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Pinch-N-Post, LLC v. McIntosh

Court of Appeals of Indiana

August 27, 2019

Pinch-N-Post, LLC, Appellant/Petitioner,
v.
Verna McIntosh, Appellee/Respondent.

          Appeal from the St. Joseph Circuit Court The Hon. John Broden, Judge Trial Court Cause No. 71C01-1807-TP-233

          ATTORNEY FOR APPELLANT Gary L. Griner Mishawaka, Indiana

          ATTORNEY FOR APPELLEE A. Robert Masters Nemeth, Feeney, Masters & Campiti, P.C. South Bend, Indiana

          Bradford, Judge.

         Case Summary

         [¶1] As of March of 2018, Verna McIntosh owned a South Bend house ("the Property") but had become delinquent on its property taxes. That month, Anthony Rose purchased a tax-sale certificate for the Property from St. Joseph County, which he assigned to Pinch-N-Post, LLC. Pinch-N-Post sent notice to McIntosh pursuant to Indiana Code section 6-1.1-25-4.5 ("the 4.5 Notice"), which notice included the components of the redemption amount. McIntosh did not redeem the Property, and, in July of 2018, Pinch-N-Post petitioned for the issuance of a tax deed to the Property. Following a hearing, the trial court denied Pinch-N-Post's petition on the basis that its 4.5 Notice had greatly overstated the amount McIntosh would have to pay to redeem the Property. The trial court also ordered that Pinch-N-Post be refunded the amount that its winning bid exceeded McIntosh's tax obligation. Pinch-N-Post claims that the trial court's finding that the 4.5 Notice inflated the redemption amount is clearly erroneous and that the trial court erred in refusing to refund all of the purchase money or, alternatively, ordering a new redemption period. Because we agree with McIntosh that the 4.5 Notice would have led a reasonable person to conclude that the total redemption amount was far greater than it actually was, we affirm that portion of the trial court's order. However, we agree with Pinch-N-Post that the trial court should have ordered a new redemption period. Consequently, we affirm in part, reverse in part, and remand with instructions.

         Facts and Procedural History

          As of March of 2018, McIntosh owned a house at 127 East Ewing Avenue in South Bend and had become delinquent on its property taxes. On March 9, 2018, after being the high bidder at a tax sale, Rose purchased a tax-sale certificate for the Property from the Board of Commissioners of St. Joseph County for $8752.00, a certificate Rose assigned to Pinch-N-Post. On March 28, 2018, Pinch-N-Post sent the 4.5 Notice to McIntosh, which included a table purporting to detail the sums of money required for redemption of the Property:

         7. The total amount of money required to redeem the property equals the sum of the amount […] set forth below:

a. Judgment amount due at time of tax sale

$4, 072.71

b. PLUS 10% of item 7(a) if redeemed within 120 days of the date of the tax sale

$407.27

c. PLUS the amount by which the purchase price, (the final bid amount at the tax sale EXCEEDED Item 7(a)- (This is commonly known as the overbid/surplus.)

$4, 679.29

d. PLUS 10% per annum on Item 7(c) added per diem

$467.93

e. PLUS additional taxes and/or assessments paid by the purchaser subsequent to the sale.

$**

f. PLUS 10% per annum on Item 7(e) to date added per diem

$**

g. PLUS additional expenses incurred by purchaser recoverable under I.C. 6-1.1-25-4.5 and the costs of a title search or of examining and updating the abstract of title for the tract or item of real property

$111.94

h. REDUCED by any amounts held in the name of the taxpayer or the purchaser in the tax sale surplus fund Item 7(c)

$**

i. TOTAL needed to redeem the parcel: Contact County Auditor for daily total

$**

         **If asterisks are shown in a box above, then call the County Auditor for the amount.

         Appellant's App. Vol. II pp. 9-10. McIntosh did not redeem the Property by the deadline of July 9, 2018.

