High Sierra Tax Sale Properties, LLC v. Robert M. Daley

IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI

NO. 2014-CA-00209-COA

HIGH SIERRA TAX SALE PROPERTIES, LLC APPELLANTS
AND GJ TAX SALE PROPERTIES, LLC

v.

ROBERT M. DALEY AND JEREMIA R. DALEY APPELLEES

DATE OF JUDGMENT: 01/08/2014
TRIAL JUDGE: HON. D. NEIL HARRIS SR.
COURT FROM WHICH APPEALED: JACKSON COUNTY CHANCERY COURT
ATTORNEY FOR APPELLANTS: JON JERDONE MIMS
ATTORNEYS FOR APPELLEES: LEWIE G. NEGROTTO IV
MATTHEW JAMES CRITTENDEN
NATURE OF THE CASE: CIVIL - REAL PROPERTY
TRIAL COURT DISPOSITION: GRANTED APPELLEES’ CROSS-MOTION
FOR SUMMARY JUDGMENT
DISPOSITION: AFFIRMED AND REMANDED - 08/11/2015
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

BEFORE GRIFFIS, P.J., ISHEE AND MAXWELL, JJ.

ISHEE, J., FOR THE COURT:

¶1. High Sierra Tax Sale Properties LLC (High Sierra) and GJ Tax Sale Properties LLC

(GJ) filed lawsuits against Robin Duckett a/k/a Robin Williams (Duckett) regarding the tax

sale of two pieces of property in Jackson County, Mississippi, that occurred on August 31,

2009. High Sierra and GJ purchased two parcels of property that were jointly owned by

Duckett and Roger Baugh as tenants in common. Two years after the purchase, Robert M.

Daley and Jeremia R. Daley obtained a quitclaim deed to Duckett’s interest in the property.

High Sierra and GJ filed two separate lawsuits, which were later consolidated, and the Daleys
were substituted for Duckett. The chancellor ultimately denied High Sierra and GJ’s motion

for summary judgment and granted the Daleys’ cross-motion for summary judgment. High

Sierra and GJ filed this appeal.

FACTS

¶2. High Sierra and GJ purchased two parcels of land at a tax sale on August 31, 2009,

for the 2008 Jackson County ad valorem taxes. The parcels had previously been jointly

owned by Duckett and Baugh as tenants in common. High Sierra and GJ argue that the

properties matured on August 31, 2011. On May 22, 2012, High Sierra and GJ filed lawsuits

to confirm the tax sales of the properties. The cases were originally filed as two separate

lawsuits, but were then consolidated at High Sierra and GJ’s request.

¶3. On June 11, 2012, the Daleys obtained a quitclaim deed from Duckett, transferring

Duckett’s interest in the land to them. On June 15, 2012, the Daleys filed their answer to

High Sierra and GJ’s complaint, and simultaneously filed a motion to substitute parties

seeking to replace Duckett in the lawsuit. A hearing was held on December 13, 2013, and

the chancellor granted the Daleys’ motion to substitute parties.

¶4. High Sierra and GJ filed a motion for summary judgment, and the Daleys filed a

cross-motion for summary judgment. The chancellor denied High Sierra and GJ’s motion

for summary judgment, and he granted the Daleys’ cross-motion for summary judgment.

High Sierra and GJ now appeal to this Court alleging the following issues: (1) the chancellor

erred in finding that the Daleys have standing to contest the tax sale; (2) the chancellor erred

in allowing the Daleys to be substituted as parties; and (3) High Sierra and GJ are entitled to

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damages reflecting their lien on the property if this Court affirms the chancellor’s order.

STANDARD OF REVIEW

¶5. When reviewing the grant or denial of a motion for summary judgment, this Court

utilizes the same standard as the trial court under Rule 56(c) of the Mississippi Rules of Civil

Procedure. Johnson v. Burns-Tutor, 925 So. 2d 155, 157 (¶10) (Miss. Ct. App. 2006) (citing

McMillan v. Rodriguez, 823 So. 2d 1173, 1176 (¶9) (Miss. 2002)). A de novo standard of

review is used when evaluating a trial court’s grant or denial of summary judgment, and all

evidence is examined in the light most favorable to the party against whom the motion was

made. Partin v. N. Miss. Med. Ctr. Inc., 929 So. 2d 924, 928 (¶13) (Miss. Ct. App. 2005)

(citing Williamson ex rel. Williamson v. Keith, 786 So. 2d 390, 393 (¶10) (Miss. 2001)). A

party is entitled to summary judgment if “there is no genuine issue of material fact, and the

moving party is entitled to [a] judgment as a matter of law.” McMillan, 823 So. 2d at 1177

(¶9) (citation omitted).

