The LaPorte County auditor’s failure to check records that would have revealed the actual address of a Michigan City property owner whose land was sold without notice for back taxes was a denial of constitutional due process, the Indiana Court of Appeals ruled Tuesday. The appeals court reinstated the landowner’s challenge to the tax sale results and remanded the case.
The appellate panel’s ruling in Indiana Land Trust Company, f/k/a Lake County Trust Company TR #4340 v. XL Investment Properties, LLC, and LaPorte County Auditor, 18A-MI-2150, could void the tax deed issued after 30 acres known as Trust 4340 were sold for unpaid taxes in 2015. According to the record, unpaid property taxes in excess of $230,000 dating to 2009 were owed on the land.
The owner of the land that used to be part of a municipal airport, Chicago developer Peter Dellaportas, had moved his business, Midwest Investment, over the years. Dellaportas never received notice of the tax sale until the buyer, XL Investment Properties, filed a quiet title action in December 2016, after the county had issued a tax deed.
In March 2017, Dellaportas’ entities sued XL and the LaPorte County auditor seeking to set aside the quiet title and tax deed, but the trial court affirmed for XL and the auditor. It found, among other things, that after certified and first-class mail to the owner was returned, the auditor was under no obligation to take additional steps to notify the property owner. “Due process does not require that a property owner receive actual notice before the government may take his property,” LaPorte Superior Judge Richard Stalbrink wrote as a finding of fact in his order.
The trial court also found Dellaportas’ suit was untimely filed, but the appeals panel ruled the court erred in both instances. Judge John Baker took particular aim at the LaPorte auditor’s reading of 2015 amendments to Indiana Code § 6-1.1-24-4, which the office cited for its insistence that it owed no duty to search its records for the landowner’s actual address before selling the property.
“It has long been settled in Indiana that to comply with due process in tax sale proceedings, county auditors are charged with the knowledge of their own records and are required to search those records,” Baker wrote. He added in a footnote that, “The unchallenged testimony provides that after August 7, 2015, the Auditor would have been able to locate the correct address for Trust 4340 in its internal, searchable ‘Low’ system.”
The COA also noted in this case that LaPorte auditor employees under oath said they did not attempt to notify owners of tax sales after a notice was returned. One employee was asked, “So you could (not) have cared less if notices were returned?” The employee replied, “That’s right.”
“The General Assembly does not have the authority to codify away constitutional protections. Therefore, despite the language of Indiana Code section 6-1.1-24-4, the Auditor was required to search its records for a better address for Trust 4340 after the certified mail notice was returned as not deliverable,” Baker wrote for the panel. The panel also rejected the auditor’s argument that its notice efforts were reasonable because of Dellaportas’ failure to update his office address.
The COA panel also reversed the trial court finding that the suit was untimely.
“The trial court’s rationale for finding the motion untimely filed primarily focuses on the length of tax delinquency, as well as Trust 4340’s actions, before the tax sale, rather than the period of time that elapsed after the tax deed was issued. There is no caselaw supporting this analysis,” Baker wrote. “By their very nature, tax sales always occur after a period of tax delinquency, often a lengthy one. Therefore, if trial courts could focus on the period of delinquency as opposed to the period of time elapsed after the tax sale occurred, there would be no point in the ‘reasonable time’ exception.”