         [¶3] On July 10, 2018, Pinch-N-Post petitioned for a tax deed for the Property. On December 6, 2018, the trial court conducted a hearing on Pinch-N-Post's petition. On January 3, 2019, the trial court denied Pinch-N-Post's petition for a tax deed to the Property. The trial court found that the 4.5 Notice "contained flawed numbers which greatly inflated the amount of money it would take for [McIntosh] to redeem the property" and concluded that it therefore did not substantially comply with the applicable statutory provisions. Appellant's App. Vol. 2 p. 45. The trial court also awarded Pinch-N-Post a refund of $4679.29, which represented the tax-sale surplus.

          Discussion and Decision

         [¶4] Here, the trial court entered special findings and conclusions according to Indiana Trial Rule 52(A).

In such cases our standard of review is two-tiered. We first determine whether the evidence supports the findings and then whether the findings support the judgment. Courts of appeal shall not set aside the findings or judgment unless clearly erroneous. In reviewing the trial court's entry of special findings, we neither reweigh the evidence nor reassess the credibility of the witnesses. The evidence is viewed in the light most favorable to the judgment, and we will defer to the trial court's factual findings if they are supported by the evidence and any legitimate inferences therefrom.

Marion Cty. Auditor v. Sawmill Creek, LLC, 964 N.E.2d 213, 216-17 (Ind. 2012) (citations and quotation marks omitted).

         [¶5] The Indiana Supreme Court has summarized the procedure by which a delinquent property-tax liability may be satisfied through the forced sale of the property and through which the purchaser ultimately receives a tax deed:

A purchaser of Indiana real property that is sold for delinquent taxes initially receives a certificate of sale. A [120-day[1] redemption period ensues. If the owners fail to redeem the property during that [period], a purchaser who has complied with the statutory requirements is entitled to a tax deed. The property owner and any person with a "substantial property interest of public record" must each be given two notices.
The [4.5] notice announces the fact of the sale, the date the redemption period will expire, and the date on or after which a tax deed petition will be filed.

Tax Certificate Invs., Inc. v. Smethers, 714 N.E.2d 131, 133 (Ind. 1999) (citations omitted).

         [¶6] Another feature of the tax-sale process is the "tax sale surplus fund" ("the Surplus Fund"), into which funds are deposited following a sale where the winning bid exceeds the then-current tax obligations:

(a) When real property is sold under this chapter, the purchaser at the sale shall immediately pay the amount of the bid to the county treasurer. The county treasurer shall apply the payment in the following manner:
(1) First, to the taxes, special assessments, penalties, and costs described in section 5(e) of this chapter.
(2) Second, to other delinquent property taxes in the manner provided in IC 6-1.1-23-5(b).
(3) Third, to a separate "tax sale surplus fund".
(b) For any tract or item of real property for which a tax sale certificate is sold under this chapter, if taxes or special assessments, or both, become due on the tract or item of real property during the period of redemption specified under IC 6-1.1-25-4, the county treasurer may pay the taxes or special assessments, or both, on the tract or item of real property from the tax sale surplus held in the name of the taxpayer, if any, after the taxes or special assessments become due.
(c) The:
(1) owner of record of the real property at the time the real property was certified for sale under this chapter and before the issuance of a tax deed; or
(2) tax sale purchaser or purchaser's assignee, upon redemption of the tract or item of real property;
may file a verified claim for money which is deposited in the tax sale surplus fund. If the claim is approved by the county auditor and the county treasurer, the county auditor shall issue a warrant to the claimant for the amount due.

Ind. Code § 6-1.1-24-7.

         [¶7] To summarize, the sale proceeds first satisfy the property tax obligation for the property, then satisfy certain other qualifying tax obligations of the property owner, with any surplus going into the Surplus Fund. In other words, the Surplus Fund is comprised of the overbid. The Surplus Fund may also be used to satisfy taxes or assessments that become due during the redemption period. Finally, if the property is redeemed, the ...


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