Court Opinion

ID: 2726917
Source: CourtListenerOpinion
Date Created: 2014-09-08 21:09:57.301599+00
Date Added: 2024-06-11T09:15:56.093666
License: Public Domain

Jul 18 2013, 6:26 am
FOR PUBLICATION

ATTORNEY FOR APPELLANTS:                    ATTORNEYS FOR APPELLEE:

RICHARD W. LORENZ                           JONATHAN PETERSEN
Hickam & Lorenz, P.C.                       NATASHA BURKETT
Spencer, Indiana                            Law Office of Jonathan Petersen
                                            Hammond, Indiana

                            IN THE
                  COURT OF APPEALS OF INDIANA

AUDITOR OF OWEN COUNTY and                  )
TREASURER OF OWEN COUNTY,                   )
                                            )
     Appellants-Respondents,                )
                                            )
            vs.                             )      No. 60A01-1212-MI-592
                                            )
ASSET RECOVERY, INC.,                       )
                                            )
     Appellee-Petitioner.                   )

                    APPEAL FROM THE OWEN CIRCUIT COURT
                        The Honorable Frank M. Nardi, Judge
                          Cause No. 60C01-1109-MI-453

                                   July 18, 2013

                            OPINION - FOR PUBLICATION

BARTEAU, Senior Judge
                             STATEMENT OF THE CASE

      The auditor and the treasurer of Owen County (“Owen County”) appeal the trial

court’s order granting Asset Recovery, Inc.’s “Verified Petition and Claim for Surplus

After Tax Sale.”

      We reverse and remand.

                                         ISSUE

      Owen County presents one issue for our review, which we restate as: whether the

trial court erred by granting Asset Recovery’s petition to claim the surplus funds from the

tax sale of certain property in Owen County.

                       FACTS AND PROCEDURAL HISTORY

      In 2010, real estate located in Owen County and belonging to Ora and Leafie

Chambers (collectively “the Chamberses”) was sold at a tax sale. Because the purchaser

paid more for the property than the amount required to fulfill the outstanding tax

obligations, the excess money was deposited in the county’s tax sale surplus fund in

accordance with Indiana Code section 6-1.1-24-7(a)(3) (2010). The Chamberses were

then entitled, pursuant to Indiana Code section 6-1.1-24-7(c)(1), to file a claim for the

money deposited in the fund. On March 16, 2012, the Chamberses signed a document

entitled “Bill of Sale and Assignment,” which purported to transfer to Asset Recovery

their right to the surplus funds from the tax sale of their property in the amount of

$7,465.50.

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       In April 2012, Asset Recovery filed with the trial court a motion to intervene and a

petition for release of the surplus funds. Owen County filed an objection to Asset

Recovery’s motion and petition. The trial court held a hearing and granted the motion to

intervene but took under advisement Asset Recovery’s petition for release of the funds.

The trial court later granted the petition for release of the surplus funds. It is from this

order that Owen County now appeals.

                             DISCUSSION AND DECISION

       Owen County contends that the trial court erred in granting Asset Recovery’s

petition for release of the funds. Specifically, Owen County argues that Indiana Code

section 6-1.1-24-7.5 (2010) invalidates the Bill of Sale and Assignment issued by the

Chamberses to Asset Recovery such that Asset Recovery is not entitled to the

Chamberses’ tax sale surplus funds.

       We review the trial court’s grant of Asset Recovery’s petition for an abuse of

discretion. An abuse of discretion occurs when a trial court reaches a conclusion that is

against the logic and natural inferences that can be drawn from the facts and

circumstances before it. Orndorff v. Ind. Bureau of Motor Vehicles, 982 N.E.2d 312, 319

(Ind. Ct. App. 2012), trans. denied. An abuse of discretion also occurs when a trial court

misinterprets the law. Id. In addition, the trial court abuses its discretion when it fails to

comply with a statute, and our scope of review in that question is not limited in any way.

Matter of S.L., 599 N.E.2d 227, 230 (Ind. Ct. App. 1992).

       Indiana Code section 6-1.1-24-7.5 provides:

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              (a) For purposes of this section, “property owner” refers to the
              owner of record of real property at the time the tax deed is issued
              and who is divested of ownership by the issuance of the tax deed.

              (b) If a property owner enters into an agreement on or after May 1,
              2010, that has the primary purpose of paying compensation to locate,
              deliver, recover, or assist in the recovery of money deposited in the
              tax sale surplus fund under section 7(a)(3) of this chapter with
              respect to real property as a result of a tax sale, the agreement is
              valid only if the agreement:

                     (1) requires payment of compensation of not more than ten
                     percent (10%) of the amount collected from the tax sale
                     surplus fund with respect to the real property, unless the
                     amount collected is fifty dollars ($50) or less;

                     (2) is in writing;

                     (3) is signed by the property owner; and

                     (4) clearly sets forth:

                            (A) the amount deposited in the tax sale surplus fund
                            under section 7(a)(3) of this chapter with respect to the
                            real property; and

                            (B) the value of the property owner’s share of the
                            amount collected from the tax sale surplus fund with
                            respect to the real property after the compensation is
                            deducted.

