Pitts v. Delaware County Tax Claim Bureau

Citations: 967 A.2d 1047; 2009 Pa. Commw. LEXIS 69; 2008 WL 5672070Docket: 1833 C.D. 2007, No. 1834 C.D. 2007

Court: Commonwealth Court of Pennsylvania; February 26, 2009; Pennsylvania; State Appellate Court

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Chadd Neumann and Steve Fitzgerald LLP (Appellants) appeal a decision by the Court of Common Pleas of Delaware County that annulled the upset sale of 335 Francis Drive, Haverford, Pennsylvania, and invalidated the tax sale deed they obtained. Gloria Pitts (Appellee) filed an emergency petition, asserting she was the record owner and occupant of the property and was unaware of the upset sale scheduled for September 13, 2006, until notified by a third party in October 2006. She claimed the notice of the sale was defective and did not comply with statutory requirements, specifically lacking proper personal service as mandated by the Tax Sale Law. Although there was a record of a notice being posted on the property, Pitts contended there was no documented proof of personal service to her, which is necessary for the sale of owner-occupied properties. Additionally, the Tax Claim Bureau sought to waive the personal notice requirement, but the court allowed the sale to proceed without adequate notice to Pitts, violating her rights under the Tax Sale Law. The court's ruling emphasized the absence of service or notice regarding both the petition to waive notice and the hearing on the matter.

The petitioner argues that, even if waiver of personal service is permissible, she was denied due process and substantive rights because she did not receive notice of the underlying petition or hearing as required by the court, preventing her from responding or defending herself. The appellants denied the allegations and claimed they were mere conclusions of law while requesting the trial court to confirm the sale of the property located at 335 Francis Lane, Haverford Township, Delaware County, PA. 

At a hearing, it was revealed that the Tax Claim Bureau sent a certified delinquent tax notice regarding the 2004 tax year, which was signed for by Melanie Pitts. In July 2006, the Bureau sent another certified notice about an upset sale, which was returned unclaimed. On August 6, 2006, a deputy sheriff posted a notice of the pending sale at the property and attempted personal service on two occasions without success. The Bureau also published notices in local newspapers and sent a ten-day notice by first-class mail on August 30, 2006, which was not returned. A phone call made by the Bureau was to a disconnected number. 

The Tax Claim Bureau petitioned the court for the sale confirmation on September 1, 2006, and the property was sold to the appellants on September 13, 2006, for $20,276.00. The sale was confirmed by the court on November 1, 2006, and became absolute on December 4, 2006. The appellee testified that she lived at the property for nine years and first learned about the sale on September 28, 2006, through a sticky note left on her door, followed by a letter.

Appellee acknowledged her delinquent property taxes and sought refinancing through Lending Tree for financial support, which included settling debts, legal fees for her divorce, and paying the overdue taxes. She later learned that her tax payment was returned because her property had been sold at a tax sale, of which she claimed she had no prior notice from the Tax Claim Bureau (TCB). The trial court ruled to set aside the upset sale, finding that Appellee established a prima facie case of due process violation, noting a lack of evidence that the TCB made reasonable efforts to notify her beyond standard procedures. The court referenced the statutory requirements of the Real Estate Tax Sale Law (RETSL), emphasizing that the TCB has the burden to prove compliance with notification protocols. The court highlighted that strict adherence to these notice provisions is critical to uphold due process rights, and any judicial inquiry post-sale can only address notice compliance and specific related issues. Appellants contended that the TCB met statutory notice requirements under Section 602 of RETSL, asserting that the trial court's decision to set aside the sale was erroneous.

