Source: https://caselaw.findlaw.com/mt-supreme-court/1719499.html
Timestamp: 2019-04-24 19:11:20+00:00

Document:
RN & DB, LLC, Plaintiff and Appellee, v. Mary Barbara Evans STEWART, Defendant and Appellant.
For Appellant: Mary Barbara Evans Stewart, self-represented, Kalispell, Montana. For Appellee: James M. Ramlow, Ramlow & Rudbach, PLLP, Whitefish, Montana Randall S. Ogle, Ogle & Worm, PLLP, Kalispell, Montana.
1. Whether the District Court erred in not applying the statutory homestead exemption to the tax lien sale on Stewart's property.
2. Whether the District Court should have considered the Flathead County Tax Assessor's failure to investigate Stewart's complaints regarding irregular tax assessments on Stewart's property .
3. Whether the District Court deprived Stewart of due process by denying her request for a hearing.
¶ 3 Stewart owned and lived on real property located at 6655 Highway 93 South, Lakeside, in Flathead County, Montana (property). The property also is known as Lots 40, 41, and 42 of the unrecorded plat of Mission View Terrace. On April 27, 2001, Stewart recorded a Declaration of Homestead for the property pursuant to § 70–32–105, MCA.
¶ 4 Beginning in 2006, Stewart failed to pay real property taxes on the property. As a result, on July 15, 2008, the Flathead County Treasurer (County) held a tax lien sale for the delinquent taxes. There was not a purchaser for the tax lien at the sale, so the County was listed as the purchaser of the tax lien pursuant to § 15–17–214, MCA.
¶ 5 On January 11, 2011, RN & DB paid $5,306.89 to the County Treasurer for the delinquent taxes, penalties, interests, and costs for the year 2007 and thereafter. On that same day, the County Treasurer assigned the County's interest in the tax lien to RN & DB.
¶ 6 On July 6, 2011, RN & DB mailed a Notice That Tax Deed May be Issued to Stewart via certified mail, return receipt requested, to the address disclosed by records at the office of the County Clerk. RN & DB also published the same Notice in the Daily Interlake newspaper.
¶ 7 Upon recording proof of notice, the County Clerk and Recorder advised RN & DB that it had failed to file proof of notice within 30 days of mailing or publishing the notice as required by statute. In an attempt to start the tax deed application process over, RN & DB then mailed Stewart a second Notice That Tax Deed May be Issued on August 30, 2011. The second notice included an inaccurate amount of tax due and was not published.
¶ 8 The County issued a tax deed to RN & DB on November 7, 2011. The initial tax deed had an incomplete property description, rendering it defective. The County issued a corrected tax deed on November 28, 2011. RN & DB subsequently filed an action to quiet title to the property. Stewart contested the action on the ground that the tax deed issued to RN & DB was void due to multiple problems with the statutory notice processes. In that action, Stewart was represented by counsel. The court found that RN & DB had failed strictly to comply with the specific statutory requirements for issuance of a tax deed. As a result, the court held that the County Treasurer was without jurisdiction to issue the tax deed and the tax deed was therefore void ab initio. The court dismissed the cause without prejudice on August 22, 2013.
¶ 9 After continuing to pay the delinquent taxes, RN & DB applied for a tax deed to the property again in late 2013, having paid a total amount of $13,722.69 in taxes, penalties, interest, and costs. This time, Stewart did not contest the tax deed on grounds of problems with the statutory notice process. Stewart did not redeem the property within 60 days of the day she received the Notice That Tax Deed May be Issued. The County issued a tax deed to RN & DB on December 9, 2013. RN & DB recorded the tax deed the following day.
¶ 10 RN & DB then filed a second action to quiet title to the property. Stewart was personally served with the complaint on January 22, 2014. The District Court entered default judgment against Stewart and a decree of quiet title to the property in favor of RN & DB on February 18, 2014. Several months later, appearing pro se, Stewart moved to vacate the judgment based, in part, on her belief that the notice of the tax deed issuance was from the prior action. The court set aside the entry of default and the default judgment.
