Court Opinion

ID: 9389941
Source: CourtListenerOpinion
Date Created: 2023-04-26 16:04:40.961714+00
Date Added: 2024-06-11T17:18:30.750984
License: Public Domain

IN THE COURT OF APPEALS OF IOWA

                                    No. 22-0128
                                Filed April 26, 2023

NO BOUNDRY, LLC,
     Plaintiff-Appellant,

vs.

BRANDI SMITHSON,
     Defendant-Appellee.
________________________________________________________________

      Appeal from the Iowa District Court for Scott County, Mark D. Cleve, Judge.

      The recipient of a tax sale deed appeals a district court ruling in its forcible-

entry-and-detainer action finding the party in possession had a right to redeem.

REVERSED AND REMANDED WITH DIRECTIONS.

      Charles P. Augustine of Klatt, Augustine & Rastede, PC, Waterloo, for

appellant.

      Leah Patton, Ames, for appellee.

      Considered by Bower, C.J., and Greer and Badding, JJ.
                                           2

BADDING, Judge.

       The recipient of a tax sale deed—No Boundry, LLC—appeals a district court

ruling in its forcible-entry-and-detainer action finding the party in possession—

Brandi Smithson—had a right to redeem under Iowa Code section 447.7 (2021)

due to a “legal disability.” Hidden within this challenge are questions about the

finality of the court’s ruling and the code year the parties and the court used to

analyze Smithson’s right to redeem. We conclude the court’s ruling was final,

apply the correct version of the statute in our de novo review of the record, and

reverse and remand with directions.

I.     Tax Sale Timeline

       On June 18, 2018, following a public tax sale, an entity named Wago 262

received a certificate of purchase for the property at issue—a condominium owned

by Brandi Smithson. See Iowa Code § 446.29 (2018). This certificate did not

actually transfer ownership of the property to Wago 262. See Kluender v. Plum

Grove Invs., 985 N.W.2d 466, 468 (Iowa 2023). It instead amounted to “an

inchoate right or lien” because, even after the tax sale is done and the certificate

of purchase issued, the property owner still has two years to redeem the property

under Iowa Code section 447.1. Id. (citations omitted).

       In April 2020, Smithson, as the “person in possession of the parcel” and “in

whose name the parcel is taxed,” was given a ninety-day notice of the expiration

of her right to redemption. Iowa Code § 447.9.1 On July 30, Wago 262 assigned

its rights in the certificate of purchase to its affiliated business, No Boundry, LLC.

1As will be explained later in this opinion, “[t]he law in effect at the time of tax sale
governs redemption.” Iowa Code § 447.14.
                                          3

See id. § 446.31. Smithson did not redeem the property within ninety days after

the notice of expiration. As a result, the county treasurer issued a tax sale deed

to No Boundry, which was recorded on August 18. See id. § 448.1.

II.    Forcible Entry and Detainer

       On July 6, 2021, No Boundry served a notice to quit on Smithson,

demanding that she vacate and surrender the premises within three days, due to

the “holding over in possession after the issuance of a valid tax deed.” See id.

§§ 648.1(6), .3 (2021). On July 15, No Boundry petitioned for forcible entry and

detainer. A hearing on the petition was set for August 3. See id. § 648.5(1). After

Smithson did not appear for the hearing or respond to the petition, the court

entered judgment for No Boundry, and a writ of removal and possession issued

soon after. See id. § 648.22.

       On August 25, Smithson moved to set aside the judgment and issuance of

a stay or injunction. She argued her “failure . . . to timely file an answer and defend

the [forcible-entry-and-detainer] proceeding is based on her legal disability,”

pointing out that she “suffers from several mental health diagnoses that make it

difficult if not impossible for her to manage day-to-day living, including her

finances.” She also pointed out that her legal disability serves as “a meritorious

defense” to the action. The court granted the motion, following which Smithson

filed an answer and counterclaim, asserting she still had a right of redemption due

to her legal disability.

