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Rebuild America, Inc. v. Drew

Court of Appeals of Mississippi

January 22, 2019

REBUILD AMERICA, INC. APPELLANT
v.
JANE A. DREW APPELLEE

          DATE OF JUDGMENT: 05/08/2017

          HANCOCK COUNTY CHANCERY COURT HON. JAMES B. PERSONS TRIAL JUDGE.

          ATTORNEY FOR APPELLANT: LEWIE G. “SKIP” NEGROTTO IV

          ATTORNEYS FOR APPELLEE: ROBERT T. SCHWARTZ CHRISTIAN J. STRICKLAND

         EN BANC.

          WILSON, J.

         ¶1. Jane Drew failed to pay the ad valorem taxes assessed on her home in Diamondhead for three consecutive years, and as a result the property was sold at tax sales in three consecutive years. Drew did not redeem the property during any of the statutory redemption periods that followed the tax sales, and Rebuild America Inc. ("Rebuild") now claims ownership of the property through those tax sales. Rebuild's claim to the property led to two lawsuits: a quiet-title action that Rebuild filed against Drew ("Drew I") and a suit to quiet title and set aside the tax sales that Drew filed against Rebuild ("Drew II"). In Drew I, the chancery court held that the first tax sale was void because the chancery clerk failed to comply with statutory notice requirements. Therefore, the court set aside the first tax sale and declared Drew the rightful owner of the property. Rebuild did not appeal the final judgment entered in Drew I. In Drew II, the chancery court held that the second and third tax sales were also void due to the clerk's failure to comply with applicable notice statutes. Therefore, the court set aside those tax sales as well and again declared Drew the rightful owner of the property. Rebuild filed a timely notice of appeal in Drew II.

         ¶2. On appeal, Rebuild argues (1) that Drew waived her right to challenge the tax sales pursuant to a 2010 contract between Drew and Rebuild and (2) that Drew was not entitled to notice of the second two tax sales because she was no longer the record owner of the property by that point. We hold that Rebuild's waiver argument is foreclosed by the chancery court's final decision in Drew I. We also hold that all three tax sales were void ab initio because in each case the chancery clerk failed to comply with statutory notice requirements. Thus, Drew remained a record owner entitled to statutory notice of each sale. Therefore, we affirm the judgment of the chancery court setting aside the tax sales and declaring Drew the property's rightful owner.

         FACTS AND PROCEDURAL HISTORY

         I. The 2008 Tax Sale and Drew I

         ¶3. Jane Drew owns a house in Diamondhead. Drew failed to pay ad valorem taxes of $522.40 that were assessed on the property for the year 2007. On August 25, 2008, U.S. Bank Custodian - Sass Muni VI ("U.S. Bank") bought the property at a tax sale for the 2007 taxes. Drew did not redeem the property by paying the 2007 taxes within the two-year redemption period.[1] On December 1, 2010, the Hancock County Chancery Clerk executed a tax deed to U.S. Bank, which was recorded in the county land records.

         ¶4. On December 14, 2010, Drew and Rebuild entered into an agreement of sale ("2010 Agreement"). Drew agreed to pay Rebuild $5, 710 on or before February 28, 2011, for the title to her Diamondhead home. The 2010 Agreement, drafted by Rebuild, represented that Rebuild had already acquired title to the property on December 2, 2010, which was the day after the tax deed was issued to U.S. Bank. However, as the chancery court later found, that representation was not true. U.S. Bank did not actually convey the property to Rebuild until May 2011. The 2010 Agreement also stated: "[Drew] waives and releases all claims, demands, actions and disputes regarding any deficiencies or defects in the foreclosure proceedings and will hold [Rebuild], and prior holders of the tax sale certificates, harmless against any such claims, demands, actions, and disputes." Drew never paid Rebuild pursuant to the 2010 Agreement.

         ¶5. On June 28, 2011, Rebuild filed a complaint in the Hancock County Chancery Court to confirm and quiet title ("Drew I"). Drew filed an answer and counterclaim in which she alleged that the tax sale to U.S. Bank was void because the chancery clerk never provided her with notice required by applicable statutes. On December 26, 2013, the chancery court granted Drew's motion for summary judgment. The court ruled that the 2008 tax sale to U.S. Bank was void because the chancery clerk failed to comply with the notice requirements of Mississippi Code Annotated sections 27-43-1 (Rev. 2017) and 27-43-3 (Rev. 2010). Therefore, the court set aside the tax sale and tax deed and confirmed Drew as the rightful owner of the property.

         ¶6. On January 6, 2014, Rebuild filed a motion for reconsideration. Rebuild argued that, pursuant to the 2010 Agreement, Drew had waived her right to challenge the validity of the 2008 tax sale. On May 8, 2017, the chancery court entered an order denying Rebuild's motion. The court held that at the time the parties entered into the 2010 Agreement, Rebuild had not acquired title to the property and therefore had nothing to convey to Drew.[2] The court also reasoned that because the 2008 tax sale was void, U.S. Bank never obtained good title to the property and therefore Rebuild never could have obtained good title either. Rebuild did not file a timely appeal from the final judgment entered in Drew I. Therefore, the decision and judgment of the chancery court in Drew I became final.[3]

         II. The 2009 Tax Sale

         ¶7. Drew also failed to pay ad valorem taxes of $566.53 that were assessed on her home for the year 2008. On August 31, 2009, U.S. Bank Custodian - Sass Muni V ("U.S. Bank")[4]bought the property at a tax sale for the 2008 taxes, initiating the two-year statutory redemption period.

         ¶8. On July 20, 2011, the chancery clerk sent correspondence to Drew by certified mail. Drew signed for delivery on August 1, 2011. However, the record does not contain a copy of the correspondence. In addition, on June 23, 2011, the chancery clerk sent correspondence by certified mail to U.S. Bank. The record contains a delivery receipt for the certified letter to U.S. Bank, although the individual who signed for it was not identified, the signature is illegible, and the receipt is undated. The record also includes a copy of a letter from the chancery clerk addressed to both Drew and U.S. Bank. The letter, which was dated February 11, 2011, advised that Drew's home had been sold at a tax sale and had to be redeemed on or before August 31, 2011. However, Hancock County Sheriff's Department stamped the letter as "unexecuted." Moreover, the record contains a September 14, 2011 letter from the sheriff to the chancery clerk notifying the clerk that the sheriff would not be delivering any tax sale notices "due to the shortage of . . . staff and late time frame of receiving the [notices]." Finally, the record includes an undated certification that a deputy chancery clerk made a diligent effort to locate Drew and U.S. Bank. That document was filed in the county land records on November 29, 2011.

         ¶9. Drew did not redeem the property by paying the 2008 taxes within the redemption period. On November 14, 2011, the chancery clerk executed a tax deed that purported to convey title to the property to U.S. Bank. The deed was recorded on November 29, 2011. On December 20, 2011, U.S. Bank ...


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