Court Opinion

ID: 9368220
Source: CourtListenerOpinion
Date Created: 2023-02-03 15:04:29.351468+00
Date Added: 2024-06-11T17:16:06.388290
License: Public Domain

IN THE SUPREME COURT OF IOWA

                                  No. 21–1437

            Submitted December 14, 2022—Filed February 3, 2023

GARY KLUENDER, JR.,

      Appellant,

vs.

PLUM GROVE INVESTMENTS, INC.,

      Appellee.

      Appeal from the Iowa District Court for Floyd County, Rustin Davenport,

Judge.

      A former landowner claims that Iowa’s tax-sale statute violates the due

process requirements of the Constitution of the United States and the

Constitution of the State of Iowa. AFFIRMED.

      May, J., delivered the opinion of the court, in which all justices joined.

      Todd P. Prichard (argued) of Walk, Prichard, Baresel & Murphy, PC,

Charles City, for appellant.

      James E. Nervig (argued) of Brick Gentry P.C., West Des Moines, for

appellee.
                                                2

MAY, Justice.

       Gary Kluender claims that Iowa’s tax-sale statute violates due process

because it doesn’t require personal service (which is to say, actual delivery1) of a

written notice that the taxpayer will lose their land if they don’t pay their tax

debt within ninety days. We disagree. “Due process does not require that a

property owner receive actual notice before the government may take his

property.” Jones v. Flowers, 547 U.S. 220, 226 (2006) (emphasis added). Rather,

due process only requires a method of service that is reasonably calculated to

provide timely notice. See id. Service by mail usually fulfills this requirement.

And Iowa’s tax-sale statute requires service of ninety-day notices by both regular

mail and certified mail. Iowa Code § 447.9 (2017).

       Like the district court, we find no due process violation. We affirm.

       I. Background Facts and Proceedings.

       A. General Background. Tax sales are governed by Iowa Code chapters

446–448. The Code requires that on the third Monday in June the county

treasurer must “offer at public sale” all parcels of land “on which taxes are

delinquent.” Iowa Code § 446.7(1). Over a month before the sale occurs (“May 1”),

the treasurer must give delinquent taxpayers notice of the planned sale “by

regular first class mail” to their “last known address.” Id. § 446.9(1).

       1The  classic form of personal service is actual delivery to the person served. See, e.g.,
Iowa R. Civ. P. 1.305 (“Original notices are ‘served’ by delivering a copy to the proper person.”);
Personal Service, Black’s Law Dictionary 1381 (11th ed. 2019) (“Actual delivery of the notice or
process to the person to whom it is directed.”). To be clear, though, our rules of civil procedure
also permit additional methods of personal service. Iowa R. Civ. P. 1.305(1)–(14).
                                         3

      At the tax sale, each parcel must be sold “for the total amount of taxes,

interest, fees, and costs due.” Id. § 446.7(1). In return for this payment, a

purchaser receives a “certificate of purchase” from the county treasurer. Id.

§ 446.29. Then the treasurer must notify the delinquent taxpayer “by regular

mail” that their “parcel was sold at tax sale.” Id. § 446.2; see also id. (requiring

the notice to be sent “within fifteen days from the date” of the sale).

      Note, though, that the “certificate of purchase” does not actually transfer

ownership of the parcel. Rather, the certificate amounts to “an inchoate right or

lien.” Dohrn v. Mooring Tax Asset Grp., L.L.C., 743 N.W.2d 857, 860 (Iowa 2008);

see Iowa Code § 446.29. Even after the tax sale is done and a certificate of

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

property by paying the county treasurer the amount for which the property was

sold as well as the amount of any taxes the certificate holder may have paid for

subsequent years plus two percent per month interest.” Dohrn, 743 N.W.2d at

860 (citing Iowa Code § 447.1). But if the property is not redeemed within this

period, the certificate holder may be entitled to a tax deed. Id. (citing Iowa Code

§ 448.1).

