COUNTY OF SULLIVAN v. VAUGHAN (2009)

This matter comes on by Order to Show Cause (OSC) of respondent to vacate the default judgment in favor of the County of Sullivan which awarded title of the tax payer's realty, Town of Fremont Tax Map 14-1-9, for non-payment of taxes to the County of Sullivan. The respondent argues that he should be permitted to pay all unpaid taxes and appropriate penalties, to the date hereof in full, and that upon payment, County of Sullivan should re-convey the realty back to him.

In the OSC, respondent property owner argues that the default judgment of February 24, 2009 should be vacated on the grounds that he did not receive adequate notice of commencement of the foreclosure proceeding as prescribed in § 1125 of the Real Property Tax Law (RPTL § 1125).

The issue before this Court is whether or not the petitioner has complied with the notice requirements of RPTL § 1125 thus giving the property owner adequate notice of the foreclosure proceedings. More specifically, whether the posting of the notice requirement as required by the RPTL was done in a manner sufficient to give adequate notice to the landowner.

The realty in question is an undeveloped and wooded 90 acre lot, located at the junction of County Road 93 (commonly known as the Tennanah Lake-Fremont Center Road) and Greenthal Road (Town of Fremont Road 33). The Assessed Value of the realty is $90,900 with an Equalization Rate of 61% for a full assessed value of $149,016 and a total repurchase price of $21,029.94.

Respondent property owner Vaughan has, by himself and as part of a family trust, owned the realty in question for over thirty years and paid all taxes except 2007. Until 2005, respondent was a resident of Ridgewood, New Jersey. At that time, he moved to Massachusetts, and failed to inform the County of Sullivan of his change in address as prescribed by RPTL § 1125(d). The County of Sullivan began tax foreclosure proceedings in January of 2009 after respondent had not paid taxes for two years commencing with the 2007 taxes.¹

The notice provisions of New York's RPTL § 1125 underwent legislative changes in the wake of the United States Supreme Court decision in Jones v. Flowers, 547 U.S. 220, 126 S.Ct. 1708, 164 L.Ed.2d 415 (2006). The U.S. Supreme Court overruled the highest court of the State of Arkansas, which had held that due process was satisfied merely by mailing notice to the property owner by both ordinary and certified mail, even though both were returned as undeliverable Jones at 234, 126 S.Ct. 1708.

The Supreme Court, in a its decision by Chief Justice Roberts, reaffirmed its previous ruling in Mullane v. Central Hanover Bank, 339 U.S. 306, 70 S.Ct. 652, 94 L.Ed. 865 (1950), that notice “must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it.” Jones at 229, 126 S.Ct. 1708, citing Mullane at 315, 70 S.Ct. 652.

Chief Justice Roberts further wrote that “the State may have made a reasonable calculation of how to reach Jones, but it had good reason to suspect when the notice was returned that Jones was no better off than if no notice had been sent.” Jones at 221, 126 S.Ct. 1708.

Additionally, Chief Justice Roberts referred to the Supreme Court's decision in Walker v. City of Hutchinson, 352 U.S. 112, 77 S.Ct. 200, 1 L.Ed.2d 178 (1956), which held that “notice required will vary with circumstances and conditions.” Jones at 227, 126 S.Ct. 1708, citing Walker at 115, 77 S.Ct. 200.

Thus, the U.S. Supreme Court has recently reiterated and reaffirmed its litmus test of due process on the effectuation of adequate notice to absentee landowners in tax foreclosure matters, which on a case-by-case analysis obligates the taxing entity to provide notice to the landowner that is reasonably calculated to reach the owner and that such notice may vary with the circumstances and conditions present. (Emphasis added).

