Court Opinion

ID: 9477951
Source: CourtListenerOpinion
Date Created: 2023-08-05 06:35:41.254112+00
Date Added: 2024-06-11T17:46:08.512823
License: Public Domain

OAKES, Circuit Judge
(dissenting):
I dissent.
I believe that the procedures followed by New York City in conducting tax foreclosure sales are constitutionally invalid for two reasons. First, the City’s Administrative Code does not give a landowner sufficient notice of foreclosure proceedings. Second, the “release” provisions, which place the approval of certain applications wholly within the “discretion” of the Board of Estimate, are totally arbitrary. Here both deprived Weigner of procedural due process and of equal protection of the laws.
*654The City provides service of a “Notice of Foreclosure” by ordinary first class mail. N.Y.C.Admin.Code § 11-417 (Lenz & Reicher 1985). With all the vagaries of the postal service in the 1980s, the notice provided to out-of-state New York City property owners whose property is the subject of foreclosure proceedings is less reliable than that provided to out-of-state property owners in a wide variety of other circumstances. So, for example, a nonresident whose real estate is sold to pay a judgment debt, N.Y.Civ.Prac.Law § 5236(c) (McKinney 1978 & Supp.1988), or one on whose personal property execution is levied to pay a money judgment, id. §§ 5225, 5232, or a person who owes money or who will owe money to a judgment debtor and is served with a restraining notice, id. §§ 5222, 5227, or a judgment debtor on whom is served an information subpoena, id. § 5224, is guaranteed service personally or by registered or certified mail, return receipt requested. I fail to see why tax foreclosure matters should be treated differently.
Recently the New York Court of Appeals considered a somewhat similar question in McCann v. Scaduto, 71 N.Y.2d 164, 524 N.Y.S.2d 398, 519 N.E.2d 309 (1987). There the court found unconstitutional the Nassau County tax foreclosure system, which provided notice of the tax sale itself only by publication and had no requirement for actual notice until three months before the redemption period expired. In a compelling opinion by Judge Kaye, the court concluded that the tax lien sale “creates ‘momentous consequences’ for the homeowner,” and that “[a]ctual notice” of it is required. Id. at 177, 524 N.Y.S.2d at 404, 519 N.E.2d at 314-15. Judge Kaye’s opinion did not specify that “actual” notice need be by registered or certified mail; however, in light of both the evolving due process standards for adequacy of notice and the practical realities of being a postal patron in the late 1980s, I would take the further step of requiring that actual notice consist of personal service, registered or certified mail, or, at a minimum, of service by first class mail with a return envelope, postage prepaid and addressed to the sender, as specified in Fed.R.Civ.P. 4(c)(2)(C)(ii) & 4(d).1 Although the Supreme Court has yet to be squarely presented with the question whether certified or registered mail, as opposed to first class mail, is required to constitute actual notice, I think that a discernible trend toward this position, coupled with the Court’s recognition of property rights as personal rights, e.g., Lynch v. Household Finance Corp., 405 U.S. 538, 552, 92 S.Ct. 1113, 1122, 31 L.Ed.2d 424 (1972), make its adoption a matter only of time.
Judge Kaye’s opinion in McCann ably recounts that trend. Starting with Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950), the Supreme Court rejected any rigid distinctions between in rem and in per-sonam proceedings, id. at 312-13, 70 S.Ct. at 656-57, and articulated that “[a]n elementary and fundamental requirement of due process ... is notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections,” id. at 314, 70 S.Ct. at 657, and that “[t]he means employed must be such as one desirous of actually informing the absentee might rea*655sonably adopt to accomplish it.” Id. at 315, 70 S.Ct. at 657. In following years the Court held that constructive notice of condemnation proceedings was inadequate to notify a landowner whose identity was known to the city, Walker v. City of Hutchinson, 352 U.S. 112, 77 S.Ct. 200, 1 L.Ed.2d 178 (1956); Schroeder v. City of New York, 371 U.S. 208, 83 S.Ct. 279, 9 L.Ed.2d 255 (1962) (publication and posting insufficient notice of condemnation proceedings to landowner ascertainable from public records), and that the posting of a summons on an apartment door was insufficient notice of a forcible entry or detainer action, Greene v. Lindsey, 456 U.S. 444, 102 S.Ct. 1874, 72 L.Ed.2d 249 (1982). In Mennonite Board of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d 180 (1983), the Court held that posting in county courthouse and publication does not provide a mortgagee adequate notice of a proceeding to sell the mortgaged property for nonpayment of taxes. Through this progression, the Court has come to recognize as a general principle that “[njotice 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.” Mennonite, 462 U.S. at 800, 103 S.Ct. at 2712. (Here Weigner’s name and address were known to the City, she having completed an “in rem card.”) The Court went on to say, “a mortgagee’s [and presumably a mortgagor’s] knowledge of delinquency in the payment of taxes is not equivalent to notice that a tax sale is pending.” Id. Thus, for purposes of notice, a delinquent real estate taxpayer stands in no different shoes from a judgment debtor. The trend continues. In Tulsa Professional Collection Services, Inc. v. Pope, — U.S. -, 108 S.Ct. 1340, 99 L.Ed.2d 565 (1988), the Court required the service of actual notice in probate proceedings.