Sufficient evidence exists to confirm that the Tax Claim Bureau adhered to the notice requirements outlined in Section 602 of the Real Estate Tax Sale Law (RETSL), 72 P.S. 5860.602(a). Specifically, the Bureau sent a certified delinquent tax notice to the Appellee on April 1, 2004, which she acknowledged receiving. Additionally, in July 2006, another certified notice regarding an upset sale was mailed but returned as "unclaimed." On August 6, 2006, a Deputy Sheriff posted a notice of the upcoming upset sale at the property and attempted personal service. A ten-day sale notice was sent via first-class mail on August 30, 2006, which was not returned. Furthermore, public notices of the sale were published on August 9, 10, and 11, 2006, in various local newspapers. The Appellee did not contest the accuracy of the property address or indicate that she had moved. As a result, the Bureau’s compliance with Section 602(a) confirmed that the Appellee was duly notified of the pending sale, and the sale cannot be invalidated based on claims of non-receipt of notice, as established by Section 602(h).

Regarding Section 607.1 of the RETSL, the Appellants argue that the Bureau was not obligated to conduct further notification efforts beyond a current telephone directory search, as additional attempts would not likely yield a different mailing address. Section 607.1 mandates that reasonable efforts must be made to locate the owner if mailed notifications are returned or not acknowledged. This includes searching current telephone directories and relevant county records. A precedent in Jefferson Township questioned whether the Tax Claim Bureau needed to undertake all notification efforts specified in Section 607.1 in addition to the notices required by Section 602.

The trial court upheld the Bureau’s actions regarding the notification process for M. Susan Ruffner, determining that the Bureau complied with Section 607.1 of the RETSL by making reasonable efforts to locate and inform her of the tax sale. The court clarified that due process requires the Bureau to conduct a reasonable investigation to ascertain the identity and whereabouts of property owners but does not necessitate extensive actions like title searches. Proper notice was sent to Ruffner via certified mail, which she did not claim, and first-class mail was also sent to her correct address without being returned. The Bureau's investigation included checking local telephone directories, which sufficed under Section 607.1, and there was no requirement to search outside the county or conduct internet searches for alternative contact information. The trial court concluded that the Bureau's efforts met the legal requirements and that Ruffner's failure to retrieve her certified mail contributed to the situation.

The Tax Claim Bureau confirmed that the property mailing address was accurate despite the disconnection of the telephone number. Citing precedent from Jefferson Township, the Bureau was not obligated to perform additional notification efforts. Consequently, the court reversed the lower court's decision. Judge SMITH-RIBNER concurred with the result, while Judge FRIEDMAN dissented. Judge COHN JUBELIRER, in a dissenting opinion, argued that the Bureau failed to comply with Section 607.1 of the Real Estate Tax Sale Law (RETSL), which mandates additional notification efforts when mailed notices are returned unclaimed. 

In this case, notice of the tax sale was sent to the property owner, Gloria Pitts, in July 2006, but was returned unclaimed. The Bureau sought a waiver for personal service, which the trial court granted, yet made no further attempts to personally notify Pitts. She only learned of the sale through a note left by the purchaser. The trial court concluded that the Bureau did not make reasonable efforts to notify her. 

Section 607.1(a) requires the Bureau to make reasonable efforts to locate property owners when a notice is returned without a signature confirming receipt. This includes mandatory and discretionary search requirements. The mandatory searches involve consulting county directories and tax assessment records, and the Bureau must complete all three specified searches to comply. Failure to perform these searches is considered a fatal defect, as highlighted in the case of Fernandez v. Tax Claim Bureau of Northampton County, which set aside a judicial sale due to the Bureau's inaction. Discretionary search efforts are defined on a case-by-case basis, allowing flexibility beyond the mandatory requirements.