      No tax deed can be issued, though, unless the certificate holder has

complied with Iowa Code section 447.9. Dohrn, 743 N.W.2d at 860. It states that

      [a]fter one year and nine months from the date of sale, . . . the holder
      of the certificate of purchase may cause to be served upon the person
      in possession of the parcel, and also upon the person in whose name
      the parcel is taxed, a notice signed by the certificate holder or the
      certificate holder’s agent or attorney, stating the date of sale, the
      description of the parcel sold, the name of the purchaser, and that
      the right of redemption will expire and a deed for the parcel be made
                                          4

      unless redemption is made within ninety days from the completed
      service of the notice.

Iowa Code § 447.9(1) (emphasis added).

      Section 447.9 goes on to specify that this ninety-day “notice shall be served

by both regular mail and certified mail to the person’s last known address and

such service is deemed completed when the notice is deposited in the mail and

postmarked for delivery.” Id.

      Once service is complete, the final ninety-day period for redemption

begins. Id. § 447.12. When those ninety days have passed, the county treasurer

must issue a tax deed upon the return of the certificate of purchase. Id. § 448.1.

When that deed is properly recorded, it “vests[s] in the purchaser all the right,

title, interest, and claim of the state and county to the parcel,” as well as “all the

right, title, interest, and estate of the former owner.” Id. § 448.3(1).

      B. Kluender and Plum Grove. We turn now to the facts of this case. In

January 2004, Gary Kluender obtained a parcel of farm land in Floyd County

(the parcel). Kluender was responsible for paying the property taxes. He received

bills in September and then paid them in the spring.

      But then Kluender went through a time of financial difficulty. His house

was damaged by fire but he could not rebuild it. He had “a hard time paying

things.” He stopped paying the property taxes on the parcel. He admits receiving

“a few notices of tax delinquency.”

      On June 19, 2017, the parcel was sold at tax sale. Plum Grove paid

Kluender’s overdue taxes plus interest and costs. In return, Plum Grove received

a certificate of purchase.
                                         5

      Time went by. Kluender did not redeem the parcel.

      On April 14, 2020, Plum Grove complied with section 447.9 by sending

the required ninety-day notice to Kluender. More specifically, Plum Grove sent

the notice by regular mail and certified mail both to the parcel itself and to

Kluender’s last known address, his house in Ionia. Although the Ionia house had

been damaged by fire, Kluender admits that he was still receiving mail there. But

Kluender did not pick up the certified letter that Plum Grove sent there. It was

returned as undeliverable. It appears undisputed, though, that Plum Grove’s

regular mail letters were not returned as undeliverable.

      In the ninety days that followed, Kluender took no action to redeem the

parcel. So, on August 11, 2020, the county treasurer issued a tax sale deed to

Plum Grove. Through this deed, Plum Grove received all of Kluender’s interest in

the parcel. See Iowa Code § 448.3(1).

      Also in August, Plum Grove sent Kluender a written demand to vacate the

parcel. It was sent to the Ionia house. Kluender admits that he received this

demand.

      In November, Kluender commenced this action. Kluender claimed that he

did not receive actual notice of the tax-sale proceedings until August 2020, when

Plum Grove sent him a written demand to vacate the parcel. Kluender also

claimed that “Iowa Code [section] 447 violates the Federal and State Constitution

[guarantees] of due process in that it does not require effective notice.”

      Kluender and Plum Grove filed cross-motions for summary judgment. The

sole issue before the court was whether Iowa Code section 447.9 is
                                               6

unconstitutional because it does not require personal service. The court

answered that question in the negative, denied Kluender’s motion, and granted

Plum Grove’s motion. Kluender appeals.

       II. Analysis.

       On appeal, Kluender again argues that Iowa Code section 447.9 “violates

the due process clause of the US and Iowa Constitutions” because it does not

require personal service of the ninety-day notice. We review his challenge

de novo. PSFS 3 Corp. v. Michael P. Seidman, D.D.S., P.C., 962 N.W.2d 810, 832

(Iowa 2021).