DISCUSSION

I. Whether the chancellor erred in denying Appellants’ motion for
summary judgment and granting Appellees’ cross-motion for
summary judgment, including the primary issue of whether the
chancellor erred in finding that the Daleys have standing to contest
the tax sales at issue.

A. Notice Requirement

¶6. High Sierra and GJ filed their motion for summary judgment on July 29, 2013. In

their motion, High Sierra and GJ alleged that the Daleys lacked standing because they did not

suffer an injury, nor did they lose an afforded due-process protection. In addition, High

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Sierra and GJ asserted that the Daleys did not act in good faith when procuring their

quitclaim deed to the properties.

¶7. The Daleys filed their response and a cross-motion for summary judgment. In their

motion, the Daleys argued that the chancery clerk did not have the authority to issue the

clerk’s conveyance of the properties to High Sierra and GJ because the chancery clerk failed

to properly comply with the statutory notice requirement found in Mississippi Code

Annotated section 27-43-1 (Rev. 2010). Furthermore, the Daleys argued that High Sierra and

GJ are “professional tax purchasers” to which the rule of caveat emptor applies.

¶8. After hearing from both sides on their respective motions, the chancellor found that

the tax sales in question were void for failure to give proper notice of forfeiture to the

property owners. Accordingly, he ordered that any related conveyances by the chancery clerk

were to be set aside.

¶9. In their motion for summary judgment, High Sierra and GJ claimed that separate

notices for the two parcels of property were issued and mailed to Duckett and Baugh on June

29, 2011. High Sierra and GJ asserted that the notices informed Duckett and Baugh of the

sale and stated that “title to the land would become absolute in the purchaser[s] unless

redemption was made on or before August 31, 2011.” While the record contains an affidavit

from the chancery court’s supervisor of land records, it does not contain a copy of the notice

confirming the date it was mailed or the language used in the notice. However, the

documentation attached to High Sierra and GJ’s motion for summary judgment labeled

“Exhibit 1” shows that Duckett signed for the delivery of both Duckett’s and Baugh’s notices

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on July 8, 2011.

¶10. Mississippi Code Annotated section 27-43-1 reads as follows:

The clerk of the chancery court shall, within one hundred eighty (180) days
and not less than sixty (60) days prior to the expiration of the time of
redemption with respect to land sold, either to individuals or to the state, be
required to issue notice to the record owner of the land sold as of 180 days
prior to the expiration of the time of redemption[.]

Per the statute, the landowners, Duckett and Baugh, should have received notice no later than

July 3, 2011; however, they did not receive notice until July 8, 2011, which was less than

sixty days prior to the expiration of the time of redemption on August 31, 2011.

¶11. In addition to the notice requirement in section 27-43-1, Mississippi Code Annotated

section 27-43-3 (Supp. 2014) provides that the chancery clerk “shall also be required to

publish the name and address of the reputed owner of the property and the legal description

of the property in a public newspaper of the county in which the land is located.” Notice was

published in the Mississippi Press, the local newspaper, on July 17, 2011; however, the

notice named “Duckett Robin et al[.]” and does not name Baugh as the property owner. The

Mississippi Supreme Court “has held that section 27-43-3 ‘contemplates that each owner

shall receive the notice required by the statute.’” Rebuild Am. Inc. v. Milner, 7 So. 3d 972,

976 (¶15) (Miss. Ct. App. 2009) (quoting Brown v. Riley, 580 So. 2d 1234, 1237 (Miss.

1991)).

¶12. “Statutes dealing with land forfeitures for delinquent taxes should be strictly construed

in favor of the landowners.” Wachovia Bank N.A. v. Rebuild Am. Inc., 56 So. 3d 586, 588

(¶10) (Miss. Ct. App. 2011) (quoting Brown, 580 So. 2d at 1237). This Court has

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specifically held that “[a]ny deviation from the statutorily mandated procedure renders the

sale void.” Moore v. Marathon Asset Mgmt. LLC, 973 So. 2d 1017, 1021 (¶14) (Miss. Ct.

App. 2008) (citation omitted). It is evident that the chancery clerk failed to issue proper

notice of forfeiture to the property owners.

B. Standing

¶13. Mississippi has very liberal standing requirements. Hudson v. Jones Cnty. Bd. of

Sup'rs, 77 So. 3d 1148, 1150 (¶4) (Miss. Ct. App. 2011) (quoting Burgess v. City of Gulfport,

814 So. 2d 149, 152 (¶13) (Miss. 2002)). “In Mississippi, parties have standing to sue when

they assert a colorable interest in the subject matter of the litigation or experience an adverse

effect from the conduct of the defendant, or as otherwise provided by law.” Id. at (¶5).

