, 2003. On October 6, 2003, tax deeds transferring the properties to Cooper were recorded. It was not until November 6, 2003, however, that the tax collector properly allocated Cooper’s payments to the delinquent taxes on the parcels, so that the properties would be considered redeemed. Nonetheless, when certificates of redemption were ultimately issued, they indicated that the properties were redeemed as of the auction date, so that Cooper would not be charged with additional taxes and penalties while his payments were being processed.

On March 18, 2004, Indyway filed its complaint in the instant action against Cooper and the County, seeking to quiet title to properties 15 and 16, and cancel the tax deeds. Cooper filed a cross-complaint, also seeking to quiet title. The case proceeded to a bench trial.

Indyway subsequently added a cause of action for payment of the excess proceeds from the tax sale. Indyway was successful on this cause of action at trial, and it is not at issue in this appeal.

At the trial, Indyway’s witnesses testified to a different, and highly improbable, view of the facts, in three significant areas: First, Indyway took the position that it had executed change of address cards for properties 13 through 16, identifying the Long Beach box, and had mailed them to the assessor on October 16, 1999. Indyway relied on an exhibit, consisting of copies of the purported cards, and a signed proof of service. Indyway also relied on the testimony of Raymond Amavisca, the man who purportedly had executed the proof of service. Amavisca testified that he was a friend of Melissa Diaz, and that she asked him to do this favor for her. He testified that she gave him the four filled-out cards and a proof of service. According to Amavisca, he signed the proof of service, put all five items in an envelope (on which Diaz had affixed postage) and immediately mailed them at the post office. In cross-examination, he agreed that he had signed only one copy of the proof of service – the copy which he placed in the envelope and mailed. Indyway offered no explanation of how its trial exhibit could contain a signed proof of service if the single executed copy had been immediately mailed to the County assessor with no copies made. Furthermore, the County introduced evidence from an employee of the assessor’s office indicating that, if Indyway’s purported change of address cards had been received, the office would have requested a letter on Indyway’s letterhead authorizing the change, and would not have processed it without such authorization. The trial court clearly disbelieved Indyway’s evidence on the issue of the change of address cards, finding, in its statement of decision, that Indyway “did not change its official mailing address.”

Second, Indyway offered the testimony of Cohen to the effect that he went to the tax collector’s office on August 6, 2003, to inquire on the status of the planned sale of parcels 15 and 16. As, by coincidence, Cohen inquired during the precise time that the properties had been temporarily removed from the auction for a Chapter 8 sale, Cohen testified that he had been informed by a “man” at the office that parcels 15 and 16 had been pulled from the auction. Indyway took the position that Cohen relied on this information and believed that the properties would not be auctioned, and therefore pursued no further efforts to stop the auction. In contrast, the County introduced evidence that, if someone had come to the counter with a problem with respect to a particular parcel, the tax assessor would have documented the encounter on a referral form. In contrast, if someone had simply inquired whether a particular parcel was still available for auction, that person likely would have been handed the most recent “update sheet” of parcels available for sale. In other words, the interaction as Cohen described it was highly unlikely. Moreover, it did not fit with Cohen’s usual way of conducting Indyway’s business. Cohen often submitted proofs of service with letters he mailed, and requested certified copies of documents. The idea that he would have been satisfied by the oral representation of “some man” at the collector’s office, without obtaining anything in writing (or even the man’s name), on an issue as important as the removal of the parcels from the auction, is difficult to accept.

Third, Cohen testified that on August 11, 2003, the day of the auction, he received an anonymous telephone call at his home, indicating that the caller had paid the taxes owed by Indyway on both parcels, and that Cohen should pick up certificates of redemption. The caller indicated that payment had been made by cash. Cohen testified that he went to the tax collector’s office on August 13, 2003, and received certificates of redemption for properties 15 and 16, showing that the taxes had been paid. This testimony is unworthy of credence for several reasons, apart from the improbable nature of the existence of an anonymous property-tax paying volunteer. First, the last day to redeem the property was August 8, 2003; it was not possible for the taxes to have been paid on August 11, 2003. Second, the tax collector’s records indicate that the taxes were not, in fact, paid when the property was eligible for redemption. Third, the taxes were not paid until Cooper paid in full for the property, some time after August 13, 2003. Finally, the taxes were not accounted for as paid in the tax collector’s books until November 6, 2003, rendering the issuance of certificates of redemption on August 13, 2003 impossible. The County’s evidence indicated that certificates of redemption would have been available for the property after November 6, 2003, and that they would have been back-dated to the August 11, 2003 date of auction. It is apparent that Indyway obtained such certificates of redemption after November 2003, and – seeing the August 11, 2003 date of redemption – concocted the anonymous donor story in order to support its claim to the property. The trial court disbelieved Cohen, specifically concluding that “the properties were not redeemed.”