¶ 11 Stewart filed an answer claiming that her property was exempt from execution or forced sale under Montana's homestead laws. RN & DB moved for summary judgment on the ground that there was no forced sale or execution because a tax deed extinguishes a delinquent payer's title and creates a fresh title granted directly by the State.
¶ 12 The District Court granted RN & DB's motion for summary judgment, finding no genuine issues of material fact, and entered a decree quieting title in favor of RN & DB on April 30, 2015. Stewart moved for a stay of judgment pending this appeal. The District Court granted the motion. Stewart appeals the judgment and decree of quiet title.
¶ 13 We review summary judgment rulings de novo, applying the criteria of M.R. Civ. P. 56. Davis v. State, 2015 MT 264, ¶ 7, 381 Mont. 59, 357 P.3d 320 (citing Tin Cup Cnty. Water v. Garden City Plumbing & Heating Inc., 2008 MT 434, ¶ 21, 347 Mont. 468, 200 P.3d 60). Summary judgment is appropriate when the moving party demonstrates both the absence of any genuine issues of material fact and entitlement to judgment as a matter of law. M.R. Civ. P. 56(c)(3); Anderson v. BNSF Ry., 2015 MT 240, ¶ 15, 380 Mont. 319, 354 P.3d 1248. If there are no genuine issues of material fact, we review for correctness the district court's conclusion that the moving party is entitled to judgment as a matter of law. Zinvest, LLC v. Hudgins, 2014 MT 201, ¶ 11, 376 Mont. 72, 330 P.3d 1135. A statutory interpretation is a conclusion of law, which we review to determine whether the district court's interpretation of the law is correct. Zinvest, ¶ 11 (citation omitted).
¶ 14 We review a district court's decision to deny a hearing on a summary judgment motion for an abuse of discretion. Miller v. Goetz, 2014 MT 150, ¶ 9, 375 Mont. 281, 327 P.3d 483. A court abuses its discretion when it acts arbitrarily, without employment of conscientious judgment, or exceeds the bounds of reason resulting in substantial injustice. Dollar Plus Stores, Inc., v. R–Mont. Assocs., L.P., 2009 MT 164, ¶ 15, 350 Mont. 476, 209 P.3d 216 (citation omitted).
¶ 15 1. Whether the District Court erred in not applying the statutory homestead exemption to the tax lien sale on Stewart's property.
(3) on debts secured by mortgages on the premises, executed and recorded before the declaration of homestead was filed for record.
¶ 17 The District Court concluded that the homestead exemption provides no protection from the sale of a tax lien. Based on §§ 70–32–201 to –202, MCA, Stewart contends that summary judgment was improper on that question because there are disputed issues of material fact regarding whether the homestead exemption applies. Stewart alleges, “It was plainly disputed between the parties as to whether rights of homestead protect against a tax deed execution.” Stewart is mistaken that the parties' dispute over whether the homestead exemption applies constitutes a genuine issue of material fact. Application of the homestead exemption is a legal issue, not a factual issue. As such, Stewart has not raised an issue of material fact. In the absence of factual issues, we must determine whether RN & DB was entitled to judgment as a matter of law. Zinvest, ¶ 11.
¶ 19 Stewart argues that because property tax liens are not explicitly excepted from the homestead exemption by § 70–32–202, MCA, the District Court did not have authority to issue a decree quieting title to the property. Stewart claims that, when the County issued the tax deed to RN & DB “in exchange for payment of unpaid taxes,” it constituted the type of forced sale implicated under § 70–32–201, MCA. Stewart also claims that when RN & DB sought “execution upon the tax deed through execution of a quiet title,” it constituted the type of execution implicated under § 70–32–101, MCA. Stewart reasons that § 15–16–401, MCA, entitled Tax Due as Judgment or Lien, supports her argument on this issue.