Several lower courts have acknowledged that certified or registered mail is preferable to first class mail as a means of notice because the certified or registered mail, if signed for, guarantees receipt, see Stateside Mach. Co. v. Alperin, 591 F.2d 234, 241 (3d Cir.1979), superseded by statute as explained in Gold Kist, Inc. v. Laurinburg Oil Co., 756 F.2d 14, 17-18 (3d Cir.1985) (state rules now require service of process by certified or registered mail), and provides documentary evidence of receipt. United States v. Smith, 398 F.2d 173, 177 (3d Cir.1968). In recognition of these advantages, registered or certified mail is now the preferable means for notice in a variety of contexts, not only in New York. For example, several states require notice by registered or certified mail before tax foreclosure, e.g., Wash.Rev.Code § 84.64.050 (1987), or mortgage foreclosure, e.g., D.C.Code §§ 45-715(b), 45-715.1; see also 12 C.F.R. § 590.4(h)(1) (1985) (Federal Home Loan Bank Board requires thirty days’ notice prior to foreclosure to be sent by registered or certified mail). Similarly, mortgage agreements frequently specify notice by certified mail pri- or to foreclosure. E.g., United States v. Victory Highway Village, Inc., 662 F.2d 488, 493 (8th Cir.1981).
The facts of this case show why notice by certified or registered mail is necessary. Here the parties dispute whether the notice was ever received. Weigner, a widow living in Florida, owned property in a rundown section of Queens. She had paid her taxes up to 1977 (and 1980 as to one parcel) except for a brief period when she held the property as mortgagee, having sold it to an unsuccessful developer, and even then she paid back taxes when she reacquired it from the buyer. Actual arrearages were only $9,259, although $21,927 in interest, subsequent taxes, penalties, etc., was owed on the property which was worth, in the 1980s, $183,000 according to the City and more than $250,000 according to Weigner. The notice (which she does not remember receiving) was a form letter on which her name does not appear, her pieces of property are not specified, and the word “summons” is conspicuously absent. The form “notice of foreclosure” simply refers to “In Rem Tax Foreclosure Action No. 38” in the Borough of Queens and says that the Com*656missioner of Finance has filed with the clerk of a court “a list of parcels of property affected by unpaid tax liens ... which on the 1st day of October, 1981, had been unpaid for a period of at least one year” and went on to specify, in writing-like typeface, December 18,1981, as the last day for redemption. Queens Action No. 38 involved, I note, 5,229 tax delinquent parcels.
In our current society, when our mailboxes are usually full of quite sophisticated, and often personalized, “junk mail,” it is not unlikely that the form letters sent by the City were simply thrown away by Weigner. Similarly, the fact that she allegedly received thirteen such notices might have led her to disregard all of them because there were so many. More importantly, had she opened the letters and worked her way through the somewhat abstruse and tortured legalese, she might not have realized that it was in fact a summons that she had received. (I note that had she been the out-of-state recipient of a summons announcing the start of a legal action, she would have been entitled to personal service. N.Y.Civ.Prac.Law §§ 313, 314 (McKinney 1972 & Supp.1988).) It is not unreasonable for an individual to expect that an important legal document will include his or her name and will describe with some particularity the subject of the dispute. To my mind the notices simply did not constitute, in the words of Mullane, a means “such as one desirous of actually informing the absentee might reasonably adopt to accomplish it.” 339 U.S. at 315, 70 S.Ct. at 657. Rather, the City appears to have been trying to satisfy some perceived minimum standard rather than making a good faith effort to provide actual notice. Moreover, the City did not send any notice of the entry of the foreclosure judgment, any notice of the recording of the tax foreclosure deed, or any notice of the pending expiration of Weig-ner’s rights to redeem within the four-month mandatory release period thereafter. This dissenting opinion may be a little in advance of its time but, I suggest, very little. Indeed, it has been anticipated by Miles v. District of Columbia, 354 F.Supp. 577, 583-85 (D.D.C.1973), aff'd, 510 F.2d 188 (D.C.Cir.1975). See also Kirst, Nebraska’s Modern Service of Process Statute, 63 Neb.L.Rev. 1, 6 (1983).