A certificate of redemption does not indicate the identity of the taxpayer; it indicates only that the taxes have been paid. Thus, anyone who wants to obtain proof that the taxes have been paid on a property may obtain a certificate of redemption.

Such a blatant fabrication on a material point also constitutes a basis for the trial court to doubt Cohen’s credibility as a whole. (See CACI No. 107.)

The trial court concluded that the County had complied with all of its notice obligations. The court therefore concluded the tax sale was proper, and quieted title to the properties in Cooper. Indyway filed a timely notice of appeal.

CONTENTIONS OF THE PARTIES

On appeal, Indyway contends the trial court erred in concluding that the County had satisfied all of its obligations prior to conducting the tax sale. Specifically, Indyway contends that the County failed in its obligations – imposed both by statute and the federal Constitution – to provide proper notice of the auction. This argument specifically relies on the fact that, had the tax collector searched its own correspondence files for addresses for Indyway, it would have found the Long Beach box. In addition to Indyway’s contentions regarding the notice of auction, Indyway also finds fault with: (1) the County’s temporary removal of the properties from the tax sale; (2) the County’s replacement of the properties back into the auction shortly thereafter; and (3) the failure of the County to record additional notices of power to sell.

DISCUSSION

1. Applicable Standard of Review

When the facts are undisputed, their legal effect is resolved on appeal de novo. (Bank of America v. Giant Inland Empire R.V. Center, Inc. (2000) 78 Cal.App.4th 1267, 1274.) However, when considering factual issues on which the evidence was disputed, all conflicts must be resolved in favor of the judgment, and all legitimate and reasonable inferences indulged in to uphold the judgment if possible. When a judgment is attacked as being unsupported, the power of the appellate court begins and ends with a determination as to whether there is any substantial evidence, contradicted or uncontradicted, which will support the judgment. When two or more inferences can be reasonably deduced from the facts, the reviewing court is without power to substitute its deductions for those of the trial court. (Western States Petroleum Assn. v. Superior Court (1995) 9 Cal.4th 559, 571.)

2. Substantial Evidence Supports the Trial Court’s Factual Conclusions

Indyway asserts that certain of the trial court’s factual conclusions are unsupported by the evidence. Specifically, Indyway challenges the trial court’s conclusions that Indyway’s change of address cards had not been submitted to the County assessor, and that Indyway had actual notice of the 2003 auction with respect to both properties. Both conclusions are well-supported by the evidence. As discussed above, the trial court was justified in rejecting Indyway’s testimony regarding the change of address cards, based on the contradiction between Amavisca’s testimony that he had signed and mailed a single copy of the proof of service, and Indyway’s possession of a purported copy of the signed proof of service. Additionally, the court relied on the County’s evidence that the assessor’s office would not have accepted the change of address cards without an authorization on letterhead.

The evidence also supports the trial court’s conclusion that Indyway had actual notice of the 2003 auction with respect to both properties. Cohen concededly received the notice of auction of the 15 property on July 8, 2003. That day, he wrote a letter to the tax collector admitting receipt of the notice, and threatening legal action should the County proceed with the tax sale of both properties – reflecting an understanding that both properties were to be offered for sale. Indeed, Cohen’s August 1, 2003 letter confirms the understanding. In that letter, Cohen represented that he had not received a notice of auction for the 16 property – a charge that would not be made if he did not know that the County intended to sell the 16 property at auction. Finally, Cohen testified that on August 6, 2003, he inquired at the tax collector’s office as to the status of both parcels, which he would not have done had he believed only parcel 15 was subject to sale. In short, the evidence that Cohen, on behalf of Indyway, had actual notice that both parcels 15 and 16 were to be sold at auction on August 11, 2003 is more than sufficient.

3. Indyway’s Non-Constitutionally-Based Challenges are Not Cognizable

Revenue and Taxation Code section 3711 provides, “Except as against actual fraud, the [tax] deed duly acknowledged or proved is conclusive evidence of the regularity of all proceedings from the assessment of the assessor to the execution of the deed, both inclusive.” To similar effect is the “validating” clause in Revenue and Taxation Code section 3701, governing notices of auction. Although the statute provides that the “tax collector shall make a reasonable effort to obtain the name and last known mailing address of parties of interest,” the section also provides that “[t]he validity of any sale under this chapter shall not be affected if the tax collector’s reasonable effort fails to disclose the name and last known mailing address of parties of interest or if a party of interest does not receive the mailed notice.”

