Court Opinion

ID: 4394113
Source: CourtListenerOpinion
Date Created: 2019-05-06 08:44:44.524951+00
Date Added: 2024-06-11T14:31:05.783391
License: Public Domain

IN THE SUPREME COURT OF TEXAS
                                                 444444444444
                                                   NO. 16-0874
                                                 444444444444

                                MICHAEL JOE SORRELL AND
                        SORRELL FAMILY, LTD PARTNERS, PETITIONERS,
                                                          v.

                  ESTATE OF BENJAMIN HARDY CARLTON, III, RESPONDENT
               4444444444444444444444444444444444444444444444444444
                                ON PETITION FOR REVIEW FROM THE
                      COURT OF APPEALS FOR THE FOURTEENTH DISTRICT OF TEXAS
               4444444444444444444444444444444444444444444444444444

                                         Argued September 12, 2018

        CHIEF JUSTICE HECHT delivered the opinion of the Court.

        JUSTICE BUSBY did not participate in the decision.

        By statute, an owner may redeem real property purchased at a tax sale by paying certain

amounts within a prescribed period of time after the purchaser’s deed is recorded.1 The issue here

is whether an owner’s tender of substantially all the required money before the deadline can comply

with the statute. We hold that it can and that the trial court did not abuse its discretion in concluding

that the owner’s tender satisfied the statute here. We affirm the judgment of the court of appeals.2

                                                          I

        1
            TEX. TAX CODE § 34.21. All statutory references are to the Tax Code unless otherwise noted.
        2
            504 S.W.3d 379.
         Benjamin Hardy Carlton, III owned a three-acre tract of land in Brazoria County. When

Hardy fell sick and became unable to pay his bills, his mother-in-law, Darlene Barton, urged her

daughter Karen to quit her job and care for him while Barton paid the couple’s living expenses.

Several taxing authorities obtained a judgment against Hardy in early 2011. He died not long

afterward, and Karen was appointed administrator of his Estate. The Estate’s only asset was the

property, which was sold to enforce the judgment at a sheriff’s sale in February 2012. Though the

property was valued at $271,000 on the tax rolls, Michael Joe Sorrell and Sorrell Family, Ltd

Partners (“Sorrell”) successfully bid $68,000 for it. Sorrell recorded his deed on February 29.

         Section 34.21 of the Tax Code provides for the redemption of real property sold at a tax sale

in various circumstances. In the Estate’s situation, Subsection (e) requires the presale owner to pay

“the amount the purchaser bid for the property, the amount of the deed recording fee, and the amount

paid by the purchaser as taxes, penalties, interest, and costs on the property, plus a redemption

premium of 25 percent of the aggregate total”.3 The statute provides that “the owner’s right of

redemption may be exercised not later than the 180th day following the date on which the

purchaser’s . . . deed is filed for record”.4 A redeemer can usually determine from public records the

bid amount, recording fee, and taxes, interest, and penalties paid by the purchaser, but would have

         3
           § 34.21(a); see § 34.21(e) (“The owner of real property sold at a tax sale other than property that was used as
the residence homestead of the owner or that was land designated for agricultural use when the suit or the application
for the warrant was filed, or that is a mineral interest, may redeem the property in the same manner and by paying the
same amounts as prescribed by Subsection (a), (b), (c), or (d), as applicable, except that: (1) the owner’s right of
redemption may be exercised not later than the 180th day following the date on which the purchaser’s or taxing unit’s
deed is filed for record; and (2) the redemption premium payable by the owner to a purchaser other than a taxing unit
may not exceed 25 percent.”).
         4
             § 34.21(e)(1).

                                                            2
no way of knowing what other costs had been incurred without asking the purchaser. The redeemer

has the right to request an itemization. There is no deadline for the request, but the purchaser has ten

days after receipt to respond, by mail if he chooses.5 The expenses must be reasonable.6

         The Estate’s deadline to redeem the home was August 27, 2012. On July 31, the Estate’s

attorney wrote to Sorrell, giving “formal notice that [Karen] Carlton will be redeeming” the home.