¶ 21 RN & DB supports the District Court's observation that “it makes sense” not to grant exemptions for tax debts, asserting that the purpose of tax lien statutes is to provide for a reliable method of collecting property taxes. RN & DB argues that the Legislature could not have intended to allow property owners “to opt out of the property tax system simply by filing homestead claims .” RN & DB emphasizes that nothing in the homestead statutes' legislative history mentions an intent to abrogate the enforcement of property tax liens. RN & DB also points out that nothing in the tax lien statutes' legislative history suggests an intent to exempt homestead property from tax liens.
¶ 22 Title 15, Chapters 16 through 18, of the Montana Code set forth Montana's property tax lien and tax deed enforcement procedures. This Court has held that the statutory procedures for the issuance of a tax deed require strict technical compliance. Showell v. Brosten, 2008 MT 261, ¶ 14, 345 Mont. 108, 189 P.3d 1210 (citation omitted). Section 15–16–403, MCA, provides that “every tax due upon real property is a lien against the property assessed․” A “lien” is a charge imposed in some mode other than by a transfer in trust by which it is made security for the performance of an act. Section 71–3–101(2), MCA. A property tax lien is “a lien acquired by the payment at a tax lien sale of all outstanding delinquent taxes, including penalties, interest, and costs.” Section 15–17–121(4), MCA. A tax lien sale, with respect to real property and improvements, occurs when the county treasurer offers the sale of a property tax lien representing delinquent taxes, including penalties, interest, and costs. Section 15–17–121(7)(a), MCA.
¶ 23 A person purchases a tax lien by paying the delinquent taxes, together with penalties, interest, and costs. Section 15–17–121(5), MCA. If no person purchases the tax lien on the first day of the tax lien sale, the county is considered to be the purchaser and the tax lien sale certificate is assigned to the county treasurer. Section 15–17–214, MCA. Where the county is the purchaser, the tax lien sale certificate “must be assigned by the county treasurer to any person who, after providing proof of mail notice to the person to whom the property was assessed ․ pays to the county the amount of delinquent taxes, including penalties, interest, and costs, accruing from the date of delinquency.” Section 15–17–323, MCA.
(b) for each property for which there has been issued a tax lien sale certificate to a purchaser other than the county or for which an assignment has been made, the purchaser or assignee, as appropriate, shall notify all persons considered interested parties in the property, if any, that a tax deed will be issued to the purchaser or assignee unless the property tax lien is redeemed prior to the expiration date of the redemption period.
¶ 25 If a tax lien is not redeemed in the time allowed, “the county treasurer shall grant the purchaser a tax deed for the property.” Section 15–18–211, MCA. Subject to only a few specific exceptions that do not apply here, a tax deed conveys to the grantee “absolute title to the property described in the deed as of the date of expiration of the redemption period, free and clear of all liens and encumbrances․” Section 15–18–214, MCA.
(ii) show cause on a date to be fixed in the order, not exceeding 30 days from the date of the order, why the payment should not be made.
Section 15–18–411(1)(c)(i), (ii), MCA. The deposit described above is not required of a person found to be indigent by the court following an examination into the matter by the court and upon the request of a true owner claiming to be indigent. Section 15–18–411(1)(d), MCA. If the court does not find that the true owner is indigent, or if the true owner fails to pay the deposit within the time fixed by the court, the true owner is considered to have waived any defects in the tax proceedings and any right of redemption. Section 15–18–412(2)(a), MCA. In that case, “the true owner has no claim of any kind against the state or purchaser and a decree must be entered in the action quieting title of the purchaser as against the true owner.” Section 15–18–412(2)(a), MCA.