The New York Court of Appeals has held, in property tax notice cases, that under both the Federal and State Constitutions the State may not deprive a person of property without due process of law (U.S. Const. 14th Amend; N.Y. Const., art. I, § 6 ). In Harner v. County of Tioga, 5 N.Y.3d 136, 800 N.Y.S.2d 112, 833 N.E.2d 255 (2005), the New York Court of Appeals reiterated the U.S. Supreme Court's holding in Mullane, by stating its due process requirement that “notice [must be] reasonably calculated, under all circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Harner at 140, 800 N.Y.S.2d 112, 833 N.E.2d 255, citing Mullane at 314, 70 S.Ct. 652. The Court of Appeals opined that “due process is a flexible concept, requiring a case-by-case analysis that measures the reasonableness of a municipality's actions in seeking to provide adequate notice.” Harner at 140, 800 N.Y.S.2d 112, 833 N.E.2d 255.

In Harner, the County found that the notice was proper because Tioga County had sent notice by both regular and certified mail, and while the certified mail was returned as “unclaimed,” the regular mail was not. Harner at 139, 800 N.Y.S.2d 112, 833 N.E.2d 255. Because the landowner bore the responsibility of updating his address to protect his ownership interests, Tioga County was justified in assuming that adequate notice had been given when the regular mail was not returned from the last known address on record, and that Harner was merely attempting to avoid notice by ignoring the certified mailings. Harner at 141, 800 N.Y.S.2d 112, 833 N.E.2d 255.

However, in the case at bar, both the regular and certified mailings were returned to Sullivan County as undeliverable. This triggered an obligation on the County's part to take additional reasonable steps to attempt to provide notice as prescribed by RPTL § 1125 and judicial due process, through Flowers and Harner and their progeny, designed to reasonably reach the landowner under the circumstances and conditions present in the particular case.

In the wake of Jones v. Flowers, the New York Legislature quickly sought to amend RPTL § 1125 to bring the State's uniform tax enforcement procedure into compliance with the U.S. Supreme Court's decision. As explained by the Counsel to the Office of Real Property Services, “it is now clear that when the government learns that an initial tax sale notice was not delivered to the owner, additional efforts must be made to notify him or her if reasonably practical.” Letter from ORPS Counsel, July 11, 2006, Bill Jacket, L. 2006, ch. 415. The current version of RPTL § 1125 is intended to reflect this. RPTL § 1125(1)(b) “Notification Method” states, in its pertinent part: that notice of commencement of foreclosure proceeding against a known owner shall be sent via ordinary first class mail and certified mail. If both mailings are returned as undeliverable and no alternative address can be found, then the enforcing officer shall cause a copy of such notice to be posted in his or her office, in the office of the Court Clerk and on the physical property to which the delinquent tax lien relates in the following manner: (i) affixed to a door of a residential or commercial structure on the premises, or (ii) attached to a vertical object, such as a tree, post or stake, and plainly visible from the road (emphasis added).

In the case at bar, both the ordinary first class and certified mailings were returned, and no alternative mailing address was found by the County of Sullivan. Therefore, the petitioner sought to give notice by attaching the paper notice to a wooden stake pounded into the ground, visible from the road on January 8, 2009.

The respondent specifically argues that albeit notice was posted pursuant to RPTL § 1125(1)(c) that notice was not adequately given because the County of Sullivan failed to take into account all of the circumstances and conditions on the property. They posted notice on a wooden stake in a snowbank in the Town of Fremont's winter season and knew that the respondent was an absentee landowner who lived out of state. Said posting could not reasonably give notice to the property owner.

As testimony before this Court has shown, the stake with the notice attached to it was posted on January 8, 2009 in the middle of winter on undeveloped woodland in a sparsely settled part of Sullivan County. The manner in which the notice was posted consisted of three sheets of letter-sized computer paper being affixed to a 2″ x 1″ wooden stake by use of construction staples. This was substantiated by a photograph taken by the enforcing officer's agent just after its erection and is not a factual issue.