       The matter proceeded to a hearing on December 14, at which forensic

psychologist Dr. Lindsay Dees testified on Smithson’s behalf. She conducted a

psychological evaluation of Smithson in June 2021, when Smithson came to her
                                          4

“in a state of distress” because “she was in danger of losing her home and . . . she

needed to talk to somebody to see if there was any way that her home could be

saved.” As part of the evaluation, Dr. Dees conducted a clinical interview and

personality assessment of Smithson and reviewed some of her medical records.

       Dr. Dees testified Smithson “has a pretty significant history of trauma . . .

from childhood.” On top of that childhood trauma, Smithson was involved in at

least one domestically violent relationship. And in August 2018, her younger sister

died by suicide, after which Smithson “began to struggle with feelings of guilt,

suicidal ideation, hopelessness, and sadness.” Those feelings led to Smithson

attempting suicide eight times in the last two years, most recently in October 2020.

Smithson “denied a significant mental health history prior to her sister’s death,” but

she was diagnosed with ADHD in 2007.

       As to Smithson’s “present mental status” during the evaluation, Dr. Dees

observed Smithson “interacted well,” was cooperative, and “[h]er thought process

was generally logical and goal-oriented.” While she “displayed a range of emotion

during the interview,” her “emotion was always appropriate to and consistent with

the content of her speech.” Her “attention and concentration appeared unimpaired,

yet she displayed some impairment in her memory for remote and recent events.”

Smithson had “[n]o impairments in reality contact,” and “[s]he did not report

experiencing any auditory hallucinations, bizarre thoughts, or other psychotic

symptoms.”    Smithson’s “speech was generally clear, coherent, and logical.”

However, “her mood was predominantly anxious, dysphoric, and sad.”

       All in all, Dr. Dees found Smithson met the diagnostic criteria for post-

traumatic stress disorder, major depressive disorder, and borderline personality
                                          5

disorder. During her testimony, Dr. Dees agreed that, at the time of the evaluation,

Smithson “lacked the ability to function adequately in her daily life.” She described

Smithson as “child-like”—“there’s a very just big lack of ability to make decisions”

and “her level of functioning was pretty grave.” Dr. Dees also agreed Smithson’s

abilities to plan, reason, and make good decisions were severely impaired.

       Smithson’s former boyfriend, Eric Hansen, also testified at the hearing. He

met Smithson in 2009 and began living with her in Florida about a year later. A

few years later, Smithson received a close to $1 million settlement after a fall that

“smashed her foot” and broke her arm. Because Hansen took care of the couple’s

finances, Smithson deposited the money into an account with his name on it. But

when Smithson decided to return to Iowa in 2016 or 2017, she put the money into

a different account that Hansen could not access. She then used some of the

settlement money to buy the property at issue in this case. The rest was depleted

by early 2019 because, according to Hansen, Smithson was an “easy mark” for

predatory people looking for loans that they never paid back.

       Hansen testified that when they lived together, Smithson functioned pretty

well, although he still had concerns for her ability to manage her day-to-day affairs.

He explained that she has trouble “adulting”—“paying bills, working, things that are

normal that responsible adults do.” Hansen elaborated: “She’s not braindead. She

just doesn’t get some things. She doesn’t understand things. She doesn’t function

well at all times.” But after Smithson’s sister committed suicide, Hansen said that

her condition worsened. She became very depressed, according to Hansen, so

much so that she was hospitalized for mental-health treatment in December 2019,

May 2020, and October 2020. Hansen still lives in Florida, but he worries about
                                          6

Smithson to such an extent that he has others check on her. He testified that he

has often paid her bills for her because she simply forgets to do so, which results

in her utilities being shut off or small claims suits being filed against her. Because

Hansen did not believe Smithson could handle her finances by herself, he planned

to seek a conservatorship for her.