¶ 28 In contrast, a tax imposed on real property and unpaid when due becomes a lien against the property. Section 15–16–403, MCA. The statutes provide for the sale of a tax lien, not the sale of the property itself. Sections 15–17–121(7)(a), –212, MCA. Compare § 15–17–121(7)(a), MCA (with respect to real property, a tax lien sale is “the offering for sale by the county treasurer of a property tax lien representing delinquent taxes, including penalties, interests, and costs”) with § 15–17–121(7)(b), MCA (with respect to personal property, a tax lien sale is “the offering for sale by the county treasurer of the personal property on which the taxes are delinquent or other personal property on which the delinquent taxes are a lien”). With respect to real property, until the tax deed is issued, the tax sale purchaser has neither legal nor equitable title but merely a lien against the property, which ripens into title through the statutory process. Higgins v. Mont. Hotel Corp., 181 Mont. 149, 153, 592 P.2d 930, 933 (1979); State ex rel. City of Billings v. Osten, 91 Mont. 76, 81, 5 P.2d 562, 565 (1931). Present title remains in the former owner subject to the lien or encumbrance of the purchaser as security for the money paid at the sale. State ex rel. Tillman v. Dist. Ct., 101 Mont. 176, 182–83, 53 P.2d 107, 110 (1936). “Until the tax deed is issued, the tax sale procedure is essentially nothing more than a tax collection device.” 5–39 Richard R. Powell, Powell on Real Property, § 39.04, 39–63 (Michael Allan Wolf ed., 2015).
¶ 29 The owner is given notice and has the opportunity to redeem the lien at multiple steps throughout the process. Sections 15–17–122, 15–18–111, –212, –411, –412, MCA. At the end of the process, if the property tax lien is not redeemed in the manner prescribed by the statutes or in the time allowed by law, the purchaser of the lien acquires the property by tax deed, § 15–18–211, MCA, imposing “the ultimate sanction of losing title to the property.” Powell, supra, at 39–64. It is undisputed that Stewart did not redeem the lien in the manner or time allowed by law: she did not prevent the tax lien sale by paying the delinquent taxes, including penalties, interest, and costs prior to the sale; she did not redeem the lien within 60 days—or at any time thereafter—following the Notice That Tax Deed May be Issued; and she neither deposited funds with the court nor requested during the quiet title action that the court waive the deposit requirement on the ground of indigence. As such, Stewart is considered to have waived any defects in the tax proceedings and any right of redemption. Section 15–18–412(2)(a), MCA.
¶ 30 We analyzed the effect of a tax deed on former titles to property in Collier. In Collier, a life estate holder failed to pay his property taxes and Rosebud County acquired a tax deed to the property. This Court held that Rosebud County's title was complete and eliminated the remainder interests held by the life estate holder's children. We held that the “tax deed created a new title, extinguishing all former titles and liens not expressly exempted from its operation․” Collier, ¶ 16. Accord McDonald v. Grassle, 228 Mont. 25, 30, 740 P.2d 1122, 1125 (1987) (stating, “a tax deed is not derivative but creates a new title in the nature of an independent grant from the sovereign, extinguishing all former titles and liens not expressly exempted from its operation”). Here, Stewart similarly failed to pay property taxes and the County acquired a tax lien on her property. The tax lien sale certificate did not grant title to the property either to the County or to RN & DB; as such, there was no sale of the property at that time. Like in Collier, where Rosebud County's acquisition of a tax deed to the property created a new title and “extinguished all former titles” including remainder interests, when Stewart failed to redeem the property and when RN & DB obtained a tax deed to the property, the tax deed conveyed absolute title to it—free and clear of all liens and encumbrances—and extinguished all former titles, including Stewart's homestead claim. Collier, ¶ 16; § 15–18–214, MCA.
¶ 31 Based on the foregoing discussion, we conclude that the homestead exemption statutes set forth in §§ 70–30–201 to –202, MCA, do not apply to property tax lien or property tax deed sales. A majority of jurisdictions agree with our conclusion. 40 Am.Jur.2d Homestead § 91 (2015) (stating, “In most jurisdictions, liability of homestead property for taxes does not differ from that of other property and the state or municipality can proceed against it as though there were no exemption law in existence.”); Morrison v. Barham, 184 Cal.App.2d 267, 272 (Cal.Dist.Ct.App.1960) (holding that the general homestead exemption “may not be invoked to defeat claims against the holder for taxes and assessments against the homestead property”).
