Opinion
No. 1248 C.D. 2011
06-04-2012
Sharron L. Rex v. Tax Claim Bureau of Montgomery County Appeal of: Albert Martin and Jacob Singer
BEFORE: HONORABLE BERNARD L. McGINLEY, Judge HONORABLE P. KEVIN BROBSON, Judge HONORABLE ROCHELLE S. FRIEDMAN, Senior Judge
OPINION NOT REPORTED
MEMORANDUM OPINION BY JUDGE BROBSON
Appellants Albert Martin and Jacob Singer (Purchasers) appeal from an order of the Court of Common Pleas of Montgomery County (trial court). The trial court granted a petition to set aside an upset tax sale under the Real Estate Tax Sale Law (Law), filed by Sharron L. Rex (Owner), for property she owns in Whitpain Township, Montgomery County (Property). On appeal, Purchasers argue that the trial court inappropriately held a hearing on the merits of the petition to set aside before the scheduled hearing on Purchasers' petition to intervene. We now vacate the trial court's order and remand the matter to the trial court for further proceedings.
Act of July 7, 1947, P.S. 1368, as amended, 72 P.S. §§ 5860.101 to .803.
Purchasers purchased the Property at the upset tax sale on September 15, 2010.
In her petition to set aside, Owner averred that she did not receive written actual notice prior to the upset tax sale. Owner thus claimed that the pre-sale procedures failed in several respects to comply with mandatory provisions of the Law. Chief among these alleged failures were: (1) the Montgomery County Tax Claim Bureau (Bureau) failed to obtain United States Postal System Form 3817 (certificate of mailing) to prove mailings to Owner; (2) the warnings in the notices were not placed in a box and were not in the required type size; (3) the posting of the Property did not comply with the Law; and (4) the "additional efforts" to notify Owner did not satisfy the Law. The Bureau filed a response to the petition, admitting certain averments, denying others, and requesting that the petition to set aside be dismissed with prejudice.
Following the filing of the answer, the trial court, through its Court Administrator, issued an Order on February 10, 2011, which provided:
AND NOW, this 10TH day of FEBRUARY 2011, an Answer having been filed, the matter is ORDERED on the Argument List upon the filing of an Argument Praecipe, in duplicate, with the Office of the Prothonotary. Said Praecipe is not to be filed until discovery, if any is needed, is completed and if needed, discovery shall be completed within sixty (60) days from the date of this order.(Certified Record (C.R.).) Notwithstanding this February 10, 2011 Order, however, the trial court caused a "Notification of Listing for Civil Hearing" to be issued on March 11, 2011, directing a hearing on the petition to set aside for March 29, 2011. According to the certified record, the hearing scheduled for March 29, 2011, did not occur. There is, however, no order or superseding notice in the certified record cancelling or rescheduling the March 29, 2011 hearing.
The notice appears to be computer generated and is not signed by a particular judge or court official. It appears to have originated in either the trial court's Prothonotary's office or Court Administrator's office.
On March 14, 2011, Purchasers filed a petition to intervene, to which Owner filed a preliminary objection. The trial court, acting through the Honorable Wendy Demchick-Alloy, issued an Order, dated March 22, 2011, overruling the preliminary objection. The Order also directed Owner and the Bureau to show cause why the trial court should not grant Purchasers' petition to intervene and to file responses within twenty (20) days of the Order. Further, Judge Demchick-Alloy's Order provided that the trial court would decide the petition under Pa. R.C.P. No. 206.7, and that "[d]epositions shall be completed within 30 days" of the date of the order. Finally, Judge Demchick-Alloy scheduled a hearing on the intervention petition to be conducted on May 18, 2011.
After Judge Demchick-Alloy issued her Order, the trial court again caused civil hearing notices to be issued, similar in form to the notice issued on March 11, 2011. The first, issued April 11, 2011, scheduled a civil hearing on the petition to set aside for May 4, 2011—i.e., fourteen (14) days before the hearing on Purchaser's petition to intervene. (C.R.) An April 20, 2011 notice rescheduled the hearing to May 17, 2011—i.e., one (1) day before the hearing on Purchaser's petition to intervene.
Purchasers attended the hearing on May 17, 2011, before the Honorable Bernard A. Moore. At the outset of the hearing, Judge Moore recognized Purchasers as having an interest in the matter and invited them to comment. At that point, Purchasers, proceeding pro se, as they are in this appeal, notified the trial court that they had not yet been granted party status, but that Judge Demchick-Alloy would be hearing the intervention request the next day. (Reproduced Record (R.R.) at 40a.) Purchasers suggested that the hearing on the merits was, therefore, premature and must await a decision by Judge Demchick-Alloy on the intervention. (Id.)
