Adair Holdings v. Johnson

Citation: 304 Neb. 720Docket: S-18-1214

Court: Nebraska Supreme Court; January 2, 2020; Nebraska; State Supreme Court

Original Court Document: View Document

SummaryOriginalCytator Case TreatmentBackward CitatorAnalysis

EnglishEspañolSimplified EnglishEspañol Fácil

Standing is essential for a party to invoke court jurisdiction. Jurisdiction is a legal question reviewed independently by appellate courts. Summary judgment is affirmed if evidence shows no genuine material facts in dispute and the moving party is entitled to judgment as a matter of law. Appellate courts assess summary judgments by viewing evidence favorably for the party against whom the judgment was granted. Quiet title actions fall under equity law, where appellate courts review factual questions de novo, giving weight to the trial judge’s assessment of witness credibility when evidence is conflicting. Statutory interpretation is also a question of law for independent appellate review. Legal challenges to titles acquired through tax deeds are governed by statute, and a void tax deed provides only color of title, requiring the original owner to initiate a quiet title action. The term "paid" in Neb. Rev. Stat. 77-1844 includes the act of tendering payment. Compliance with statutory notice requirements is critical; failure renders a tax deed void. Misstatements in statutory redemption notices invalidate tax deeds. In quiet title actions, the party seeking relief must establish their own title's strength rather than exploiting the opponent's weakness. Equity relief is determined by case nature and facts, with the principle that one seeking equity must also do equity. Errors for appeal must be specifically assigned and argued. Adair Holdings, LLC, pursued a quiet title action after acquiring a tax deed, attempting to notify the record owner, Dennis G. Johnson, via certified mail and publication. The appellate court affirmed the lower court's decision.

The notice provided to Johnson regarding the redemption of his property contained incorrect information about the redemption timeframe. The trial court ruled the deed void due to this incorrect notice and upheld Johnson's counterclaim for quiet title, without requiring Johnson to reimburse Adair Holdings for delinquent taxes. Adair Holdings is appealing this decision. 

In March 2014, Adair Asset Management, L.L.C. and others purchased a tax sale certificate for unpaid 2012 taxes. Adair Management subsequently paid delinquent taxes for 2013, 2014, and 2015, and after the required three-year period, sent a certified notice to Johnson in March 2017, which was returned unclaimed. Following this, they published a notice in a local newspaper that included erroneous statutory references regarding the redemption period. The notice did not appear to be sent to Johnson’s address directly. 

Adair Management applied for a tax deed in July 2017, asserting compliance with notice requirements. The treasurer issued a tax deed later that month. In October 2017, Adair Holdings sought to quiet title to the property, and Johnson counterclaimed, arguing the notice was both statutorily and constitutionally defective. Johnson claimed he was misled by the notice into believing he had 45 days to redeem the property. He attempted to make a payment on the first business day after this perceived deadline but was refused due to the issuance of the tax deed.

Johnson claimed that the notice regarding the tax deed contained a legal misstatement, which Adair Holdings failed to contest, rendering the tax deed void. He also asserted that Adair Management neglected to inspect the property and did not provide him with personal notice as required by the Nebraska Constitution. The court granted summary judgment for Johnson, determining that Adair Management did not comply with notice requirements, leading to (1) the tax deed being ruled void, (2) the tax sale certificate being invalidated, and (3) quieting title to the property in Johnson. Adair Holdings appealed, contesting the summary judgment on two grounds: (1) asserting that the tax sale certificate remains valid despite the voiding of the tax deed, as it does not eliminate the lien for unpaid taxes, and (2) arguing that the tax deed is valid since all statutory notice requirements were met and Johnson did not significantly rely on the alleged misstatement. The appellate court emphasized that standing is crucial for jurisdiction, and it reviews summary judgments by assessing whether there are genuine issues of material fact, viewing evidence favorably for the non-moving party. It also noted that quiet title actions are equitable in nature and that statutory interpretation is a question of law. The analysis clarified that challenges to tax deeds are governed by specific statutes, and while a void tax deed affects title, it does not resolve the underlying land dispute, obligating the original landowner to initiate a quiet title action. The court underscored the necessity for strict compliance with the statutory process for tax deeds as outlined in Nebraska Revised Statutes sections 77-1801 to 77-1863, which favor landowners.

