Tuesday, June 17, 2008
State Supreme Court Overturns Tax Sale Based on Flawed Notice
Justices Say Letter That Misnamed Owners Did Not Trigger Limitations Period
By KENNETH OFGANG, Staff Writer
Purported notice of a tax sale did not put the property owners on actual or constructive notice of the delinquency where the notice was sent to the correct address but misnamed the owners, who reasonably believed the notice was sent to them in error, the state Supreme Court ruled yesterday.
The justices unanimously overturned a Court of Appeal ruling in favor of L&B Real Estate—described by opposing counsel as “the king of the foreclosure market in California”—which purchased a Los Angeles parcel belonging to Frank and Josie Mayer for $24,000 at the 2001 sale.
The parcel was part of a La Brea Ave. property, the site of an AutoZone store, purchased by the Mayers in 1991. The grant deed described the property as consisting of three parcels, and the Mayers paid between $14,000 and $17,000 a year in real estate taxes after that.
In June 2001, they received notice from the county tax collector that a property described as “POR OF VAC ST ADJ LOT 509 TR NO 1446 ON E” was due to be sold unless $4,780 in past due taxes was paid. The notice listed Henry S. and Chong I. Moon as the owners of the property instructed the recipients to return the notice if they believed it was sent in error, which the Mayers did.
At trial, the Mayers explained that they believed the notice to be in error not only because they were unfamiliar with the Moons, but also because the assessor’s parcel number on the notice differed from that on their tax bills and because the property description on the notice differed from that on their deeds.
As it turned out, however, the property to which the notice referred consisted of two of the three parcels described in the deed. This was a triangular shaped piece of property next to the store that supported a huge AutoZone sign.
The Moons, who already owned the property on which the store was sited, bought the parcel from the city in 1988. They later recorded an agreement to hold the three parcels as one before selling the entire property to a corporation, which later sold it to the parties who eventually sold it to the Mayers.
The assessor, however, listed the property as two separate parcels, contrary to the office’s usual practice involving consolidated parcels. Evidence at trial showed that the assessor mistakenly continued to assess the odd-sized property in the names of the Moons while properly assessing the store property in the names of the Mayers.
Discovery later confirmed that the tax collector had noticed the name discrepancy and informed the assessor, but that the error went uncorrected as the sale went forward. L&B purchased the property in August 2001; the Mayers were notified in November 2001 that they could claim the excess proceeds, this being the first notice concerning the matter that named them as the “assessees” for the property.
After trying to resolve the matter with the assessor and tax collector, the Mayers referred the matter to counsel, who filed a quiet title action in October 2002. Los Angeles Superior Court Judge Barbara Meiers ruled for the Mayers, but the Court of Appeal reversed, holding that the August 2001 tax sale triggered the one-year limitations period.
Justice Carlos Moreno said the Court of Appeal was wrong, and that the November notice triggered the one-year period. Before that, he explained, the Mayers were in “undisturbed” possession of the property and thus not on notice that their title to the property was in question.
Under the unusual facts, Moreno said, the mere fact that the taxes were unpaid could not have placed the Mayers on notice of the delinquency, nor could the erroneous notice sent to them in August.
“The crucial issue...is when their possession of the property was disturbed by adequate notice of the tax sale,” Moreno wrote. “As noted above, this happened when the Mayers received the Tax Collector’s November 2, 2001 letter. Only then could the statute of limitations begin to run.”
The Mayers’ appellate attorney, Henry W.R. Chamberlain II of Buchalter Nemer, said the decision eliminates “about 80 years of uncertainty” as to the meaning of “undisturbed possession.” As the high court saw it, “it’s all about due process,” he said.
He also credited the Mayers’ trial lawyer and appellate co-counsel, Encino practitioner Steven W. Weinshenk, with a “truly exceptional” presentation at trial.
L&B’s attorney, Mitchell Ezer of Ezer Williamson & Brown said he was not surprised by the decision, based on the tenor of oral argument and other factors, but that he could not comment further because he had not read the opinion.
The case is Mayer v. L&B Real Estate, 08 S.O.S. 3496.
Copyright 2008, Metropolitan News Company