       In its ruling, the district court framed the issue as “whether [Smithson]

suffers from a legal disability and thus may avail herself of an additional period in

which to redeem the property, as set forth in Iowa Code [s]ection 447.7.” Following

both parties’ lead, the court considered the issue under an amendment to section

447.7 that took effect on July 1, 2018—shortly after the tax sale of Smithson’s

property. Largely relying on the testimony of Dr. Dees and Hansen, which the

court found credible, the court concluded Smithson “established by clear and

convincing evidence that she has suffered from a legal disability at all times

pertinent to this proceeding.” The court ordered Smithson to pay the stipulated

redemption amount of $12,300 to the clerk of court within thirty days, upon which

“the court may take further action as required by Iowa Code section 447.7(1)(e) or

that if no such payment is made the court may take action as required by Iowa

Code section 447.7(1)(f).”

       No Boundry appeals, claiming “the evidence failed to support the trial court’s

holding that Smithson was under a legal disability prior to the issuance of the tax

sale deed.” If this claim fails, No Boundry requests that we remand the matter for

recalculation of the redemption amount to reflect interest and taxes that accrued

while the appeal was pending.
                                            7

III.    Standard of Review

        Forcible-entry-and-detainer actions are equitable, so appellate review is de

novo.    See Iowa Code § 648.15; Iowa R. App. P. 6.907; ACC Holdings v.

Rooney, 973 N.W.2d 851, 853 (Iowa 2022); see also Sibley State Bank v. Zylstra,

No. 19-0126, 2020 WL 4814072, at *5 (Iowa Ct. App. Aug. 19, 2020) (“We review

de novo all issues related to redemption in an equity action.”).

IV.     Analysis

        Before getting to the merits of No Boundry’s appeal, we need to deal with

two issues lurking in the background—our appellate jurisdiction and the code year

applied by the parties and the court in considering Smithson’s right to redeem.

        A.     Jurisdiction

        Although neither party raised the issue, we are concerned with the form of

our appellate jurisdiction. See Bribriesco-Ledger v. Kilpsch, 957 N.W.2d 646, 649

(Iowa 2021) (“[A]n appellate court has responsibility sua sponte to police its own

jurisdiction.” (citation omitted)). Only final orders and judgments are appealable

as a matter of right. See Iowa R. App. P. 6.103(1). As our supreme court has

often repeated,

        [a] final judgment of decision is one that finally adjudicates the rights
        of the parties. It must put it beyond the power of the court which
        made it to place the parties in their original position. A ruling or order
        is interlocutory if it is not finally decisive of the case.

In re Marriage of Thatcher, 864 N.W.2d 533, 537 (Iowa 2015) (citation omitted).

        While this seems straight-forward, determining “what is a final order and

what is merely interlocutory” can generate considerable “complexities and

perplexities.” Johnson v. Johnson, 188 N.W.2d 288, 293 (Iowa 1971). That is
                                           8

because it’s possible to have two final orders “in a single case, one putting it

beyond the power of the court to put the parties in their original positions in relation

to a specific issue, and the other adjudicating remaining issues in the case.” Lyon

v. Willie, 288 N.W.2d 884, 887 (Iowa 1980); accord Johnson, 188 N.W.2d at 293

(“The same case can and often does contain more than one final order.”).

       The ruling that No Boundry appealed from followed the multi-step process

laid out in Iowa Code section 447.7(2)(d) (2021) for redemption by persons with a

legal disability. Consistent with that process, the ruling determined Smithson had

a right to redeem because of her legal disability, established the amount necessary

to effect redemption, denied No Boundry’s claim for a judgment for improvements

to the property, and directed Smithson to pay the stipulated redemption amount to

the clerk of court within thirty days. See Iowa Code § 447.7(2)(d). This all smacks

of finality—except that the court contemplated further action after timely payment

was either made or not made, as set out in section 447.7(2)(e) and (f).

        Even though the court’s order contemplated that further action, we think it

was still a final adjudication on Smithson’s right to redeem and the amount required

to do so. See Johnson, 188 N.W.2d at 293 (“A judgment, order, or decree finally

directing the payment of money is generally held to be appealable. . . .” (citation

omitted)); cf. Billingsley v. Frank, No. 10-2051, 2011 WL 3116561, at *2 (Iowa Ct.