“As required by law”, the attorney wrote, “my client will be tendering you the amount of money

paid plus the 25% redemption funds. . . . I will be sending you a proposed redemption deed and the

funds in the not so distant future and certainly before the deadline.”

         But on August 10, Karen died tragically and unexpectedly. Though Barton was, as she

testified, “pretty emotionally upset”, she managed to be appointed successor Estate representative

on August 21, six days before the statutory redemption deadline. That same day the Estate’s attorney

sent Sorrell a letter with a proposed redemption deed and two checks: one for $85,000, representing

Sorrell’s $68,000 bid plus 25%, and another for the $28 deed recording fee. The letter stated:

                This money and the Deed are delivered to you in TRUST. Please do not
         negotiate the checks until such time as the Deed has been executed by all Parties and
         the Deed is on its way back to my Office. . . .

         5
           § 34.21(i) (“The owner of property who is entitled to redeem the property under this section may request that
the purchaser of the property, or the taxing unit to which the property was bid off, provide that owner a written
itemization of all amounts spent by the purchaser or taxing unit in costs on the property. The owner must make the
request in writing and send the request to the purchaser at the address shown for the purchaser in the purchaser’s deed
for the property, or to the business address of the collector for the taxing unit, as applicable. The purchaser or the
collector shall itemize all amounts spent on the property in costs and deliver the itemization in writing to the owner not
later than the 10th day after the date the written request is received. Delivery of the itemization to the owner may be
made by depositing the document in the United States mail, postage prepaid, addressed to the owner at the address
provided in the owner’s written request. Only those amounts included in the itemization provided to the owner may be
allowed as costs for purposes of redemption.”).
         6
             § 34.21(g)(2)(A) (“‘Costs’ includes . . . the amount reasonably spent by the purchaser . . . .”).

                                                              3
               If you have any questions or any issues, please contact me immediate[ly]. The
         Redemption amount does include the 25% redemption fee over and above the
         amount paid for this tract of property at the Tax Sale.

                  ...

               As required by law my client is tendering you the amount of money paid plus
         the 25% redemption funds and your filing fees. If there are any more claimed
         expenses, please notify me immediately and such funds will be paid, upon review.

         Ten days later—four days after the deadline for redemption—Sorrell’s attorney responded

that Sorrell had “paid $70,500.00 for the land[,] . . . $8,694.49 in taxes, and $682.00 in insurance”,

so that “[t]he proper redemption amount would have been at least $99,845.61.” The attorney

returned the Estate’s checks. In fact, Barton was correct that Sorrell had paid only $68,000 (Sorrell

mistakenly included $2,500 it had paid for another tract). Sorrell had paid the taxes a few weeks

earlier, and Barton could have determined the amount from the county tax assessor–collector by the

time she notified Sorrell of her intention to redeem the property. Calculating the 25% premium on

the total, the correct redemption amount was $96,720.61—$11,692.61 more than the Estate had paid.

The Estate had timely paid as much of the redemption amount as Barton knew about—

approximately 88% of the total due—and offered to pay the rest.

         The Estate sued Sorrell seeking a declaration of redemption.7 After a bench trial, the court

concluded that the Estate had “effectively exercised the right of redemption” by “ma[king]

substantial compliance and tender[ing] full compensation within the redemption period.” The court

         7
            Sorrell does not complain that the Estate is not a legal entity entitled to sue in its own name because Barton,
the Estate’s representative, participated in the case. See Embrey v. Royal Ins. Co. of Am., 22 S.W.3d 414, 415 n.2 (Tex.
2000) (“[I]f the personal representative of an estate participates in the case, the judgment involving the estate may be
valid.” (citing Bernstein v. Portland Sav. & Loan Ass’n, 850 S.W.2d 694, 699 (Tex. App.—Corpus Christi 1993, writ
denied))).

                                                            4
directed the Estate to deposit the redemption funds into the court registry to be paid to Sorrell, and

the Estate complied.