Testimony of several residents of the area of the property and the respondent's closest neighbor shows that the weather in the vicinity of Tennanah Lake in the Town of Fremont during January is very harsh, consisting of high winds and heavy snowfall. January 2009 was no exception to this weather pattern. Additionally, the testimony of the Superintendent of Highways of the Town of Fremont revealed that frequent snow plowing in the region would have thrown snow up onto the bank in the area where the notice was posted. All the local residents of the area who testified, none saw any indication of the posting's existence, even though they would frequently and daily drive past the posted location.

The County of Sullivan relies upon the holding in County of Sullivan v. Basile, 43 A.D.3d 598, 840 N.Y.S.2d 676 (3rd Dept.2007).² There, the Appellate Division, Third Department, held that although Sullivan County claimed to have given proper service through both regular and certified mail which were never returned, there was no admissible proof to support this. Basile at 676. In the decision, Justice Kane, writing for the Appellate Court, wrote that without proof that the mailings were not returned, the ruling that Basile did not receive proper due process of notice must be upheld, and therefore, it was proper that the County's default judgment was vacated. Basile at 677. This reliance on Basile is misplaced because in the case at bar, there is proof that the mailings were both returned, therefore an obligation was triggered on the County's part to ensure that an adequate alternative method of notice reasonably calculated under all conditions and circumstances to give the property owner notice.

Similarly, in the case of Norgrove v. Board of Education of the City School District of the City of New York, 23 Misc.3d 684, 881 N.Y.S.2d 802 (Sup.Ct., New York Cty., 2009), the New York County Supreme Court held that other service is required when a party is made aware that mail was returned. There, the petitioner, a tenured teacher, faced various charges from the school board that led to the termination of his employment. Under Education Law § 3020, a tenured teacher is entitled to notice of such charges by two methods in the alternative: by certified or registered mail, or by personal delivery. Norgrove at 690, 881 N.Y.S.2d 802. The Board of Education sent notices by regular and certified mail. While the regular mail was not returned the certified mail was sent back as unclaimed. The petitioner claimed that service was improper, and that he could therefore not be dismissed. The Court held that when the certified mail was returned unclaimed, the Board of Education became aware that notice was ineffective, which triggered an obligation on their part to take additional steps to effect notice by redelivering the second notice to Norgrove personally at his place of work. Norgrove at 695, 881 N.Y.S.2d 802. Because personal delivery at work was the one additional reasonable and practical step available to effect notice, they were obligated to give notice in this manner. As the Board of Education failed to do so, the Court found in favor of the petitioner and ordered the respondents to reinstate him with full salary and benefits retroactive to the time he was terminated. Norgrove at 696, 881 N.Y.S.2d 802.

The case at bar, while falling under a different section of New York Law, is similar in that it involves the use of a statutorily prescribed step-by-step method of the manner of giving notice. Just as the Board of Education should have taken one additional reasonable and practical step to effect notice, so too should the County of Sullivan have worked to ensure that adequate notice under RPTL § 1125(1)(b) was given in an appropriate manner under the circumstances and conditions then and there existing including the nature of the property, the time of the year and the out-of-state address of the absentee owner to insure a reasonable likelihood that the owner would receive notice; due process and the right to own and hold property in a free society demands no less. (Emphasis added).

Additionally, in the recent case of Orange County Commissioner of Finance v. Helseth, 24 Misc.3d 204, 875 N.Y.S.2d 754 (Sup.Ct., Orange Cty., 2009), the Orange County Supreme Court held that the foreclosing municipality did not afford the property owner adequate notice of their constitutionally protected right of redemption. There, the petitioner merely sent notice by way of certified mail, which was returned as “not deliverable as addressed.” Helseth at 205, 875 N.Y.S.2d 754. Because the certified mail was returned unclaimed, the Commissioner of Finance became aware that notice was ineffective, which triggered an obligation on their part to take additional steps to effect notice. Helseth at 209, 875 N.Y.S.2d 754. Under RPTL § 1125(1)(b), these steps included the mailing of notification by ordinary mail, a search to see if an alternative mailing address could be found, and the physical posting of notice on property to which the delinquent tax lien relates. As the Commissioner of Finance failed to take these additional steps, the Court found in favor of the respondent, and ordered the County of Orange to issue the Helseths a newly issued right of redemption under the same terms and conditions as set forth in the default notification. Helseth at 211, 875 N.Y.S.2d 754.