App. July 27, 2011) (finding a district court’s determination of “the rights, claims

and interests of all parties” and “the amount necessary to effect redemption” under

section 447.8(4), the counterpart to section 447.7(2)(d), “will provide the final
                                            9

resolution of issues”).2 While Smithson’s failure “to timely deliver payment of the

total redemption amount” could return No Boundry to its original position, see Iowa

Code § 447.7(2)(f), that would not be possible if she made the payment. See id.

§ 447.7(2)(e); see also Rowen v. LeMars Mut. Ins. Co., 357 N.W.2d 579, 581 (Iowa

1984) (determining district court’s order establishing a plan for election of a new

board of directions was final where, “[i]f the plan were carried out, the court would

not be able to return the parties to their former positions”). Because this is one of

those cases in which there can be more than one final order, we find the court’s

ruling is final. See Rowen, 357 N.W.2d at 581. As a result, No Boundry had a

right to appeal, and we have jurisdiction.

       B.     Proper Legal Standard

       To further complicate things, we note Smithson based her claim that she

was entitled to redeem on a version of the redemption statutes that do not apply

here, and the district court applied that scheme in reaching its decision.3

2 The issue in Billingsley was whether a tax sale deed should be set aside under
section 447.8(1)(b) due to lack of notice of the expiration of the right of redemption.
2011 WL 3116561, at *1. The district court granted the property owner’s summary
judgment motion on the issue, finding the deed was void, and set a hearing to
“determine the rights, claims, and interests of all the parties and establish the
amount necessary for redemption,” as required by section 447.8(4) and as also
required by section 447.7(2)(d). Id. Before that hearing could take place, the
holders of the tax sale deed appealed. Id. We found the court’s summary
judgment order was not final but noted: “The hearing under section 447.8(4), which
is to determine the ‘rights, claims, and interests of all parties,’ will provide the final
resolution of issues that cannot be decided on the record before us.” Id. We
reached that conclusion even though section 447.8(5)(a) and (b), like section
447.7(2)(e) and (f), provides for further action from the court after timely payment
or nonpayment of the redemption amount.
3 There are two recent decisions from our supreme court—No Boundry, LLC v.

Hoosman, 953 N.W.2d 696, 702–03 (Iowa 2021) and ACC Holdings, LLC v.
Rooney, 973 N.W.2d 851, 852–53, 856 (Iowa 2022)—that mentioned the newer
version of section 447.7 while addressing issues that did not involve the application
                                         10

       To explain, “[t]he law in effect at the time of tax sale governs redemption.”

Iowa Code § 447.14. Here, the tax sale occurred in June 2018. At that time,

section 447.7 did not provide a statutory right of redemption based on “legal

disability,” but instead provided a right of redemption for “[m]inors and persons of

unsound mind.”     Iowa Code § 447.7 (2018).       The version of the statute that

Smithson and the district court followed did not take effect until July 1, 2018—a

little more than a week after the tax sale. See 2018 Iowa Acts ch. 1039, § 2 (striking

section 447.7 and replacing it with current version);4 see also Iowa Const. art. 3,

§ 26 (stating effective date of laws). Thus, the new version of the statute does not

apply to this litigation. See, e.g., Dohrn v. Mooring Tax Asset Grp., L.L.C., 743

N.W.2d 857, 863 n.2 (Iowa 2008); (noting statutory amendment that took place

after tax sale did not apply to the case); St. John’s Full Gospel Baptist Church v.

Tax 207, No. 11-0553, 2012 WL 1860667, at *5 n.5 (Iowa Ct. App. May 23, 2012)

(same).