The Bureau must employ common business practices to identify proper addresses for tax sale notifications, as established in *Farro v. Tax Claim Bureau of Monroe County*. While the Bureau satisfied the telephone directory requirement, it failed to demonstrate that it completed mandatory searches of dockets and indices from relevant county offices. The majority opinion incorrectly treats these mandatory searches as discretionary, contrary to statutory language and judicial precedent, which dictate that reasonable efforts include these three searches plus any additional appropriate efforts. The majority overlooks the necessity for the Bureau to meet mandatory requirements before considering discretionary efforts. It suggests that compliance with Section 602(h) of the Real Estate Tax Sale Law (RETSL) negates the need for subsequent review of the Bureau's notification efforts. However, Section 602(h) assumes prior compliance with all notice requirements, including those in Section 607.1. The majority's analysis implies that the owner may have been at fault for not receiving notice, citing the owner's acknowledgment of the tax delinquency notice and the unclaimed status of judicial sale notices. However, case law emphasizes that the focus should remain on the Bureau's adherence to statutory requirements rather than any potential neglect by the owner. Strict compliance with notice requirements is essential to protect property rights and ensure due process.

Disagreement exists regarding the majority's conclusion that notice requirements for the tax sale were satisfied due to the Owner's acknowledgment of receiving notice of tax delinquency. The law stipulates that knowledge of tax delinquency does not equate to receiving notice of an impending tax sale, as established by the U.S. Supreme Court in Jones v. Flowers. Consequently, regardless of the notice received regarding delinquency, the Bureau was obligated to adhere to all statutory procedures outlined in Section 607.1. The language of Section 607.1 mandates compliance when any notification of a pending tax sale is returned without proper acknowledgment or under circumstances that raise doubts about actual receipt. The dissent emphasizes that the record lacks sufficient evidence to confirm that the Bureau utilized all required notification methods, with factual issues remaining about whether these efforts were made. Owner's testimony suggests she did not receive any certified mail notifications. The dissent critiques the majority's stance, which dismisses the mandatory statutory notice requirements as "fruitless," arguing that these requirements are legislative, not equitable, and should be strictly interpreted to uphold due process. The dissent supports affirming the trial court's order, emphasizing strict adherence to notice requirements as essential to protect constitutional rights.

On August 29, 2006, the Tax Claim Bureau filed a petition with the common pleas court under Section 601(3) of the Real Estate Tax Sale Law (RETSL), requesting a waiver for personal service by the Sheriff due to inability to serve within 25 days. The court granted this petition on September 8, 2006. A subsequent letter from Chadd Neuman informed Gloria Pitts that her property at 335 Francis Drive had been sold at an Upset Sale for unpaid taxes since 2004, urging her to contact him to potentially resolve the situation before eviction proceedings began.

On December 20, 2007, the trial court referenced its earlier orders in response to the Appellant’s appeal, indicating that the reasons for its decisions were contained in those orders. In a second order dated August 27, 2007, the court set aside the upset sale, vacated any tax sale deeds issued to the intervenors, and mandated the refund of all proceeds paid by the intervenors, including interest.

The court noted that its review in tax sale cases is limited to assessing whether the trial court abused its discretion, made legal errors, or acted without supporting evidence. The upset sale's validity negated the need to address the Appellants' claim regarding the trial court's departure from the principle that judges of coordinate jurisdiction should not overrule each other on the same issue. The majority opinion cited a prior case to support the conclusion that a search of county records was unnecessary, highlighting that the previous case did not pertain to owner-occupied property, which distinguishes it from the current situation.

The statute mandates that the tax claim bureau conduct a search of the county's recorder of deeds for properties, and it cannot bypass this requirement, regardless of the perceived futility of the task or the negligence of the property owner. The responsibility for notification of impending property sales lies with the Bureau, emphasizing strict compliance to protect against potential deprivation of property without due process. The property owner is not obligated to inform the Bureau of changes to her address. Additionally, the Bureau's argument that strict adherence to the statutory requirements for notifying property owners, particularly in cases where the owner does not reside in the county, is unnecessary or would not have impacted the outcome, is characterized as speculative. Testimony indicated that the owner's estranged husband had access to her mail and had previously handled tax payments. There are two versions of the transcript from the April 30, 2007, hearing, though both are substantively identical for the appeal’s purposes, and the cited transcript is the one included in the record for this Court's review.