The sale of property for taxes is a device to compel the owner to pay his share of the burden of government. If he does not pay within the time allowed, his property will be sold subject to redemption, but with added burdens consisting of penalties, interest and costs.
State ex rel. Billings, 91 Mont. at 79, 5 P.2d at 564. The effect of these statutes may seem harsh when applied, as here, to deprive a homesteader of the full value of her property over the non-payment of a relatively small amount of tax liability. In a tax deed case, however, “a citizen's right to own property is challenged by the government and the assignee of a tax sale certificate, almost always for a payment by the assignee to the government of far less than the property's full value.” Isern v. Summerfield, 1998 MT 45, ¶ 9, 287 Mont. 461, 956 P.2d 28. By the same token, “[p]ayment of the underlying tax delinquency terminates the lien as well as sale of the property in a tax lien enforcement action.” Powell, supra, at 39–42.
¶ 33 The imposition of taxes and the administration of tax deeds are exclusively creatures of statute. Mont. Const. art. VIII, § 3. The Legislature has crafted a comprehensive scheme to address a property owner's non-payment of taxes. It is the Court's function to apply those statutes as written. Section 1–2–101, MCA. Stewart's interpretation would insulate a homesteader from her obligation to pay taxes on the property, a conclusion that does not find support in the statutes. The record in this case demonstrates that county officials and the court gave Stewart all the protections that the law affords, including rejecting defective notice, setting aside the first faulty tax deed, and withdrawing issuance of default judgment against Stewart. Because the homestead exemptions do not apply to property tax lien sales, the District Court did not err in granting summary judgment to RN & DB on this issue.
¶ 34 2. Whether the District Court should have considered the Flathead County Tax Assessor's failure to investigate Stewart's complaints regarding irregular tax assessments on Stewart's property .
¶ 36 Section 15–7–101, MCA, establishes that it is the Department of Revenue's duty to appraise “all taxable city and town lots” and “all taxable rural and urban improvements.” Section 15–7–101(1)(b)–(c), MCA. Property assessment notices are sent to the owner of real property whenever there is a re-appraisal or change in ownership, classification, or value of property. Sections 15–7–102, –138, MCA. If an owner is dissatisfied with the appraisal as it reflects the market value of the property, “the owner may request an assessment review by submitting an objection on written or electronic forms provided by the department for that purpose” within 30 days after receipt of the notice of appraisal and classification. Section 15–7–102(3)(a), MCA. The county tax appeal board may not reduce the valuation of property unless the taxpayer makes a written application for reduction and submits it for filing with the county clerk and recorder. Section 15–15–102, MCA. The county treasurer may not sell the property or a property tax lien, if, prior to the tax lien sale, the county treasurer discovers that the property on which the taxes are delinquent has been irregularly assessed. Section 15–17–124, MCA.
¶ 39 Based on our review of the record, we conclude that Stewart failed to object timely or properly to the tax assessment on her property. There is no evidence that Stewart submitted an objection on written or electronic forms provided by the Department of Revenue within 30 days after receipt of the notice of appraisal pursuant to § 15–7–102(3), MCA. There is no evidence that Stewart made and filed a written application for reduction in valuation with the county clerk and recorder pursuant to § 15–15–102, MCA. Stewart did not make her objection “prior to the tax lien sale” pursuant to § 15–17–124, MCA. Also, as noted above, Stewart did not make the required deposit or seek exemption from the deposit requirement once RN & DB filed the quiet title action; under § 15–18–412(2)(a), MCA, she is deemed to have waived any defects in the proceedings. Therefore, her claims now are barred.
¶ 40 3. Whether the District Court deprived Stewart of due process by denying her request for a hearing.