         A divided court of appeals affirmed.8 The majority reasoned that because courts have long

held that “the applicable statutory provisions [must be construed] broadly in favor of redemption”,

substantial compliance is all the law requires.9 “Substantial compliance”, the majority continued,

“is determined on a case by case basis, depending in part on the size of the amount paid timely, the

size of the amount left unpaid by the [deadline], and the promptness of the late payment.”10 While

the Estate’s underpayment was not small or insignificant under the doctrine of de minimis non curat

lex, the majority acknowledged,11 the Estate had promised, within the redemption period, to pay any

other amounts due.12 Under the circumstances, the majority concluded, the evidence was sufficient

to support the trial court’s judgment.13 The dissent argued that even if substantial compliance with

Section 34.21 were sufficient, an issue the dissent would not have decided, there could be no

substantial compliance absent an unconditional tender of the full redemption amount by the 180-day

deadline.14

         8
             504 S.W.3d 379.
         9
             Id. at 383.
         10
           Id. (alteration in original) (internal quotation marks omitted) (quoting Mekhail v. Duncan-Jackson Mortuary,
Inc., 369 S.W.3d 482, 485 (Tex. App.—Houston [1st Dist.] 2012, no pet.)).
         11
              See id. at 384.
         12
              Id. at 385.
         13
              Id. at 386.
         14
          See id. at 390–393 (Frost, C.J., dissenting) (relying on Bluntson v. Wuensche Servs., Inc., 374 S.W.3d 503
(Tex. App.—Houston [14th Dist.] 2012, no pet.)).

                                                          5
        We granted Sorrell’s petition for review.15

                                                        II

        Sorrell argues that substantial compliance is not sufficient for redemption under Section

34.21, and even if it were, the Estate did not substantially comply with the statutory requirements.

                                                        A

        For decades, the lower courts have held that substantial compliance with statutory

requirements is sufficient for redemption.16 We have never decided the issue. We have held, just last

Term, in BankDirect Capital Finance, LLC v. Plasma Fab, LLC, that substantial compliance is

insufficient to comply with an Insurance Code provision requiring an insurance premium finance

company to give ten days’ notice before canceling a policy.17 Sorrell argues that BankDirect,

decided after the court of appeals’ decision in the present case, is dispositive. We disagree.

        At issue in BankDirect was Section 651.161(b) of the Insurance Code, which states:

        The insurance premium finance company must mail to the insured a written notice
        that the company will cancel the insurance contract because of the insured’s default

        15
             61 Tex. Sup. Ct. J. 1211 (June 1, 2018).
         16
            McKnight v. Moss, 2017 WL 2462315, at *2 (Tex. App.—Tyler June 7, 2017, no pet.) (mem. op.); Laguan
v. Lloyd, 493 S.W.3d 720, 723 (Tex. App.—Houston [1st Dist.] 2016, no pet.); Haynes v. Haire, 2014 WL 5409053,
at *2 (Tex. App.—Beaumont Oct. 23, 2014, pet. denied) (mem. op.); Khyber Holdings, LLC v. HSBC Bank USA, Nat’l
Ass’n, 2014 WL 1018195, at *3 (Tex. App.—Dallas Mar. 5, 2014, no pet.) (mem. op.); Mekhail, 369 S.W.3d at 485;
Gonzalez v. Razi, 338 S.W.3d 167, 176 (Tex. App.—Houston [1st Dist.] 2011, pet. denied); Jensen v. Covington, 234
S.W.3d 198, 203 (Tex. App.—Waco 2007, pet. denied); Leach v. Conner, 2003 WL 22860911, at *10 (Tex.
App.—Corpus Christi Dec. 4, 2003, no pet.) (mem. op.); Optimum Fund, L.L.C. v. Cito Int’l, Inc., 2001 WL 1427629,
at *2 (Tex. App.—Dallas Nov. 15, 2001, pet. denied); Macha v. Carameros, 674 S.W.2d 491, 493 (Tex. App.—El Paso
1984, no writ); Page v. Burk, 582 S.W.2d 512, 514 (Tex. App.—Dallas 1979, no writ).
        17
             519 S.W.3d 76, 83 (Tex. 2017).