The other basis for unconstitutionality of the city foreclosure procedures is more direct. New York City Administrative Code section ll-424(g) permits the Board of Estimate in its “discretion” to authorize the “release” of the City’s interest in the property foreclosed to the taxpayer who properly applies and pays all due charges during the period from four months to twenty-four months after the deed of foreclosure is recorded. (For the first four months there is a mandatory release.) The only restraint on this discretion is that it cannot be exercised if the City has sold or disposed of the property, if the property has been condemned or assigned to any agency of the City, or if it is the “subject of contemplated use for any capital or urban renewal project of the city.” Weigner duly filed her applications for release but, according to the City’s affidavit in support of its motion for summary judgment, she was turned down because the vacant land was “on disposition hold” because it was submitted to the Mayor’s office as “potential Affordable House Sites” and because she lacked any plans for the sites.
To my mind, despite the City’s admirable goal of using the foreclosed land for affordable housing, the untrammeled discretion of the Board makes the City’s action arbitrary. To be sure, it can be argued that the period for the “release” application could be shortened, for example, to four months, and that would eliminate the problem of arbitrariness. But I rather thought the right-privilege distinction had been interred,2 or at the very least that when government agencies take actions affecting valuable property rights there must be standards for the exercise of administrative discretion. Judge Henry Friendly spoke of the need for such standards as *657early as 1962 in The Federal Administration Agencies: The Need for Better Definition of Standards 5-6 (1962), selected chapters reprinted in Benchmarks 86-134 (1967). Professor Kenneth Culp Davis devotes a chapter in his 2 Administrative Law Treatise ch. 8 (2d ed. 1979) to the subject. Case law in the Supreme Court, Morton v. Ruiz, 415 U.S. 199, 231, 232, 236, 94 S.Ct. 1055, 1072, 1073, 1075, 39 L.Ed.2d 270 (1974) (determination of eligibility for welfare benefits), and in this court, Holmes v. New York City Hous. Auth., 398 F.2d 262, 265 (2d Cir.1968) (selections among applicants for public housing); McClendon v. Rosetti, 460 F.2d 111 (2d Cir.1972) (disposition of property in police custody), requires that decisions be made according to articulated standards, not by unfettered administrative discretion. See also White v. Roughton, 530 F.2d 750, 753-54 (7th Cir.1976) (“vesting virtually unfettered discretion in [Town Supervisor]” with no “published standards for eligibility or the amount of aid given,” id. at 751).
Here, I believe that the actions of the Board were arbitrary. The lack of standards, coupled with the fact that the Board is not required to give its reasons for its ultimate decision, creates a situation where an applicant must guess at the arguments to be made to the Board, and will often never know why an application has been accepted or denied. Weigner’s complaint made out a colorable claim of arbitrariness, and she should have been allowed discovery on the question of whose applications were approved and whose were not. The practical result of this case is that the City of New York, through suspect procedures and arbitrary administrative actions, has gained possession of property worth between $183,000 and $250,000, because an elderly out-of-state widow failed timely to pay less than $10,000 in property taxes. Because the City has failed to live up to its constitutionally-mandated duties, I dissent.

. Significantly, the Advisory Committee and the Supreme Court had approved of an amendment that would permit service referred to in Rules 4(d)(1) and 4(d)(3) by registered or certified mail, return receipt requested, and Congress instead adopted the substitute found in the Rule. See 4A C. Wright & A. Miller, Federal Practice and Procedure § 1092.1, at 56 (1987). Although "in the usual situation [in class action suits] first-class mail and publication in the press fully satisfy the notice requirements of Fed.R.Civ.P. 23 and the due process clause,” Zimmer Paper Prods., Inc. v. Berger & Montague, P.C., 758 F.2d 86, 90 (3d Cir.), cert. denied, 474 U.S. 902, 106 S.Ct. 228, 88 L.Ed.2d 227 (1985), notice by certified mail may be preferable where the intended recipient lacks legal expertise. For example, one court which found that notice by first class mail in a class action suit was “ ‘reasonably calculated ... to apprise interested parties’ ’’ where the class consisted of business entities with legal expertise also recognized that "[m]ore elaborate steps, such as certified mail, [may be appropriate] ... where class members may be presumed to be less aware of a notice’s legal ramifications.” Id. at 92 (quoting Mullane, 339 U.S. at 314, 70 S.Ct. at 657).

. See Van Alstyne, The Demise of the Right-Privilege Distinction in Constitutional Law, 81 Harv. L.Rev. 1439 (1968).