       The Fourteenth Amendment to the United States Constitution prohibits

“any State” from “depriv[ing] any person of life, liberty, or property, without due

process of law.” U.S. Const. amend. XIV, § 1. Similarly, article I, section 9 of the

Iowa Constitution states that “no person shall be deprived of life, liberty, or

property, without due process of law.”2 Iowa Const. art. I, § 9. It is certainly true,

then, that Kluender’s property rights in the parcel were constitutionally

protected. They could not be extinguished “without due process of law.” Our task

is to decide what process was due.

       We begin by recognizing that there are two distinct kinds of due process

claims: facial and as-applied.3 Bonilla v. Iowa Bd. of Parole, 930 N.W.2d 751, 764

       2The parties draw no clear lines between the protections offered by the two constitutions.

For purposes of this case, we assume they provide the same protections.
       3Some  cases recognize another distinction: procedural due process and substantive due
process. We understand Kluender’s arguments to be about procedural due process, namely, that
the procedure required by section 447.9 is insufficient. Although one of his headings mentions
“substantive due process,” he does not develop a substantive due process argument.
                                                7

(Iowa 2019). In an as-applied challenge, the challenger claims that a statute is

unconstitutional “as applied to a particular set of facts.” Id. (quoting Honomichl

v. Valley View Swine, LLC, 914 N.W.2d 223, 231 (Iowa 2018), overruled by

Garrison v. New Fashion Pork LLP, 977 N.W.2d 67 (Iowa 2022)). Conversely, in a

facial challenge, the challenger must prove that a statute is “totally invalid and

therefore, ‘incapable of any valid application.’ ” Id. at 766 (quoting Santi v. Santi,

633 N.W.2d 312, 316 (Iowa 2001)). A facial challenge is the “most difficult” to

“ ‘ “mount successfully” because it requires the challenger to show [that] the

statute under scrutiny is unconstitutional in all its applications.’ ” Id. (quoting

Honomichl, 914 N.W.2d at 231). “Facial challenges are disfavored for several

reasons.” Wash. State Grange v. Wash. State Republican Party, 552 U.S. 442,

450 (2008).

       Claims of facial invalidity often rest on speculation. . . . Facial
       challenges also run contrary to the fundamental principle of judicial
       restraint that courts should neither “anticipate a question of
       constitutional law in advance of the necessity of deciding it” nor
       “formulate a rule of constitutional law broader than is required by
       the precise facts to which it is to be applied.”

Id. (quoting Ashwander v. Tenn. Valley Auth., 297 U.S. 288, 346–47 (1936)

(Brandeis, J., concurring)).

       In this case, Kluender asserts a facial challenge.4 He claims that section

447.9 is “unconstitutional on its face” because “personal notice . . . informing a

delinquent taxpayer of their right to redeem a tax certificate” is “never required.”

The statute’s mailing requirements are “so ineffective in protecting” property

        4Kluender’s opening brief makes it clear that he is attacking section 447.9 “on its face.”

At oral argument, Kluender verified that he was asserting a facial challenge.
                                          8

rights, Kluender contends, “that there is no factual situation in which they are

constitutionally adequate.” As support, Kluender relies on Mathews v. Eldridge,

424 U.S. 319 (1976). In Mathews, the United States Supreme Court said “that

identification of the specific dictates of due process generally requires

consideration” of three factors: (1) the private interests at stake; (2) the risk that

the procedures used will result in an “erroneous deprivation” of those interests;

and (3) the government’s interests, including any “burdens that the additional

or substitute procedural requirement would entail.” Id. at 334–35. Applying

these factors here, Kluender notes that (1) tax sales involve important interests,

namely, private interests in real estate; (2) service by mail entails risk that the

landowner won’t receive actual notice; and (3) conversely, actual notice could be

guaranteed by requiring personal service, an alternative that Kluender says “is

not difficult or expensive” or burdensome for “the tax sale system or . . . the

certificate holder.” In Kluender’s view, then, the Mathews factors show that

section 447.9 violates due process by allowing service by mail instead of

requiring personal service or—at a minimum—proof that notice was actually

received.