While the County of Sullivan may have taken additional steps to effect notice pursuant to RPTL § 1125(1)(b), beyond those taken by the County of Orange in Helseth, they still failed to live up to the fully intended statutory obligations to provide adequate notice reasonably calculated to give the landowner notice under all the conditions and circumstances. There is no additional merit garnered for completing three-quarters of the required steps rather than one-half; failing to appropriately follow through on any less than all of the required steps in effectuating notice of the foreclosing proceedings does not meet the standards set forth in the Real Property Tax Law and the progeny of U.S. Supreme Court and New York Court of Appeals holdings.

The petitioner in the case at bar also argues that under RPTL § 1131, the respondent is prohibited from bringing a motion to vacate a default judgment because such a motion must be brought within one month of the entry of the default judgment, which was entered on February 24, 2009. In response, the respondent property owner argues that under RPTL § 1125(1)(b)(ii), the taxpayer may pay all taxes, interest and penalties in full and reclaim their property “at any time prior to the expiration of 30 days after having been given notice of the tax foreclosure proceeding and prior to the County taking title to the subject property.”³ If the respondent had received adequate notice under the rules imposed by RPTL § 1125, the petitioner's argument would be persuasive. However, in this matter, the failure to give adequate notice is precisely what the respondent is arguing. By failing to give the respondent adequate notice under RPTL § 1125, the time clock of 30 days which bars a taxpayer from paying the requisite fees to reclaim their property never began. Thus, there is no statutory restriction on the time frame in which the respondent property owner may seek such action until notice is given.

Respondent's position is also supported by the U.S. Supreme Court case Schroeder v. City of New York, 371 U.S. 208, 83 S.Ct. 279, 9 L.Ed.2d 255 (1962). In that case, the County of New York commenced proceedings to acquire rights to divert a portion of the Neversink River in Sullivan County as part of the construction of the Neversink Dam. In accordance with the New York City Water Supply Act, the City “caused notice of its acquisition of the right to divert the Neversink to be published the requisite number of times in the City Record of the City of New York, in two New York City newspapers, and in two newspapers published in Orange County, and in addition posted 22 notices on trees and poles along a seven- or eight-mile stretch of river in the general vicinity of the appellant's premises.” Schroeder at 210, 83 S.Ct. 279. Nothing was posted specifically on the appellant's property, and the Orange County newspapers were published in small communities many miles from the appellant's property. Schroeder at 210, 83 S.Ct. 279. Additionally, the postings were made in January, when the appellant's premises were vacant. Schroeder at 210, 83 S.Ct. 279.⁴ Because the New York City Water Supply Act provides that all claims for damages resulting from the city's acquisition are barred after three years, the City of New York argued that Schroeder's proceeding was invalid. Schroeder at 210, 83 S.Ct. 279. Schroeder argued that because she had never received proper notice of the condemnation proceedings, the city had deprived her of property in violation of due process of law. Schroeder at 211, 83 S.Ct. 279.

The U.S. Supreme Court concluded that because Mrs. Schroeder never received notice of the taking, the three-year limitation on her in which to file a claim never ran against her. Schroeder at 214, 83 S.Ct. 279. Citing previous decisions, the U.S. Supreme Court held that “an elementary and fundamental requirement of due process in any proceeding which is to be accorded finality 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.” Schroeder at 211, 83 S.Ct. 279, citing Mullane at 314, 70 S.Ct. 652. The Court went on to say that it is “impossible to draw a standard set of specifications as to what is constitutionally adequate notice, to be mechanically applied in every situation,” thus requiring a party giving notice to take many factors into consideration when reasonably calculating how to provide notice to the parties involved in an action.” Schroeder at 212, 83 S.Ct. 279.