¶ 41 Stewart argues that the District Court deprived her of due process when it “deliberately disregarded” her request for a summary judgment hearing. Stewart claims that she made a specific request for a hearing on grounds that the County Tax Assessor's Office would not voluntarily submit an affidavit regarding Stewart's alleged reports disputing the property's tax assessment. Stewart claims that subpoenaing the County Tax Assessor's Office and holding a hearing was the “only means” by which to obtain testimony about Stewart's reported dispute and to “counter” Holly Dale's affidavit. Stewart contends that, upon request to the District Court, she was entitled to a hearing under M.R. Civ. P. 56(c)(2).
¶ 43 Rule 56(c)(2)(A) of the Montana Rules of Civil Procedure provides that “the right to hearing is waived unless a party requests a hearing within 14 days after the time for filing a reply brief has expired.”1 The purpose of a hearing is for the district court to consider “not so much legal arguments, but rather whether there exists genuine issues of material fact.” Cole v. Flathead Cnty., 236 Mont. 412, 418, 771 P.2d 97, 101 (1989).
¶ 44 A district court may grant a motion for summary judgment without first holding a hearing. Chapman v. Maxwell, 2014 MT 35, ¶ 11, 374 Mont. 12, 322 P.3d 1029 (citing SVKV L.L.C. v. Harding, 2006 MT 297, ¶ 37, 334 Mont. 395, 148 P.3d 584). We have held that “there may be an occasion where the movant is so ‘clearly entitled’ as a matter of law to summary judgment that the district court may dispense with the need for a hearing.” Richards v. Cnty. of Missoula, 2009 MT 453, ¶ 17, 354 Mont. 334, 223 P.3d 878 (citing Cole, 236 Mont. at 419, 771 P.2d at 101). Thus, we will not put a district court in error for failing to hold a summary judgment hearing if the hearing testimony would not raise any issue of material fact. Richards, ¶¶ 25–26 (holding that a summary judgment hearing was not necessary and “would not have added anything to the proceedings” because defendant's “one lone memorandum” would not raise an issue of material fact); Dollar Plus, ¶ 39 (holding that the district court did not abuse its discretion in granting summary judgment without first holding a hearing because defendant gave “no indication of what evidence it would have presented at the hearing that would have helped it establish a genuine issue of material fact”).
¶ 45 RN & DB filed its motion and brief for summary judgment on December 18, 2014. On December 22, 2014, the District Court ordered a briefing schedule, requiring briefs and affidavits from Stewart by January 12, 2015, and reply briefs and affidavits by RN & DB by January 27, 2015. Stewart filed a response brief and affidavit on January 12, 2015, objecting to the summary judgment motion and requesting a hearing.
¶ 46 Although we agree with Stewart that she did not waive her right to request a hearing, we conclude that the District Court did not abuse its discretion in denying her request because there was “no indication that the evidence [Stewart] would have presented at the hearing would have helped [her] establish a genuine issue of material fact.” Dollar Plus, ¶ 39. Stewart claims that testimony from the County Tax Assessor's Office would have raised an issue of material fact by showing that she had disputed the irregular assessments to that office. But, even if Stewart's factual assertion is true, the most the County Tax Assessor's Office could have offered would be that she informally disputed the taxes to that office in or around May 2013. Such testimony “would not have added anything” as to the validity of the County's tax lien purchase, its subsequent assignment to RN & DB, or the tax deed issued to RN & DB in light of Stewart's failures to comply with the statutory processes discussed above. Richards, ¶ 26.
¶ 47 The testimony Stewart sought to introduce raised no genuine issue of material fact and RN & DB was “clearly entitled” to judgment as a matter of law. Richards, ¶ 17 (citing Cole, 236 Mont. at 419, 771 P.2d at 101). Accordingly, the District Court did not abuse its discretion in granting summary judgment without holding a hearing.
¶ 48 For the foregoing reasons, the District Court's judgment and decree of quiet title are affirmed.
1. Although we have decided only a few cases interpreting M.R. Civ. P. 56(c) since this Court amended the rule in 2011, much of the case law decided prior to 2011 is helpful in interpreting the revised Rule.

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