When used in this context, the supreme court defines colorable as “appearing to be true,

valid, or right.” Id. (quoting Hall v. City of Ridgeland, 37 So. 3d 25, 33 n.6 (Miss. 2010)).

¶14. We find that the tax sales to High Sierra and GJ were void for failure to properly

notify the property owners of the forfeiture. As such, we affirm the chancellor’s order that

the chancery clerk’s conveyances be set aside. Therefore, we find the Daleys do have

standing in this matter since the title to the properties was properly conveyed to them.

II. Whether the chancellor erred in allowing the Daleys to be
substituted as parties and setting aside the entry of default.

¶15. On February 11, 2013, High Sierra and GJ filed a motion for an entry of default

against Duckett, Baugh, and “All Other Persons, Firms and Corporations, Having or

Claiming Any Legal or Equitable Interest” in the two parcels of land. The motion was

granted. On November 25, 2013, the Daleys filed a motion to set the default aside based on

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the fact that they had filed their answer and counterclaim on June 15, 2012, along with their

motion for substitution of parties, in which the Daleys requested to be substituted in the place

of Duckett. The chancellor allowed the Daleys to be substituted, to which High Sierra and

GJ object.

¶16. Motions to substitute brought pursuant to Mississippi Rule of Civil Procedure 25(c)

are left to the trial court’s discretion. Citizens Nat’l Bank v. Dixieland Forest Prods. LLC,

935 So. 2d 1004, 1008 (¶13) (Miss. 2006). We will affirm the decision of the trial court

“unless there is a definite and firm conviction that the court below committed a clear error

of judgment in the conclusion it reached upon weighing the relevant factors.” Id. at 1008-09

(¶13) (quoting Amiker v. Drugs for Less Inc., 796 So. 2d 942, 948 (¶24) (Miss. 2000)).

¶17. Rule 25(c) allows for “the person to whom the interest is transferred to be substituted

in the action.” Because Duckett completed a valid transfer of her interest in the property to

the Daleys, we find that the Daleys were properly substituted as parties to this lawsuit. This

issue is without merit.

III. Whether High Sierra and GJ are entitled to damages reflecting
their lien on the properties.

¶18. High Sierra and GJ argue that, in the event this Court finds that the Daleys have

standing and the chancellor’s order is affirmed, they are entitled to all amounts owed

pursuant to Mississippi Code Annotated section 27-45-3 (Rev. 2010). High Sierra and GJ

allege that “[t]o the extent the tax deeds and sales are set aside, the interest of GJ and High

Sierra continues to be a lien on the subject property until all redemption amounts are paid to

GJ and High Sierra.” We agree.

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¶19. Under Mississippi law, High Sierra and GJ are entitled to the amounts due to them as

provided by Mississippi Code Annotated section 27-45-3. The statute reads as follows:

The owner, or any persons for him with his consent, or any person interested
in the land sold for taxes, may redeem the same, or any part of it, where it is
separable by legal subdivisions of not less than forty (40) acres, or any
undivided interest in it, at any time within two (2) years after the day of sale,
by paying to the chancery clerk, regardless of the amount of the purchaser's bid
at the tax sale, the amount of all taxes for which the land was sold, with all
costs incident to the sale, and five percent (5%) damages on the amount of
taxes for which the land was sold, and interest on all such taxes and costs at
the rate of one and one-half percent (1-1/2%) per month, or any fractional part
thereof, from the date of such sale, and all costs that have accrued on the land
since the sale, with interest thereon from the date such costs shall have
accrued, at the rate of one and one-half percent (1-1/2%) per month, or any
fractional part thereof . . . .

Id.

¶20. We find this issue is to be remanded to the chancery court so the chancellor can

calculate the amount of taxes due and owing, plus interest and damages. See Lawrence v.

Rankin, 870 So. 2d 673, 677 (¶21) (Miss. Ct. App. 2004).

¶21. THE JUDGMENT OF THE JACKSON COUNTY CHANCERY COURT IS
AFFIRMED, AND THIS CASE IS REMANDED FOR CALCULATION OF
DAMAGES OWED TO THE APPELLANTS PURSUANT TO THE FINDINGS OF
THIS OPINION. ALL COSTS OF THIS APPEAL ARE ASSESSED ONE-HALF TO
THE APPELLANTS AND ONE-HALF TO THE APPELLEES.

LEE, C.J., IRVING AND GRIFFIS, P.JJ., BARNES, CARLTON, MAXWELL,
FAIR AND JAMES, JJ., CONCUR. WILSON, J., NOT PARTICIPATING.

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