In effect, Judge Moore refused Purchasers' request, noting that he would allow Purchasers "to participate in this proceeding and to testify if you want or to be heard in any manner." (Id. at 42a.) In response, Purchasers noted, in effect, that they were unprepared to proceed on the merits of the petition to set aside on such short notice, noting specifically the fact that they have not yet had the opportunity, as a party, to conduct discovery. (Id.) Judge Moore nonetheless reiterated that "it's the Court's determination . . . that [Purchasers are] entitled to fully participate in this proceeding if you would like." (Id. at 44a.) Judge Moore proceeded with the hearing on the merits of the petition to set aside. At various points, Judge Moore gave Purchasers an opportunity to comment, cross-examine, and offer evidence. At each such point, however, Purchasers reiterated the point that they had not yet been given party status and thus had not yet had the opportunity to conduct discovery. They continued to express their view that the hearing be continued or, alternatively, that the trial court not rule on the petition to set aside until Purchasers gained party status as intervenors, conducted discovery (particularly on the issue of whether Owner had actual notice of the sale), and presented their case on the petition to set aside. (Id. at 45a, 49a, 86a-87a, 97a-98a, 110a-11a.)
The next day, the trial court, acting through Judge Demchick-Alloy, conducted the scheduled hearing on the petition to intervene, and issued an Order on May 23, 2011, granting Purchasers' intervention petition. (Id. at 23a.) Thereafter, on June 13, 2011, the trial court, acting through Judge Moore, set aside the upset tax sale. (Id. at 24a.) In his Opinion issued pursuant to Pa. R.A.P. 1925(b), Judge Moore stated that he set aside the upset tax sale because the Bureau failed to obtain a proof of mailing certificate from the United States Postal Service (USPS) in the second notice that it sent to Owner, in violation of Section 602(e)(2) of the Law, 72 P.S. § 5860.602(e)(2). See In re: York County Tax Claim Bureau (Appeal of Luciani), 3 A.2d 765 (Pa. Cmwlth. 2010) (Luciani). Judge Moore also noted in his Opinion that the Bureau admitted that it had no evidence suggesting that Owner had actual notice of the planned upset tax sale.
With regard to Purchasers' claim that the trial court erred in proceeding to conduct the hearing on the merits before Judge Demchick-Alloy conducted a hearing on and decided the intervention petition, Judge Moore concluded that no error resulted from the decision to proceed on the merits of Owner's petition, because: (1) Purchasers attended the May 17, 2011 hearing; (2) the trial court permitted Purchasers to intervene and participate in the hearing; and (3) Owner withdrew her objections to Purchasers' petition to intervene and did not object to Purchasers' participation in the hearing. Judge Moore also expressed his view that had Purchasers participated in the hearing, the result would be the same—i.e., any error was harmless error.
On appeal, the sole issue Purchasers raise is whether the trial court erred in conducting a hearing on the merits of Owner's petition to set aside the upset tax sale before Purchasers were granted intervenor status, because until that time, Purchasers had no right to engage in pre-trial preparation (such as discovery) as a party. Purchasers contend that they would have conducted discovery regarding the question of whether Owner had actual notice of the upset tax sale.
This Court's review of an order of a trial court granting a petition to set aside a tax upset sale is limited to considering whether the trial court abused its discretion, rendered a decision lacking in supporting evidence or clearly erred as a matter of law. In re Dauphin County Tax Claim Bureau, 834 A.2d 1229, 1232 n.2 (Pa. Cmwlth. 2003).
In In re Consolidated Return of Real Estate Tax Sale Held September 10, 2003, 859 A.2d 15 (Pa. Cmwlth. 2004) (Consolidated Return), this Court noted that Section 607(d) of the Law, 72 P.S. § 5860.607(d), provides that trial courts addressing objections and/or exceptions filed in a tax sale matter should dispose of such pleadings "according to the practice of the court." Consolidated Return, 859 A.2d at 18. We also noted that, with regard to successful bidders seeking to participate in post-tax sale matters, courts of common pleas generally require such bidders to intervene in order to become a party. Id. We observed that Pennsylvania Rule of Civil Procedure 2328(a) requires persons who desire to intervene to file a petition to intervene in accordance with that rule. Further, Pennsylvania Rule of Civil Procedure 2329 requires the courts, following hearing, to enter an order granting or denying a petition to intervene. Id.
The parties do not suggest that the trial court applies anything other than the Pennsylvania Rules of Civil Procedure in tax sale matters arising under the Law. Under Pennsylvania Rule of Civil Procedure 2327, "[a]t any time during the pendency of an action, a person not a party thereto shall be permitted to intervene ... subject to these rules." Further, Pennsylvania Rule of Civil Procedure 2330 provides that "[a]fter the entry of an order allowing intervention, the intervenor shall have all the rights and liabilities of a party to the action," and "[a]ny party to the action may amend any pleading filed by the party to include any claim or defense available against an intervening party."
In this case, because Purchasers were not parties before the hearing on the merits occurred, they did not have the same opportunities as Owner and the Bureau to prepare for the May 17, 2011 hearing on the petition to set aside. By refusing to grant Purchasers' request for a continuance, the trial court essentially denied the Purchasers the rights afforded parties under Rule 2330. Though the trial court may have been well-intentioned in inviting/permitting Purchasers to participate fully at the hearing, the indisputable fact from the record in this proceeding remains that at no time prior to the May 17th hearing had Purchasers been made a party to the proceeding. Thus, unlike Owner and the Bureau, Purchasers did not have a full and fair opportunity to prepare for the May 17th hearing and to present their evidence in defense of the petition to set aside.