       Here, the Chamberses are the property owners as defined in Indiana Code section

6-1.1-24-7.5(a). They were the owners of record of the property when it was sold and a

tax deed was issued. As a result of that transaction, they were divested of their ownership

of the property. The parties do not dispute this.

                                               4
       On March 16, 2012, the Chamberses entered into an agreement with Asset

Recovery, a Colorado corporation, whereby they purportedly sold to Asset Recovery

their rights to the surplus funds from the tax sale of their Indiana property.            The

agreement is entitled “Bill of Sale and Assignment,” and its terms state that for the sum

of $4,479.30, $150 of which was paid in advance, the Chamberses assigned to Asset

Recovery their personal property, specifically the “Excess Proceeds claim in the amount

of $7,465.50 originating from the 9/1/2010 sale of tax defaulted property in Owen

County under Map #60-16-20-100-010.000-017.” Appellants’ App. p. 8.

       This agreement between the Chamberses and Asset Recovery is invalid pursuant

to Indiana Code section 6-1.1-24-7.5(b) because it is an agreement that has the primary

purpose of paying compensation to recover money deposited in a tax sale surplus fund

with respect to property that has been the subject of a tax sale and requires payment of

compensation of more than 10% of the amount to be collected from the tax sale surplus

fund. We are unmoved by Asset Recovery’s disingenuous argument that the agreement

is a bill of sale and assignment and nothing more. While the agreement, in form and

label, is an assignment of rights to certain personal property (i.e., tax sale funds), it is in

substance an asset recovery agreement. Substantively the agreement states that Asset

Recovery will recover the Chamberses’ funds in the amount of $7,465.50 from Owen

County’s tax sale surplus fund and give $4,479.30 to the Chamberses. This leaves

$2,986.20 for Asset Recovery.        The agreement contains no stated purpose, and we

discern no other purpose for the agreement than to pay compensation to Asset Recovery

                                              5
for its recovery of the Chamberses’ money from the tax sale surplus fund. Therefore, we

refuse to accept Asset Recovery’s invitation to regard the agreement between it and the

Chamberses as a bill of sale, thereby elevating its form over its true substance. See

Citizens Action Coal. of Ind., Inc. v. N. Ind. Pub. Serv. Co., 804 N.E.2d 289, 301 (Ind. Ct.

App. 2004) (stating that this Court has indicated its preference to place substance over

form).     Moreover, justice should not be defeated by technicalities.         Binninger v.

Hendricks Cnty. Bd. of Zoning Comm’rs, 668 N.E.2d 269, 272 (Ind. Ct. App. 1996)

(discussing Court’s policy not to exalt form over substance), trans. denied.

         Having determined that the primary purpose of the agreement between Asset

Recovery and the Chamberses is to pay compensation to Asset Recovery to recover

money deposited in the tax sale surplus fund, we now turn to whether the agreement

requires payment of more than 10% of the amount collected. Pursuant to its agreement

with the Chamberses, Asset Recovery would receive $2,986.20. This amount is equal to

40% of the total amount collected from the surplus fund. In stark contrast, pursuant to

Indiana Code section 6-1.1-24-7.5(b)(1), Asset Recovery is limited to 10% of the total

amount collected from the surplus fund, which is equal to $746.55.             Thus, Asset

Recovery would receive $2,239.65 more as a result of circumventing the statute. The

agreement is merely a ruse utilized by Asset Recovery to circumvent the 10% fee cap

statutorily mandated by Indiana Code section 6-1.1-24-7.5(b)(1). See, e.g., Greenpoint

Bank v. Criscione, 23 Misc.3d 1106, 885 N.Y.S.2d 711 (2009) (holding that New York

Abandoned Property Law § 1416 invalidated property recovery agreement because

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agreement provided for payment of fees in excess of 15% of value of recoverable

property).

       Moreover, as a matter of public policy, the statute is designed to protect the

citizens of our state and to regulate the activities of property locator services whose

primary purpose is to locate money deposited in tax sale surplus funds by capping the

fees at 10% of the total amount collected from the surplus fund. Certainly, elderly

property owners are a particular group of the population to be protected by this statute as

their vulnerability is often preyed upon. Therefore, it would be error for us to ignore the

spirit and objectives of Indiana Code section 6-1.1-24-7.5 by allowing Asset Recovery to

be compensated for the recovery of the funds pursuant to the terms of its agreement with

the Chamberses.

                                     CONCLUSION

       For the reasons stated, we conclude that the trial court abused its discretion by

granting Asset Recovery’s petition for the release of the surplus funds.

       Reversed and remanded for further action not inconsistent with this opinion.

BRADFORD, J., and BROWN, J., concur.

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