                                                        6
         in payment unless the default is cured at or before the time stated in the notice. The
         stated time may not be earlier than the 10th day after the date the notice is mailed.18

The notice BankDirect sent to its insured stated a cancellation date that was nine days after the

notice was mailed.19 On the 15th day after mailing, and after a fire had destroyed the insured’s

property, the insured tendered to BankDirect the overdue premiums to cure its default, but the policy

was not reinstated.20 In the litigation that followed, BankDirect argued that its cancellation notice

substantially complied with Section 651.161(b).21 We held that “absent statutory language to the

contrary, a statutorily imposed time period does not allow for substantial compliance.”22

         But that statute and Section 34.21 are very different. Section 651.161(b) is short,

straightforward, and clearly focused on the deadline stated in the notice of default. Section 34.21 is

exceedingly complex, and reading the provision as a whole, one cannot say that it is singularly

focused on the redemption deadlines stated in it.23

         Subsection (a) applies to “real property sold at a tax sale to a purchaser other than a taxing

unit” that is “the residence homestead of the owner”, “designated for agricultural use”, or “a mineral

         18
              TEX. INS. CODE § 651.161(b).
         19
519 S.W.3d at 79.
         20
              Id.
         21
              Id. at 80.
         22
              Id. at 83.
         23
            Cf. Mekhail v. Duncan-Jackson Mortuary, Inc., 369 S.W.3d 482, 486 (Tex. App.—Houston [1st Dist.] 2012,
no pet.) (explaining that courts are justified in applying the doctrine of substantial compliance to Section 34.21 because
“the statute acknowledges and provides for certain ambiguity in the amount that must be paid”, it “does not contain clear
and precise requirements that would allow for a strict construction of its application”, and “certain matters in [it] are
subjective and readily subject to dispute”).

                                                            7
interest”.24 The owner may redeem the property within two years of the date that the purchaser’s

deed is filed by paying the bid amount; the deed recording fee; taxes, penalties, interest, and costs;

plus a redemption premium that varies depending on when it is paid: “25 percent of the aggregate

total if the property is redeemed during the first year of the redemption period or 50 percent . . . if

the property is redeemed during the second year”.25

       Subsection (b) applies to the same categories of property, but when the property is “bid off

to a taxing unit . . . and has not been resold”.26 The owner still has two years from the date the deed

is filed to redeem the property, but the redemption amount is calculated by different formulas

depending on the manner in which the taxing unit acquired the property.27

       Subsection (c) addresses yet another contingency: the redemption of a homestead,

agricultural land, or mineral interest when the property has already been resold by the taxing unit.

The redemption timeline and payment formula mirror those provided under (a).28 If the amount paid

by the owner under (c) “is less than the amount of the judgment under which the property was

sold,”29 Subsection (d) contains additional steps that the owner must take.

       24
            § 34.21(a).
       25
            Id.
       26
            § 34.21(b).
       27
            Id.
       28
            See § 34.21(c).
       29
            § 34.21(d).

                                                  8
         Finally, Subsection (e) applies to property sold at a tax sale that is not a homestead,

agricultural land, or a mineral interest. The owner “may redeem the property in the same manner and

by paying the same amounts as prescribed by Subsection (a), (b), (c), or (d), as applicable, except

that:”

                 (1)     the owner’s right of redemption may be exercised not later than the
         180th day following the date on which the purchaser’s or taxing unit’s deed is filed
         for record; and

                 (2)    the redemption premium payable by the owner to a purchaser other
         than a taxing unit may not exceed 25 percent.30

That is, before an owner of “other” property can determine the redemption amount, he must first

wade through (a)–(d) to determine the applicable formula and then modify it by the terms of

(e)(1)–(2).

