Opinion
49764
03-19-2018
In the Matter of the FORECLOSURE OF TAX LIENS BY PROCEEDING IN REM PURSUANT TO ARTICLE 11 OF the REAL PROPERTY TAX LAW BY the COUNTY OF SENECA, Petitioner, v. MAXIM DEVELOPMENT GROUP, Respondent.
ATTORNEY FOR PETITIONER: Frank R. Fisher, Esq. ATTORNEY FOR RESPONDENT: Dirk A. Galbraith, Esq.
ATTORNEY FOR PETITIONER: Frank R. Fisher, Esq.
ATTORNEY FOR RESPONDENT: Dirk A. Galbraith, Esq.
Dennis F. Bender, J.
The Respondent herein moves for an Order dismissing the petition and notice of foreclosure filed by the County against it under the above captioned Index number. The basis for the petition is Respondent's assertion that there are no delinquent taxes or other charges owing by said Respondent to the Petitioner and upon the further ground that the Court lacks in rem jurisdiction over the real property of the Respondent.
As noted in the petition, there were two prior tax sales pertaining to this property following foreclosure proceedings that were subsequently deemed invalid. The first tax deed was dated March 4, 2014. That deed was vacated by this Court per Decision and Order dated February 2, 2015 (Petition, Exh. F), because the County failed to give proper statutory notice to Maxim. This Court stated, "Simply put, the County did not convey proper title to Montezuma because the County never properly acquired title. The deed given by the County to the defendant Montezuma should accordingly be vacated and the judgment of foreclosure...should be vacated as a nullity with respect to the plaintiff's premises." The second Judgment of Foreclosure was vacated by the Appellate Division 4th Department as jurisdictionally defective per Decision dated June 9, 2017 (Petition, Exhibit O).
The Respondent argues that when the County of Seneca acquired deeds to the property pursuant to the two (since vacated) foreclosure judgments, the Respondent's tax liability for those unpaid taxes ended. The Respondent also argues the County had no obligation to reimburse the third party buyer at the prior foreclosure sales since the County said the property was being conveyed by quitclaim deed and the County was not making any representation or warranty as to title.
Respondent cites Matter of Ueck , 286 NY 1 (1941), Corvetti v. Fidelity National Insurance Company of NY, 258 AD 2nd 32 (3rd Dept, 1999) and others for the premise that a tax sale extinguishes the taxpayer's personal liability for the unpaid taxes. None of those cases, however, deal with the situation where a tax judgment of foreclosure and the subsequent conveyances have been declared nullities due to a lack of jurisdiction.
In Byrnes v. County of Saratoga, 251 AD 2nd 795 (3rd Dept, 1998) the Petitioner sought to set aside a tax sale of his real property. As was the case in the two prior foreclosure proceedings here, the County failed to give the statutory notice required, rendering the subsequent tax sale invalid. The trial court in that case had properly voided the sale but the Third Department found it had erred in directing the Petitioner to redeem his property, "Since we hold that the initial tax sale ...was invalid, the County did not acquire a legal title it could convey...and there was no "tax sale" which would trigger any redemption rights (see RPTL 1008(1) )...Needless to say, nothing herein contained shall be construed as invalidating the tax liens for the years in question or the interest and other fees that may have lawfully accrued thereon...". Byrnes v. County of Saratoga , Supra at page 798.
The Respondent's argument that the lien of the prior taxes was extinguished by the prior tax sales is disingenuous because the tax sales were declared a nullity. Accordingly, since the sales were vacated, any extinguishment of the tax lien was also nullified. The Respondent was put back to square one, as if the tax sales never occurred and the taxes it failed to pay were still unpaid and its liability was still outstanding.
The Respondent further anticipated a possible equitable argument by the County since the County has represented that it paid the third party back for the monies it advanced at the prior tax sales since the tax sales were nullified. The Respondent argues there is nothing unfair or inequitable because the County did not have to refund the monies to the third party buyer, Montezuma Properties, LLC, stating tax sale auctions are a gamble and that the buyer simply gambled and lost—twice. The Respondent argues there is no statutory provision requiring the County to paid for the buyer back. The Respondent also argues that bidders were warned by the taxing authority that it would be a quitclaim deed with no warranties of title and that at the second sale, the bidders received a further notice from Respondent's counsel that they were going to file a legal challenge to the validity of the sale.
The County submits it was required to refund the consideration paid for the parcel following both auctions because the sales had been declared a nullity and therefore, they had no authority to put the property up for sale in the first instance. Indeed, the Court finds equity dictates support for the County's argument, and not the argument of the Respondent. To the extent the Respondent's argument could be construed as arguing the County should be estopped from seeking the past due taxes, it is noted that estoppel generally cannot be invoked against a municipal agency to prevent it from discharging its statutory duties.
"Courts have set forth two public policy reasons foreclosing application of the doctrine of estoppel in such circumstances: (1) to avoid public fraud, and (2) to avoid violating the doctrine of separation of powers (citations omitted). In light of these policy reasons, we conclude that the present circumstances do not present one of the "rarest" of cases, where estoppel can be invoked against a governmental entity (citations omitted)." Ilana Realty, Inc v. Village of Haverstraw, 163 AD2d 356 (2nd Dept, 1990). The Court finds the Respondent herein has not set forth any legal or equitable basis to support its motion.
The Respondent also argues it did not receive either a certified or first class notice of petition and petition as required by RPTL 1125(1)(b), by its managing partner, Patrick Gawrysiak. Mr. Gawrysiak does acknowledge personal service of the documents. In response, the Petitioner provided an affidavit of service averring that the documents were mailed by regular and certified mail to the Respondent at 215 Franklin Turnpike, Allendale, New Jersey 07401, and that no mailings have been returned as undeliverable. The Respondent's "mere denial of receipt failed to overcome the presumption of regularity of mailing (citations omitted)." In Rem Tax Foreclosure Action No. 47, 19 A.D.3d 547, (2nd Dept, 2005).
Based upon the foregoing, it is hereby
ORDERED that the motion by the Respondent is in all respects denied.