In the case at bar, the petitioner failed to meet its obligation to provide adequate notice to the owner that is reasonably calculated under the circumstances. The petitioner failed to reasonably calculate how to provide adequate notice when it attached non water- and weather-proof computer paper to a wooden stake in a snow bank during the winter weather.

In the matter herein respondent produced photos of “No Trespassing” signs attached to trees along the highways bordering respondent's property, visible from the highway. A neighbor who posted such signs for respondent testified that such signs remained in place for long periods of time. Petitioner's employee who placed the stake in the snow on the shoulder of the road testified that the snow was too deep for him to staple the notice on any of the trees off the road. Clearly, difficulty in walking through a few feet of snow is not consistent with the intent “as one desirous of actually informing the absentee might reasonably adopt to accomplish it.” Mullane at 315, 70 S.Ct. 652.

Therefore, the argument that the respondent property owner should be barred from bringing a motion to vacate the default judgment is not persuasive. The fact that the respondent had not received adequate notice and the 30 day limitation on respondent in which to file a motion to vacate a default judgment has not run against him. See, Schroeder v. City of New York, Supra.

The respondent argues whether the posting of a paper on a two inch wide wooden stake on the side of the road is relevant, as the respondent lives out-of-state and the land is undeveloped and has no year round habitable structure on it, and it is unlikely that the owner would see such notice during January or the other winter months. Thus, the U.S. Supreme Court in Mullane held that “the chance of actual notice is further reduced ․ [if it] does not inform acquaintances who might call it to the attention” of the landowner. Mullane at 315, 70 S.Ct. 652. As applied to the case at bar, it is evident from the testimony adduced at the hearing that the respondent had several reliable acquaintances in the immediate vicinity of his property that would have informed him of the notice of foreclosure if they had seen it. Thus, the paper notice posting in winter had no chance of actual notice being given to the out-of-state owner or his acquaintances.

This Court finds that although the County of Sullivan technically complied with the notice requirements of RPTL § 1125, nonetheless failed to provide adequate notice, reasonably calculated under the circumstances and conditions of weather, time of year, size of the property, and out-of-state residence of the property owner when they posted non water- and weather-proof paper on a wooden stake in a snowbank in January alongside a road by the undeveloped woodland parcel.

Accordingly, this Court finds that the petitioner County of Sullivan did not give adequate notice to respondent under the circumstances and conditions existing in that the paper notice stapled to a wooden stake in a snowbank at non-residential property is insufficient to given reasonably calculated notice.

Base on the above, it is

ORDERED, that the default judgment of February 24, 2009 against the respondent is vacated, and it is further

ORDERED, that property owner shall pay all taxes and penalties issued as of the inadequate posting on January 8, 2009 by September 30, 2009, and it is further

ORDERED, that upon payment by property owner as stated above, the County of Sullivan shall re-convey said property.

This shall constitute the Decision and Order of this Court.

FOOTNOTES

1.  The owner had moved to Massachusetts and left a forwarding address with his post office in New Jersey, but after six months the forwarding address expired automatically and petitioner's inquiry of the Ridgewood, New Jersey Postmaster showed that the owner had moved and that they had no record of a forwarding address.

2.  This was a decision in which the Appellate Division, 3rd Department affirmed an Order of the County Court of Sullivan County (LaBuda, J.), entered June 5, 2006 vacating a default judgment against Basile.

3.  The respondent remains ready, willing and able to redeem his property with full payment of all taxes and appropriate penalties in the full amount of $21,029.94.

4.  Appellant did not reside on the realty in question and only stayed at the seasonal house and 31/212 acres of land during the months of July and August each year.

FRANK J. LaBUDA, J.