Although the language of these clauses, particularly the former, appears absolute, there is an exception for constitutionally-required procedures. The validating clauses in Revenue and Taxation Code sections 3701 and 3711 “cannot cure a jurisdictional defect, that is, one which is a constitutionally indispensable step. [Citations.] Alternatively, those sections do cure a nonjurisdictional defect.” (Chesney v. Gresham (1976) 64 Cal.App.3d 120, 128.) A simple failure to comply with a step prescribed by the Legislature is cured by these provisions, as long as the step is not also required by the state or federal Constitutions. (Ibid.)

As such, while we will address Indyway’s contentions that the County violated its right to federal due process, all of its remaining contentions are barred by the conclusive effect given to the tax deeds. Thus, the following arguments are simply not cognizable: (1) that the County failed to comply with statutory requirements for giving notice of the auction; (2) that the properties were improperly removed from the tax sale; (3) that the properties were improperly replaced in the tax sale; and (4) that the County was required to record a second notice of power to sell.

In its brief on appeal, Indyway suggests that the tax collector committed fraud, an argument exempted from the conclusiveness of a tax deed by the express language of Revenue and Taxation Code section 3711. According to Indyway, after the tax collector received Cohen’s letter of August 1, 2003 threatening legal action, the tax collector “intentionally removed” the parcels from the tax sale list, but not from the auction itself. According to Indyway, the tax collector intended to keep the parcels “removed” until the completion of the public auction. This would prevent Indyway from bringing an action to stop the auction of the properties until it was too late. Indyway further posits that Cohen’s serendipitous visit to the tax collector’s office on August 6, 2003 interrupted the plan. Cohen’s visit forced the tax collector to not only admit that the parcels had been removed from the list “but to explain how the parcels had mysteriously changed designation.” The tax collector then “cover[ed its] tracks” by replacing the properties on the auction list. Indyway did not allege fraud in its complaint, nor did it pursue this theory at trial. In any event, it is supported only by speculation, and contradicted by Cohen’s own testimony. Cohen testified that he had been told that the properties had been “pulled” from the auction, not that the parcels had “changed designation.” If there had been a plan to keep the properties removed from the list in order to prevent Indyway from bringing suit, telling Cohen that the parcels had been removed would have been an integral part of it – it would not have required the tax collector to cover its tracks and replace the properties on the auction list.

At oral argument, Indyway argued that the removal of the properties from the auction list and their subsequent replacement amounted to a jurisdictional error. For the purposes of the argument, Indyway conceded the evidence supported the conclusions: (1) that the properties had been removed from the auction list for only a few hours; and (2) that nobody, including Cohen, had been informed of their removal during this time. In other words, Indyway argues that a three-hour mis-designation of the parcels known only to the County offices somehow deprived the County of jurisdiction to sell the parcels. Indyway has no authority to support this proposition, and we fail to see how a clerical error in these circumstances rises to the level of a constitutional violation.

We note that this latter argument, on which Indyway heavily relied in challenging the auction, is simply not meritorious. Revenue and Taxation Code section 3691.1 provides that the tax collector shall execute a notice of power to sell “whenever a parcel becomes subject to the power of sale set forth in [Revenue and Taxation Code s]ection 3691.” This notice is then to be recorded. (Rev. & Tax. Code, § 3691.4.) Indyway takes the position that the phrase “whenever a parcel becomes subject to the power of sale” requires a new notice whenever a parcel is scheduled to be sold in a new auction. We disagree. The statute itself explains that a notice of power to sell is necessary whenever the parcel becomes subject to the power of sale as set forth in Revenue and Taxation Code section 3691. That section explains that a property becomes subject to the power of sale five years after the property has become tax defaulted. In other words, five years after a property has become tax defaulted, it is subject to the power of sale, and notice should be recorded to that effect. The property remains subject to the power of sale until it is either redeemed or sold – at which time, it may again become subject to the power of sale if another five years elapse after a tax default. The fact that a notice of power to sell might have been recorded in anticipation of a particular auction does not mean the notice of power to sell loses effect after that auction. The property became subject to the power to sell not because of a planned auction, but because the taxes remained unpaid. Therefore, a subsequent auction, based on the same unpaid taxes, does not require a second notice of power to sell.