       Though there are significant differences between the two versions of

section 447.7, what is common to both is the right of redemption for a person of

unsound mind within one year after the disability is removed. See Iowa Code

of the statute. In Hoosman, the issue was whether a default judgment against a
homeowner on a petition for recovery of real property should be set aside due, in
part, to the owner’s claimed legal disability. 953 N.W.2d at 699. And in ACC
Holdings, the court mentioned the statute in determining whether a tax deed holder
could proceed with a third forcible-entry-and-detainer action against a property
owner who had failed to pay taxes after dismissing the first two actions against the
same owner without prejudice. 953 N.W.2d at 852.
4 Aside from changing the substance of the statute, the legislation also changed

the heading of the statute from “Minors and persons of unsound mind” to
“Redemption by minors and persons of unsound mind.” Beginning with the 2019
version of the Iowa Code, however, the code editor substituted “persons with a
legal disability” for “minors and persons of unsound mind” in the section heading.
                                          11

§ 447.7 (2018); id. §§ 445.1(6), 447.7(2)(a) (2021). While the old version of the

statute provides a right of redemption to minors or persons of unsound mind and

the new version provides the right to a person with a legal disability, the meaning

of a “person with a legal disability” within the new scheme is defined as “a minor

or a person of unsound mind.” See id. § 445.1(6) (2021). And both statutes are

concerned with whether that unsound mindedness existed prior to the delivery of

the treasurer’s deed—the current statute through its express language and the

former statute through case law applying its provisions.5

       So that is the overarching question in this appeal: whether Smithson

established by clear, satisfactory, and convincing evidence that she was a person

of unsound mind at the time her property was sold and deeded for nonpayment of

taxes and therefore has an additional period of redemption. See Hawley v. Griffin,

92 N.W. 113, 115 (Iowa 1902) (referring to “the clear and satisfactory

preponderance of the evidence” in examining whether a property owner who lost

his lands in tax sales was of unsound mind); cf. Hult v. Home Life Ins. Co. of N.Y.,

240 N.W.2d 218, 223 (Iowa 1932) (requiring this showing to set aside contract due

to unsound mind); Crawford v. Raible, 221 N.W. 474, 481 (Iowa 1928) (requiring

5 The current statute provides: “To establish the right to redeem, the person
maintaining the action shall prove to the court that the owner of the parcel is a
person with a legal disability entitled to redeem prior to the delivery of the
treasurer’s deed.” Iowa Code § 447.7(2)(b) (emphasis added). The former
versions of the statute did not contain that same language, stating only that “[i]f a
parcel of a minor or person of unsound mind is sold at tax sale, it may be redeemed
at any time within one year after the disability is removed. . . .” Id. § 447.7 (2018);
accord id. § 892 (1873) (“If real property of any minor or lunatic is sold for taxes,
the same may be redeemed at any time within one year after such disability is
removed. . . .”). But cases applying those older versions also placed the relevant
time period “at the time the lands in controversy were sold and deeded for
nonpayment of taxes.” See, e.g., Hawley v. Griffin, 82 N.W. 905, 906 (Iowa 1900).
                                        12

this showing to set aside conveyance due to unsound mind). Resolution of that

question remains guided by case law6 on our de novo review of the record. See

In re D.L.C., 464 N.W.2d 881, 883 (Iowa 1991) (“Although the judge of the juvenile

court utilized the wrong standard of review, it is unnecessary for us to return the

case to the juvenile court. We review the facts and law de novo, and thus cure the

improper juvenile court review.”); see also In re A.K., 825 N.W.2d 46, 50

(Iowa 2013) (noting de novo standard of review “requires this court to review the

‘facts as well as the law [to] determine from the credible evidence [the parties’]

rights anew.’” (alterations in original) (citation omitted)); State v. Nguyen,

No. 13-0045, 2013 WL 5498072, at *2 n.1 (Iowa Ct. App. Oct. 2, 2013) (noting

remand when improper standard is applied by the district court is generally not

required in cases of de novo review).

