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Indiana Land Trust Co. v. XL Investment Properties, LLC

Court of Appeals of Indiana

July 30, 2019

Indiana Land Trust Company, f/k/a Lake County Trust Company TR #4340, Appellant-Movant,
XL Investment Properties, LLC, and LaPorte County Auditor, Appellees-Respondents

          Appeal from the LaPorte Superior Court The Honorable Richard R. Stalbrink, Jr., Judge Trial Court Cause No. 46D02-1509-MI-1642

          ATTORNEYS FOR APPELLANT Greg A. Bouwer Jeff Carroll Koransky Bouwer & Poracky, P.C. Dyer, Indiana

          ATTORNEY FOR APPELLEE XL INVESTMENT PROPERTIES, LLC Matthew J. Hagenow Newby, Lewis, Kaminski & Jones, LLP LaPorte, Indiana

          ATTORNEY FOR APPELLEE LAPORTE COUNTY AUDITOR J. Alex Bruggenschmidt Buchanan & Bruggenschmidt, P.C. Zionsville, Indiana

          BAKER, JUDGE

         [¶1] Indiana Land Trust Company, f/k/a Lake County Trust Company TR #4340 (Trust 4340), appeals the judgment of the trial court denying its motion to set aside a tax deed and quiet title judgment issued to XL Investment Properties, LLC (XL Investment). Trust 4340 argues that the trial court erroneously determined that the motion to set aside was untimely filed and the tax sale notice process employed by the LaPorte County Auditor (the Auditor) was statutorily and constitutionally insufficient. Finding that the motion to set aside was not untimely and that the notice process was constitutionally insufficient, we reverse and remand for further proceedings.


         [¶2] Peter Dellaportas is a decades-long real estate developer who owns many investment properties. At some point in the past, Dellaportas purchased a 140-acre property, which used to be a municipal airport, in Michigan City. The property has since been subdivided into multiple parcels, some of which have been developed for commercial use.

         [¶3] Dellaportas's company, located in Chicago, is called Midwest Investment. In June 1993, Dellaportas put one of the undeveloped parcels, totaling approximately thirty acres (the Property) into a trust, Trust 4340, with either himself or Midwest Investment as the beneficiary. Lake County Trust Company (the Trust Company) was the entity that helped him process and finalize the trust.

         [¶4] The deed directed that property tax bills for the Property should be sent to Midwest Investment at 415 North LaSalle Street, Suite 700, in Chicago. In 1994, Midwest Investment relocated to Suite 200 in the same building and remained there for approximately ten[2] years. In 2014, Midwest Investment moved to 432 North Clark Street, Suite 304, in Chicago. Midwest Investment did not update the Auditor with its changes of address.

         [¶5] Midwest Investment paid the property taxes on the Property from 1993 through 2008 but failed to pay any property taxes from 2009 through 2015. In 2015, LaPorte County (the County) determined that the Property's outstanding tax liability totaled $230, 017.26.

         [¶6] The County held a tax sale in 2015 (the Tax Sale); the certified Tax Sale list included the Property. The County engaged SRI, Inc. (SRI), a local government contractor, to assist with various aspects of the tax sale process, including the mailing of thousands of tax notices. The Work Plan Agreement entered into between the County and SRI stated that the parties (including SRI, the Auditor, and the Treasurer) would "individually or collectively perform or cause to be performed by employees of their organization the actions defined herein which are required to execute the County Tax Sale in compliance with Ind. Code 6-1.1-24 and Ind. Code 6-1.1-25." Tr. Ex. 21. The Work Plan Agreement also stated that "the Auditor agrees to search its internal records for a better address for the owner(s) of properties for which the certified mail notices are returned and provide the results of said searches to SRI . . . ." Id.

         [¶7] In 2015, the General Assembly amended Indiana Code section 6-1.1-24-4. Following that amendment, the Auditor believed it no longer had an obligation to search for a better address if certified mail notices were returned as undeliverable.

         [¶8] On July 31, 2015, SRI prepared the notice of the tax sale of the Property and sent it by certified mail (the Certified Mail Notice) to Trust 4340 at Suite 700 on North LaSalle Drive. The Certified Mail Notice did not contain a street address or common description of the Property. The Certified Mail Notice was returned, stamped "Return to Sender, Not Deliverable as Addressed, Unable to Forward," and bore a handwritten note stating "refused." Tr. Ex. 24. The notice was also mailed to the same address on the same date by regular, first-class mail (the First Class Notice). The First Class Notice was not returned.

         [¶9] SRI generated a "returned mail to search" list for all entities that were sent notices of the Tax Sale; the list included Trust 4340. In August 2015, SRI performed an additional search for addresses of those entities, but evidently was unable to find the current address for Trust 4340 and/or Midwest Investment.

         [¶10] On August 7, 2015, the address for tax notices for Trust 4340 and the adjacent parcel was changed in the LaPorte County system used by the Auditor and assessor. Beginning on that date, the system listed the correct, current address on North Clark Street.

         [¶11] The Auditor did not undertake any effort to find current addresses for property owners whose certified mail was returned as undeliverable. Although SRI posted to its website if first class or certified mail was returned, no one from the Auditor's office ever checked that website to determine if mail had been returned. There was never a point in the process when the Auditor looked for returned mail or took any action related to it. Indeed, employees of the Auditor readily admitted they took no action:

• "Q: Did you search your internal records for this parcel, to your knowledge? A: I just answered that. We did not because the first-class mail was not returned. Shall I say it ...

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