4. Indyway was Given Due Process

“Before a State may take property and sell it for unpaid taxes, the Due Process Clause of the Fourteenth Amendment requires the government to provide the owner ‘notice and opportunity for hearing appropriate to the nature of the case.’” (Jones v. Flowers (2006) 547 U.S. 220, 223.) “[W]hen notice is a person’s due, process which is a mere gesture is not due process. The means employed must be such as one desirous of actually informing the [person] might reasonably adopt to accomplish it. The reasonableness and hence the constitutional validity of any chosen method may be defended on the ground that it is in itself reasonably certain to inform those affected [citations], or, where conditions do not reasonably permit such notice, that the form chosen is not substantially less likely to bring home notice than other of the feasible and customary substitutes.” (Mullane v. Central Hanover Bank & Trust Co. (1950) 339 U.S. 306, 315.) Actual notice is not required to satisfy due process. The government is required only to provide notice that is reasonably calculated under all of the circumstances to apprise of the pendency of the action and give an opportunity to object. (Jones v. Flowers, supra, 547 U.S. 220, 226.)

It has been held that when the County knows that the notice it has sent to an interested party has not been received – such as, if the notice was returned undelivered – the County is required to make reasonable efforts to renotice the party, if such efforts would impose a relatively modest administrative burden. (Bank of America v. Giant Inland Empire R.V. Center, Inc., supra, 78 Cal.App.4th at pp. 1276-1278; Sinclair & Valentine Co. v. County of Los Angeles (1988) 201 Cal.App.3d 1021, 1027.) Examples of such reasonable additional efforts might include obtaining a preliminary title report (Bank of America v. Giant Inland Empire R.V. Center, Inc., supra, 78 Cal.App.4th 1267, 1278), searching the telephone book (ibid.), or searching its own records (Sinclair & Valentine Co. v. County of Los Angeles, supra, 201 Cal.App.3d at pp. 1025, 1027).

In this case, the issue of whether the County’s efforts satisfied the constitutional standard of reasonableness is academic. The purpose of due process in this context is to provide the party with notice of the imminent deprivation of property and an opportunity to be heard. Here, Indyway had actual notice of the auction sale. Nor was Indyway’s notice received too late for Indyway to have an opportunity to challenge the upcoming sale. Indyway was apprised of the sale one month in advance, sent more than one letter to the tax collector challenging the sale, and had an opportunity to consult with counsel. During this time, Indyway chose to claim that the notice it had received was invalid, because it had not been sent to the address Indyway had unilaterally decided was the only place it would accept mail. Due process is not a game. Once Indyway had actual notice, the Constitution was satisfied.

In any event, we conclude that the methods taken by the County in order to give notice to Indyway were not unreasonable as a matter of law. The County purchased a title report from an independent vendor, performed an internet phone book search, and checked its own records for other property owned by Indyway. Indyway argues that, in this particular case, reasonable efforts would have included a search of the tax collector’s own correspondence files, which would have revealed a history of correspondence with Indyway at the Long Beach box. We disagree. That an additional address for Indyway would have been disclosed by such a search does not imply that such a search would be reasonably calculated to obtain Indyway’s last known address, or that it would have been any more likely to find Indyway’s address than the combination of a title search, internet search, and tax roll search. Therefore, it was not required by due process.

Indyway makes much of a passage in the County Tax Sale Procedural Manual, issued by the Controller, which suggests an in-house search of tax collector records may be a better starting point than a title report when compiling a party of interest list with respect to a parcel which had previously been offered for sale. The manual suggests this as a cost-saving alternative to a title report, it does not suggest that an in-house search is preferable to a title report.

DISPOSITION

The judgment is affirmed. Cooper and the County shall recover their costs on appeal.

We Concur: KLEIN, P. J., KITCHING, J.


Summaries of

Indyway Investment v. Cooper

California Court of Appeals, Second District, Third Division
Apr 1, 2008
No. B192944 (Cal. Ct. App. Apr. 1, 2008)
Case details for

Indyway Investment v. Cooper

Case Details

Full title:INDYWAY INVESTMENT, Plaintiff and Appellant, v. DENNIS COOPER and COUNTY…

Court:California Court of Appeals, Second District, Third Division

Date published: Apr 1, 2008

Citations

No. B192944 (Cal. Ct. App. Apr. 1, 2008)