      We view the matter differently. For starters, we do not believe that the

Mathews test governs here. It “was first conceived in the context of a due process

challenge to the adequacy of administrative procedures used to terminate Social

Security disability benefits.” Dusenbery v. United States, 534 U.S. 161, 167

(2002). But the Supreme Court has never “viewed Mathews as announcing an

all-embracing test for deciding due process claims.” Id. at 168. And when the
                                        9

Court has been “confronted with questions regarding the adequacy of [a] method

used to give notice,” the Court has “regularly turned to” a different test that was

announced in Mullane v. Central Hanover Bank & Trust Co., 339 U.S. 306 (1950).

Dunsenbery, 534 U.S. at 168. Indeed, the Court has said that—in those kinds of

cases—application of the Mullane framework is a “well-settled practice.” Id.

      So we apply the Mullane framework here. We start from the premise that

“[d]ue process does not require that a property owner receive actual notice before

the government may” dispose of real property. Jones, 547 U.S. at 226. Rather,

under the Mullane framework, governments must only require “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. (quoting Mullane, 339 U.S. at 314). And the Supreme Court has

approved the use of mail service to fulfill this obligation. Id. (citing cases). As

Justice O’Connor summarized: “We have repeatedly recognized that mail service

is an inexpensive and efficient mechanism that is reasonably calculated to

provide actual notice.” Tulsa Pro. Collection Servs., Inc. v. Pope, 485 U.S. 478,

490 (1988) (citing Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 799–800

(1983); Greene v. Lindsey, 456 U.S. 444, 455 (1982); Mullane, 339 U.S. at 319).

      In light of these principles, we do not believe Kluender’s facial challenge

can succeed. Section 447.9 requires certificate holders to send the ninety-day

notice to the landowner’s last known address by both regular mail and certified

mail. Iowa Code § 447.9. This combination of mailings is reasonably calculated

to provide the landowner with actual notice of the ninety-day period and,
                                        10

therefore, an opportunity to timely respond. This satisfies due process. See

Tsann Kuen Enters. Co. v. Campbell, 129 S.W.3d 822, 832 (Ark. 2003) (holding

tax sale statute that requires notice by certified mail “fulfills constitutional due

process requirements and provides sufficient notice”); Ind. Land Tr. Co. v. XL Inv.

Props., LLC, 155 N.E.3d 1177, 1189 (Ind. 2020) (finding tax sale statute that

requires notice by certified mail and first-class mail constitutional); HBI, L.L.C.

v. Barnette, 941 N.W.2d 158, 169–70 (Neb. 2020) (finding tax sale statute that

requires notice by certified mail constitutional).

      But Kluender argues that a different result is required by War Eagle Village

Apartments v. Plummer, 775 N.W.2d 714 (Iowa 2009). In War Eagle, we

concluded that Iowa’s forcible entry and detainer (FED) statutes violated due

process because they did not require service that was reasonably calculated to

provide tenants with timely notice of eviction hearings. Id. at 719–22. As

Kluender emphasizes, our conclusion in War Eagle was partially based on the

fact that the FED statutes allowed service by certified mail rather than personal

service. See id.