A third party paying a landowner's delinquent taxes receives a tax sale certificate and a tax lien but does not obtain immediate title to the property. The law mandates a 3-year waiting period before the certificate holder can apply for a tax deed or foreclose, during which the landowner retains the right to redeem the property by paying the outstanding taxes, interest, and costs. If the property is not redeemed after 3 years, the certificate holder has 6 months to act before the tax lien expires, requiring proper notice to all parties and an affidavit to the county treasurer to confirm compliance with statutory requirements.

Johnson's counterclaim to challenge Adair Management's tax deed hinges on his standing under Neb. Rev. Stat. 77-1844, which stipulates that no one can question a treasurer's deed title without proving all taxes due were paid by them or their predecessor at the time of sale. The statute allows for the tender of payment to the county treasurer to establish standing. Although Johnson attempted to tender payment outside the statutory redemption period, it was within the timeframe set by Adair Management in their public notice. However, because the tax deed was already issued, the treasurer refused his payment. The district court legally determined that Johnson's attempt to tender payment satisfied the standing requirement under 77-1844.

Upon establishing standing, 77-1843 outlines four methods for a landowner to contest a tax deed, which is void if the holder fails to meet statutory notice requirements before obtaining the deed. The statute emphasizes that a party claiming title adverse to a treasurer's deed must provide proof to defeat the title.

Strict compliance with statutory language in 77-1843 and related statutes is essential for a treasurer to have the authority to issue a tax deed. Adair Management failed to adhere to the notice requirements of 77-1831 (Reissue 2009), which dictate the necessary timing and content for notice before a tax deed can be granted. Instead, Adair Management used the terms from a later version, 77-1831 (Cum. Supp. 2012), which incorrectly allowed 45 days for redemption after the tax deed issuance. The applicable version for Johnson’s land, according to Section 77-1837.01, was the 2009 statutes, under which Johnson’s right to redeem expired upon the issuance of the tax deed. A misstatement in the notice regarding the expiration of the redemption period invalidates the tax deed. Since it is uncontested that Adair Management's notice contained this misstatement, the district court correctly ruled the tax deed void.

Adair Holdings contended that Johnson needed to show detrimental reliance to invalidate the tax deed, but the court found no legal precedent supporting such a requirement. 

Regarding Johnson's quiet title claim, the court determined there was no error in granting summary judgment in Johnson's favor. Johnson provided uncontested evidence of his ownership and valid title prior to the tax sale, establishing that no one else had a superior claim. Although quiet title actions typically require the claimant to pay delinquent taxes to obtain equitable relief, Adair Holdings did not formally argue this requirement as an error, instead suggesting the matter be remanded to determine the amount owed. The court noted that such a demand for payment would need to be addressed as part of a judgment if the tax deed was voided.

To be considered by an appellate court, errors must be specifically assigned and argued in the party's brief. Adair Holdings' argument regarding the invalidity of the tax sale certificate lacks merit because it did not raise the issue of recovery for delinquent taxes in the lower court. The legal principle that "one who seeks equity must do equity" applies, but prior case law cited by Adair Holdings is not relevant, as those cases involved a certificate holder who had requested reimbursement in the trial court. Adair Holdings failed to present any claim for reimbursement in its pleadings or in response to the counterclaim for quiet title. Additionally, Adair Holdings is not the entity that paid the delinquent taxes; the record shows that the interest in the land was transferred from Adair Management and BMO Harris Bank to Adair Holdings without indication of any assignment of claims or rights. Consequently, requiring Johnson to reimburse Adair Holdings would unjustly compensate it for a payment made by a third party, as Adair Holdings has not established standing for such a claim. The court affirms the summary judgment in favor of Johnson's counterclaim for quiet title, concluding that equity does not necessitate relief for Adair Holdings. The court does not rule on potential rights or relief for Adair Holdings, Adair Management, or BMO Harris Bank in a separate action. The district court's decision is affirmed.