Opinion ID: 4580940
Heading Depth: 2
Heading Rank: 1

Heading: The Due Process Clause of the Fourteenth

Text: Amendment sets minimum notice standards for tax sales of delinquent properties. It is an “elementary and fundamental requirement” of the Due Process Clause of the Fourteenth Amendment that before it institutes an action to sell a delinquent property, “a State must provide ‘notice reasonably calculated, under all circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.’” Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 795, 103 S.Ct. 4 The Court of Appeals below found Trust 4340’s motion to set aside the tax deed was timely filed. Indiana Land Trust Co., 130 N.E.3d at 636. Assuming arguendo that this conclusion is correct, we need not reach this issue because of our determination that the Auditor complied with due process requirements. Indiana Supreme Court | Case No. 20S-MI-62 | October 27, 2020 Page 8 of 22 2706, 2709, 77 L.Ed. 180 (1983) (quoting Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 314, 70 S.Ct. 652, 657, 94 L.Ed. 865 (1950)). Put differently, a party that has a legally protected property interest in a particular parcel is “entitled to notice reasonably calculated to apprise him of a pending tax sale.” Id. at 798. Both the Supreme Court of the United States and our own Court have weighed in on what these standards entail. We will review the relevant cases from each court below. A. The Supreme Court of the United States has held that while actual notice is not required, notice must be given in a manner desirous of actually informing the owner. The Supreme Court has addressed the contours of due process in several opinions over the years. For example, in Mennonite Bd. of Missions, a case with Hoosier origins, the Court considered a tax sale in which Elkhart County posted and published notice of a tax delinquency but failed to mail any notice to the mortgagee. The Court determined, inter alia, that publication and posting alone were unlikely to reach those with interest in the property. Id. at 799. The Court’s opinion concluded that personal service or mailed notice was required for a creditor with a legal interest in a property. Id. The Court wrote, “Notice by mail or other means as certain to ensure actual notice is a minimum constitutional precondition to a proceeding which will adversely affect the liberty or property interests of any party, whether unlettered or well versed in commercial practice, if its name and address are reasonably ascertainable.” Id. at 800 (emphasis in original). In Mennonite Bd. of Missions, then, a single letter of notice would have discharged the county’s constitutional obligation to give notice to the party with a legal interest in the property. Id. More recently in Jones v. Flowers, 547 U.S. 220, 126 S.Ct. 1708, 164 L.Ed.2d 415 (2006), the Supreme Court confronted an issue not unlike the one our Court faces today. There, a property owner became delinquent on property taxes after he got divorced and moved out of his marital home. Indiana Supreme Court | Case No. 20S-MI-62 | October 27, 2020 Page 9 of 22 The government sent a certified letter to his property to notify the owner of an impending tax sale, but the letter was returned unclaimed. The government made no additional attempts to notify the owner other than publishing notice of the sale in a local newspaper. The property was eventually sold, and the owner was only notified when the purchaser delivered an unlawful detainer notice to the owner’s daughter at the property. Id. at 223-24, 126 S.Ct. at 1712-13. The owner filed suit alleging the government failed to give him sufficient notice of the tax sale in violation of the Due Process Clause of the Fourteenth Amendment. The issue presented to the Supreme Court was framed as “whether, when notice of a tax sale is mailed to the owner and returned undelivered, the government must take additional reasonable steps to provide notice before taking the owner’s property.” Id. at 223, 126 S.Ct. at 1712. Under the circumstances presented in Jones, the Supreme Court answered this question in the affirmative, finding “someone who actually wanted to alert [the property owner] that he was in danger of losing his house would do more when the attempted notice letter was returned unclaimed, and there was more that reasonably could be done.” Id. at 238, 126 S.Ct. at 1721. The Jones Court made several foundational observations to reach its result. First, the Due Process Clause of the Fourteenth Amendment requires the government to provide “notice and opportunity for hearing appropriate to the nature of the case.” Id. at 223, 126 S.Ct. at 1712 (quoting Mullane, 339 U.S. at 313, 70 S.Ct. at 652). Second, “actual notice” is not required by due process. Id. at 225, 126 S.Ct. at 1713. Rather, due process requires the government to provide “notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and to afford them an opportunity to present their objections.” Id., 126 S.Ct. at 1713-14 (quoting Mullane, 339 U.S. at 314, 70 S.Ct. at 652). Third, to assess the adequacy of a particular form of notice, a Court must balance the interest of the State against the individual interest sought to be protected by the Fourteenth Amendment. Id. at 229, 126 S.Ct. at 1715 (quotations omitted). So “when notice is a person’s due … [t]he means Indiana Supreme Court | Case No. 20S-MI-62 | October 27, 2020 Page 10 of 22 employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it.” Id. (quoting Mullane, 339 U.S. at 315, 70 S.Ct. at 652). Applying the facts of Jones to this framework, the Court wrote that someone desirous of actually informing a property owner that his house was subject to a tax sale would surely take “additional reasonable steps” to give notice if a mailing were returned. Id., 126 S.Ct. at 1716. Because the government in Jones did nothing when the certified letter was returned as unclaimed, the Supreme Court observed that the government “should have taken additional reasonable steps to notify [the landowner], if practicable to do so.” Id. at 234, 126 S.Ct. at 1718. The Jones Court stopped short, however, of prescribing any particular type or form of service. Id. (citing Greene v. Lindsey, 456 U.S. 444, 455, n.9, 102 S.Ct. 1874, 72 L.Ed.2d 249 (1982)). It followed, then, that “if there were no reasonable additional steps the government could have taken upon return of the unclaimed notice letter, it cannot be faulted for doing