      But nothing in War Eagle suggests that personal service is the only

constitutional option. Also, there are important differences between the FED

system addressed in War Eagle and the tax-sale system before us here. For one

thing, section 447.9 requires not only service by certified mail but also service by

regular mail. Iowa Code § 447.9. Surely, the addition of a regular-mail

requirement increases the probability of actual delivery by some appreciable
                                        11

degree. Indeed, as the Supreme Court has recognized, regular mail is sometimes

more effective than certified mail:

      [T]he use of certified mail [instead of regular mail] might make actual
      notice less likely in some cases—the letter cannot be left like regular
      mail to be examined at the end of the day, and it can only be
      retrieved from the post office for a specified period of time. Following
      up [certified mail] with regular mail might also increase the chances
      of actual notice to [the person served] if . . . he had moved. Even
      occupants who ignored certified mail notice slips addressed to the
      owner (if any had been left) might scrawl the owner’s new address
      on the notice packet and leave it for the postman to retrieve, or notify
      [the person] directly.

Jones, 547 U.S. at 235.

      Moreover, the time frames at issue here are far different from those in War

Eagle. In War Eagle, the court considered an FED statute that (1) required

eviction hearings to “be set not later than seven days from the date of the order

scheduling the hearing,” (2) allowed the landlord to serve the tenant “not less

than three days prior to the hearing,” and (3) allowed service to occur by certified

mail alone, with notice deemed “received by the tenant when it is mailed.” 775

N.W.2d at 718. This combination of features made it highly unlikely that a tenant

would receive notice prior to the hearing—much less that the tenant would

receive notice “in time to meaningfully participate in the hearing.” Id. at 721. It

was not reasonably calculated to give tenants notice and opportunity to be heard.

      Section 447.9 is different. As noted, section 447.9 requires not only

certified mail but also regular mail. Much more importantly, perhaps, section

447.9 allows the landowner ninety days from the date of those mailings in which

to act. Iowa Code § 447.9. Compare this with the statutes in War Eagle, which

allowed a landlord to serve notice simply by depositing a certified letter “not less
                                         12

than three days prior to the hearing.” 775 N.W.2d at 718 (emphasis added).

Applying simple math, we see that section 447.9 provides landowners with far

more opportunity—an additional eighty-seven days of opportunity—to receive

notice and take responsive action.

      All things considered, then, we believe that War Eagle is properly

distinguished and, more broadly, that Kluender has failed to show that section

447.9 is facially invalid. See Nicholson v. HF05, No. 08–1418, 2009 WL 4842472,

at *3–4 (Iowa Ct. App. Dec. 17, 2009) (distinguishing War Eagle and rejecting

constitutional challenge to section 447.9). We also believe that in this particular

case, Kluender received due process. It is undisputed that Plum Grove complied

with section 447.9 by sending the ninety-day notice to Kluender’s last known

address—and to the parcel itself—both by certified and regular mail. Although

the house at Kluender’s last known address had been damaged by fire, Kluender

still received his mail there. Indeed, after the tax sale deed was issued, Plum

Grove sent an eviction notice to that address—and Kluender received it there.

      Note also that this is not a situation in which all of Plum Grove’s mailings

were returned undelivered. If that had occurred, due process may well have

required Plum Grove to take additional steps. See Jones, 547 U.S. at 225 (“We

hold that when mailed notice of a tax sale is returned unclaimed, the State must

take additional reasonable steps to attempt to provide notice to the property

owner before selling his property, if it is practicable to do so.”). Here, though, it
                                             13

appears undisputed that—although a certified mail notice was returned5—the

regular mail notices were not. Under these facts, Plum Grove was entitled to

assume that the United States Postal Service had done its job by delivering the

ninety-day notice to Kluender via regular mail. Due process required nothing

more. Nicholson, 2009 WL 4842472, at *3–4 (“Because HF05 used two

notification methods calculated to apprise Nicholson of her redemption rights

and learned that only one of them failed, due process did not require it to take

additional steps to notify Nicholson.”).

       III. Conclusion.

       Kluender has not shown a due process violation. We affirm.

       AFFIRMED.

       5The  record is not clear about what happened to the certified-mail notice that was sent
to the parcel. Even if it had been returned to Plum Grove, however, the outcome here would not
change. Because the regular mail notices were not returned, Plum Grove was entitled to assume
that they were delivered.