         In BankDirect, we observed that substantial compliance is “ubiquitous . . . throughout Texas

law”, but we thought it “particularly [im]prudent” to allow for substantial compliance with the

statutory deadline in that case because the Legislature could have done so, as it has in many other

statutes, and did not.31 In this case, Legislative inaction cuts strongly the other way. Texas courts

have favored redemption over forfeiture since 1909.32 In 1932, we acknowledged this favoritism as

         30
              § 34.21(e) (emphasis added).
         31
              BankDirect Capital Fin., LLC v. Plasma Fab, LLC, 519 S.W.3d 76, 81 (Tex. 2017).
         32
             Jackson v. Maddox, 117 S.W. 185, 185 (Tex. App.—Fort Worth 1909, no writ) (“Statutes favoring
redemption are to be liberally construed; for the sale of land for taxes is the nearest approach to tyranny that exists in
a free government, and whatever tends to modify its severity is favorable to the citizen and to rights of property and to
justice.” (quoting section 728 of “Mr. Blackwell in his work on Tax Titles”)).

                                                            9
“the recognized rule”.33 In the last century, the Legislature has amended the redemption statute

dozens of times. None of the amendments has sought to change Texas courts’ policy of interpreting

the redemption statute to favor the redeemer. “[I]n the area of statutory construction, the doctrine

of stare decisis has its greatest force because the Legislature can rectify a court’s mistake, and if the

Legislature does not do so, there is little reason for the court to reconsider whether its decision was

correct.”34

        Although, as we said in BankDirect, substantial compliance is insufficient to satisfy a

statutory deadline,35 it may be sufficient to comply with other statutory requirements.36 Here, the

Estate paid Sorrell before the statute’s deadline but did not pay the full amount that the statute

requires. In light of our longstanding practice of favoring redemption over forfeiture in this property-

rights context, we hold that a party’s timely substantial compliance with the redemption statute’s

requirement to pay certain amounts may satisfy the statute’s demands.

                                                         B

        The remaining question is whether the trial court erred by concluding that the Estate

substantially complied with Section 34.21(e). The record and caselaw reflect confusion about the

standard of review among litigants and the lower courts. The trial court listed its substantial

        33
             Buckholts v. Alsup, 56 S.W.2d 301, 305 (Tex. App.—Texarkana 1932, writ ref’d).
        34
             Sw. Bell Tel. Co. v. Mitchell, 276 S.W.3d 443, 447 (Tex. 2008) (footnote and internal quotation marks
omitted).
        35
519 S.W.3d at 83.
        36
            See, e.g., Roccaforte v. Jefferson County, 341 S.W.3d 919, 926–927 (Tex. 2011) (holding that a party who
fully complied with a statutory deadline but only substantially complied with a manner-of-service requirement had
satisfied the statutory requirements).

                                                        10
compliance determination among its conclusions of law, yet on appeal Sorrell has treated the

determination as a factual finding and challenged the sufficiency of the evidence to support it. The

court of appeals “reject[ed] Sorrell’s contention that legally and factually insufficient evidence

supports the trial court’s findings that the Estate substantially complied with the statutory

requirements and effectively redeemed the property”, but never directly confronted the standard of

review.37 At least one court of appeals has treated the issue of substantial compliance with Section

34.21 as a question of law.38

         Whether an owner substantially complied with the requirements of Section 34.21 can be

analogized to the issue whether a consent to search was voluntary under the totality of the

circumstances—it “involves questions of both fact and law” and should be reviewed for abuse of

discretion.39 There may be underlying facts that are in dispute, such as whether the land was

“designated for agricultural use when the suit . . . was filed” (which affects the length of the

redemption period and the amount of the premium)40 or the date on which the owner tendered

payment to the purchaser. In such circumstances, “a reviewing court [should] not engage in its own

         37
              504 S.W.3d 379, 386.
         38
              Jensen v. Covington, 234 S.W.3d 198, 205–206 (Tex. App.—Waco 2007, pet. denied).
         39
            State v. $217,590.00 in U.S. Currency, 18 S.W.3d 631, 633 (Tex. 2000) (“[W]e hold that an abuse of
discretion standard of review applies to a trial court’s ruling on a motion to suppress evidence based upon the contention
that a claimant’s consent to a search was not voluntary.”).
         40
              § 34.21(a).