We, therefore, conclude that the trial court abused its discretion by refusing to grant some form of continuance in the matter, thereby foreclosing Purchasers' ability to engage in meaningful pre-hearing preparations, such as discovery.
For instance, the trial court could have continued the entire hearing until a later date, or it could have conducted the hearing as scheduled and left the record open for Purchasers to supplement the record through additional testimony at a later date, if warranted, following discovery.
In reviewing the procedural record, the relevant portions of which are recounted above, it appears as if this was a situation where the right hand of the trial court did not know what the left hand was doing. This case started as a matter identified for oral argument only, following a sixty (60) day period of discovery. Thereafter, the trial court issued three civil hearing notices, one before the petition to intervene was filed and two after. The two after set hearing dates before the hearing on the petition to intervene. Neither the trial court, the Bureau, nor Owner offer any explanation, or defense, for what appears on its face to be some sort of scheduling breakdown. --------
Owner argues that any error by the trial court in this regard was harmless. We disagree. In this case, Owner sought to set aside the upset tax sale because of an alleged failure by the Bureau to comply with the notice provisions of the Law. This Court has often repeated the principle "that the notice provisions of the [Law] are to be strictly construed." Luciani, 3 A.3d at 767 (citing Donofrio v. Northampton County Tax Claim Bureau, 811 A.2d 1120, 1122 (Pa. Cmwlth. 2002)). The Law compels strict compliance in order to ensure that a governmental entity seeking to recover delinquent taxes provides due process before divesting an individual of his property. In Re Tax Sale of Real Property Situate in Paint Township, Somerset County, 865 A.2d 1009, 1015 (Pa. Cmwlth. 2005). When, however, a "property owner has actual notice of a tax upset sale, the notification requirements in the statute need not be followed." Luciani, 3 A.3d at 767 (citing Donofrio, 811 A.2d at 1122).
In her petition to set aside, Owner alleges at paragraph 16 that, inter alia, she did not have actual notice of the September 15, 2010 sale of the Property. (R.R. at 5a.) In its answer, the Bureau denied that averment. (Id. 11a.) In their Amendment to Petition to Intervene (C.R.), Purchasers adopt the Bureau's answer. Thus, Purchasers disputed Owner's contention that Owner did not have actual notice of the sale. During the merits hearing, Purchasers informed the trial court of their wish to conduct discovery, particularly on the question of whether, notwithstanding the violations of the notice provisions in the Law, Owner had actual notice of the sale:
Your Honor, I have not had discovery. This goes to the very factual question whether or not [Owner] had notice of that sale. This is a factual issue. It's not a legal issue whatsoever, and that was what I have to have time for discovery to prove that point.
And then the US mail becomes completely irrelevant, so that would be thrown out of the case. So the case is not complete at all. The case, in my view, is still open and it's still an open case and I have a chance to prove my points, which is a factual consideration and I must have time for discovery.
I haven't had time to depose the petitioner. I would have normally have done that. It's a routine thing we do, ask exactly what happened and try to find out all that I can to make my case. And I haven't had a chance to do that.(R.R. 86-87a.)
I think that's my whole point is I have been deprived of a chance to make a defense and I can't. I'm incapable now of making a defense because I haven't prepared for it.
Although this Court has held in certain circumstances that actual notice of the sale will not cure certain deficiencies, such as where a tax bureau fails to comply with the posting requirements of the Law, Schooley v. Beaver County Tax Claim Bureau, 4 A.3d 797 (Pa. Cmwlth. 2010), or where an owner does not receive actual notice within a reasonable amount of time to enable the owner to rectify the underlying tax delinquency, 1999 Tax Claim Bureau of Consolidated Returns Appeal of O'Neill, 820 A.2d 833 (Pa. Cmwlth. 2003), the Court has recognized, as noted above, that actual notice can cure deficiencies in other contexts. Owner does not cite to any specific authority or analysis that would warrant our delving into the question of whether all of the alleged deficiencies below can be overlooked if Owner had actual notice of the sale. We will thus leave that for the trial court on remand to consider. We are satisfied, however, that Purchasers should have at least been afforded the opportunity to present their "actual notice" defense to the trial court.
For these reasons, we will vacate the trial court's order and remand the matter to the trial court. On remand, the trial court should permit Purchasers a reasonable period of discovery on the question of whether Owner had actual notice of the sale. If necessary, the trial court should conduct a hearing to resolve any factual issues with respect to when, if, and to what extent Owner had actual notice of the sale. Then, based on the existing record and the record on remand, the trial court can issue its decision on the petition to set aside the upset tax sale.
/s/_________
P. KEVIN BROBSON, Judge
ORDER
AND NOW, this 4th day of June, 2012, the order of the Court of Common Pleas of Montgomery County is vacated and this matter is remanded to the trial court for further proceedings consistent with the accompanying opinion.
Jurisdiction is relinquished.
/s/_________
P. KEVIN BROBSON, Judge