       C.     Unsound Mind

       The purpose of the unsound mindedness protection is “to protect those

who . . . are incapable of understanding their rights and obligations, and of caring

for their own interests.” Hoosman, 953 N.W.2d at 704 (ellipsis in original) (quoting

Hawley v. Griffin, 82 N.W. 905, 906 (Iowa 1900)). While “[t]his State has a long

history of protecting the property rights of wards deemed unable to protect their

own economic interests without assistance,” id. at 701–02, “the presumption is in

favor of sanity, and that acts must be inconsistent with that presumption, to be

evidence of insanity.” Hawley, 82 N.W. at 907.

6See Hoosman, 953 N.W.2d at 704 (highlighting caselaw from the late 1800s and
early 1900s in discussing legal disability and unsound mindedness).
                                          13

       “A person of unsound mind is someone who is not capable of exercising the

judgment necessarily required in the management of his [or her] ordinary affairs”

or “one who is incapable of transacting the particular business at hand.” Id.

(cleaned up) (quoting Garretson v. Hubbard, 81 N.W. 174, 174 (Iowa 1899)). “It is

not every infirmity of mind that entitles a person to the protection of these statutes,

but only such infirmities as render the person affected incapable of comprehending

his [or her] duty to pay taxes, and the consequences that follow a failure to pay.”

Id. at 906.

       True, Dr. Dees diagnosed Smithson with several mental-health illnesses in

June 2021 and testified that she “lacked the ability to function adequately in her

daily life” with severe impairments to her abilities to plan, reason, and make good

decisions at the time of the trial. Smithson’s former boyfriend, Hansen, also noted

his concerns for Smithson’s ability to manage her day-to-day affairs when they

lived together, opining she has trouble “adulting”—“paying bills, working, things

that are normal that responsible adults do.” And Smithson clearly suffers from

depression, which has led to suicide attempts and resulting hospitalization. But

the question is not whether Smithson suffered with her mental health or had the

ability to do adult things. Instead, the question is whether she was capable of

navigating the business at hand—here, the payment of her property taxes. See

Garretson, 81 N.W. at 174. The evidence shows that she was.

       Smithson purchased the home in June 2017.            The 2016 taxes on the

property were due in September 2017 and March 2018. The first installment was

paid, albeit late, in November 2017. The second installment was paid by Wago

262 at the June 2018 tax sale. Property taxes for calendar year 2017 were due in
                                           14

September 2018 and March 2019. Smithson made both of these payments online.

She also made web payments for property taxes in September 2019 and March

2020, attributable for taxes in 2018. So the evidence shows that in between the

tax sale in June 2018 and deed issuance in August 2020, Smithson made her

regular tax payments, missing only the very first payment, which resulted in the tax

sale. Smithson argues that it is unclear from the record whether she made these

payments or someone made them on her behalf. But even if someone else made

the payments on her behalf, Smithson had the competency to seek out help to

ensure her duty to pay taxes was satisfied. Cf. id. (indicating fact that owner was

capable of seeking help from legal counsel weighed against finding of unsound

mind).

         The district court overlooked this key evidence, instead relying almost solely

on the testimony of Dr. Dees and Hansen. While Smithson certainly struggled with

her mental health, those struggles did not prevent her from managing the business

at hand.     See id.    Smithson’s payment of taxes is clear evidence that she

comprehended her duty to pay taxes and the consequences of failing to do so,

thus negating a finding that she was of unsound mind at the time when her property

was sold and deeded for nonpayment of taxes. See Hawley, 82 N.W. at 906. As

a result, Smithson was not entitled to redemption following the delivery of the

treasurer’s deed.

         We reverse the district court’s contrary conclusion and remand for the entry

of “judgment holding that all rights of redemption are terminated and that the

validity of the tax title . . . is conclusively established as a matter of law.” See Iowa

Code § 447.8(3) (2018). There is thus no need to address No Boundry’s second
                                      15

issue about recalculation of the redemption amount to reflect interest and taxes

that accrued while the appeal was pending.

      REVERSED AND REMANDED WITH DIRECTIONS.