                                                           11
factual review, but decide[] whether the record supports the trial court’s resolution of factual

matters” and “defer to the trial court’s factual determinations” if it does.41

          If the record supports the trial court’s factual determinations or where, as here, the

underlying facts are undisputed, the reviewing court then “determines . . . whether the trial court

properly applied the law to the facts in reaching its legal conclusion.”42 We have acknowledged that

“[t]he doctrine of substantial compliance, though certainly familiar to the law, lacks comprehensive

definition,” yet we have “assume[d] that substantial compliance with a statute means compliance

with its essential requirements”.43 The trial court should consider “the totality of the

circumstances”,44 including the amount left unpaid, the owner’s good faith and diligence in

attempting to comply with the statute, and any factors that hindered the owner’s full compliance.

          In this case, the evidence establishes that the Estate timely tendered a redemption payment,

but its checks were short by more than $11,000, or about 12% of the total due under Section

34.21(e). The unpaid funds included “the amount paid by the purchaser as taxes, penalties, interest,

and costs”45—sums the Estate did not know. Although the Estate could have obtained the figures

from the tax assessor–collector, it attempted to obtain them from Sorrell before the deadline by

          41
               $217,590.00 in U.S. Currency, 18 S.W.3d at 633–634 (citing Goode v. Shoukfeh, 943 S.W.2d 441, 446 (Tex.
1997)).
          42
               Id. at 634.
          43
               Edwards Aquifer Auth. v. Chem. Lime, Ltd., 291 S.W.3d 392, 402–403 (Tex. 2009).
          44
               $217,590.00 in U.S. Currency, 18 S.W.3d at 633.
          45
               § 34.21(a).

                                                           12
asking in its August 21 letter to be notified “immediately” “[i]f there are any more claimed

expenses”, and it promised to pay them. Section 34.21(i) gives a purchaser ten days to respond to

a request for an itemization of costs, and those ten days did not expire in this case until after the

180th day of the redemption period. Although the statute did not require Sorrell to respond to the

Estate’s request until four days after the deadline, it did not require the Estate to request the

itemization by any particular date in advance of the 180th day. While dealing with the circumstances

immediately following Karen’s unexpected death, the Estate timely paid all it knew then to pay and

promised to promptly pay any additional amounts required.

         The dissent in the court of appeals viewed the language in the Estate’s August 21 letter

promising to pay additional funds “upon review” as a conditional offer rendering the Estate’s

redemption attempt ineffective.46 But the trial court, justifiably, could have read the language as a

simple acknowledgment that the redemption statute requires that costs “spent by the purchaser [to]

maintain[], preserv[e], and safekeep[] the property” be “reasonabl[e]”,47 especially in light of the

evidence that the Estate was making a good-faith effort to comply with the statutory requirements.

         46
          See 504 S.W.3d 379, 390 (Frost, C.J., dissenting) (“[T]he use of the term ‘upon review’ reflects that the Estate
would pay [any missing] amounts only if, after review of the expense(s) in question, the Estate concluded that the
expense(s) were part of the Redemption Amount. Therefore, any promise by the Estate to pay these expenses in the
future was conditional and thus insufficient to effect a redemption.” (citing Bluntson v. Wuensche Servs., Inc., 374
S.W.3d 503, 507 (Tex. App.—Houston [14th Dist.] 2012, no pet.))).
         47
              § 34.21(g)(2)(A).

                                                           13
       We hold that the trial court did not abuse its discretion in concluding that the Estate

substantially complied with the requirements of Section 34.21(e). The court of appeals’ judgment

is

                                                                                      Affirmed.

                                            Nathan L. Hecht
                                            Chief Justice

Opinion delivered: May 3, 2019

                                              14