nothing.” Id. Perhaps stated differently, the Supreme Court concluded the “reasonable additional steps” that must be taken when a certified letter is returned “depends upon what the new information reveals.” Id. In the case of a certified letter returned as unclaimed, the Court posited that one viable option would have been for the government to send another letter via regular mail. Id., 126 S.Ct. at 1718-19. Another practical option would have been for the government to post notice on the door of the property. Id. at 235, 126 S.Ct. at 1719. In the Court’s view, either of these options would increase the likelihood the owner would be notified of the impending tax sale on his property. Id. Particularly relevant to today’s decision, the Supreme Court addressed the landowner’s argument that the government should have searched either the phone book or “other government records” to reveal his new address. Id. at 235-36, 126 S.Ct. at 1719. But the Supreme Court did “not believe the government was required to go this far.” Id. at 236, 126 S.Ct. at 1719. “An open-ended search for a new address—especially when the State obligates the taxpayer to keep his address updated with the tax Indiana Supreme Court | Case No. 20S-MI-62 | October 27, 2020 Page 11 of 22 collector[ ]—imposes burdens on the State significantly greater than the several relatively easy options” discussed above. Id. B. Our Court’s decisions echo the findings of the Supreme Court and evaluate the adequacy of notice based on the facts and circumstances of each case. Our own Court has had the opportunity to review Jones under factually similar circumstances in Sawmill Creek, 964 N.E.2d at 213. In that case, the property owner’s business name was incorrectly listed as “Saw Creek” instead of “Sawmill Creek” on several documents filed with the government. Id. at 214. When the property owner moved operations, addresses were updated for Sawmill Creek in the auditor’s system, but not for the “Saw Creek” entity used on the property documents. Id. at 215. The property became delinquent. Id. The county auditor sent a pre-sale notice via certified mail to the address on file for “Saw Creek,” but the notice was returned as ”NOT DELIVERABLE AS ADDRESSED, UNABLE TO FORWARD.” Id. The auditor published notice in the newspaper, on its website, and on a list posted outside of the county clerk’s office. Id. After the property was sold, the auditor employed a title company to conduct additional research on the property, but the title company could not locate a “Saw Creek” business entity. Id. Two post-sale notices—one via certified mail and one via first-class mail—were again sent to the address on file, but both mailings were returned as undeliverable. Id. Only when the new property owner’s “for sale” signs appeared on the property did the original owner become aware of the sale and sued to set aside the tax deed. Id. at 216. Applying the analytical framework of Jones referenced above, our Court found the county auditor satisfied due process requirements because, under the circumstances of that case, “the [a]uditor’s actions were reasonably calculated to provide notice to [the landowner].” Id. at 221. Observing “every fact relevant to whether the [a]uditor acted or failed to act ‘as one desirous of actually informing’ [the owner] of the pending tax sale must be considered,” id. at 219, we found that after the certified letter Indiana Supreme Court | Case No. 20S-MI-62 | October 27, 2020 Page 12 of 22 was returned as undeliverable, it would have been unreasonable for the auditor to re-send the same notice via first-class mail. Id. at 220. We also observed that posting notice on bare, unimproved land was not practical. Id. at 221. Ultimately, we were satisfied that the auditor took the required “additional reasonable steps” by engaging a title search company to search government records and the phonebook for additional addresses. Id. Our Court again examined Jones in the case M&M Inv. Group, LLC v. Ahlemeyer Farms, Inc., 994 N.E.2d 1108 (Ind. 2013). Though the facts and procedure of that case are not particularly relevant to today’s decision, our Court’s opinion carefully reviewed the structure and history of Indiana’s tax sale statutes and the decisional law interpreting them. Id. at 1112-17. Focusing on our prior decision in Elizondo v. Read, 588 N.E.2d 501 (Ind. 1992), our Court discussed whether auditors are required to search internal records for a better address when notice to the delinquent property owner is returned. We recounted that in Elizondo, “due process required the auditor to search his or her own records for alternate addresses for the owner of the property.” Id. at 1116 (citing Elizondo, 588 N.E.2d at 505). See also Griffin v. Munco Assoc., 589 N.E.2d 220 (Ind. 1992); Miller Reeder Co. v. Farmers State Bank of Wyatt, 588 N.E.2d 506 (Ind. 1992). After a review of Jones v. Flowers and then-existing statutes, however, we called Elizondo’s viability—at least with respect to property owners—into question. Id. at 1117. We determined that “the portion of Elizondo dealing with a property owner has been abrogated [by Jones v. Flowers] to the extent it implies an auditor may receive a notice back ‘unclaimed’ and then effectively sit on his or her hands and do nothing more…” Id. While “Jones would compel the additional steps of at least mailing the notice by first class mail, posting it on the front door, and/or addressing it to ‘occupant’” if notice to a property owner was returned to a county auditor, our opinion deferred to the legislature’s additional guidance codified at the time the opinion was handed down. Id. In M&M Investment Group, we further observed that notice requirements are different depending on the class of interest at stake. Indiana Supreme Court | Case No. 20S-MI-62 | October 27, 2020 Page 13 of 22 Whether notice was sent to a property owner or a mortgagee proved to be a consequential distinction. We observed that “[w]hile those cases relate to, inform, and persuade each other, it would be erroneous to presume that they control issues and parties beyond their own scope. Each class of interest merits its own analysis.” Id. at 1118. Unlike M&M Investment Group and the remaining viable portion of Elizondo, the present “class of interest” is that of a property owner, not a mortgagee. As we discuss below, this distinction places Elizondo’s internal records search requirement outside the present facts.