Crescent City Property Redevelopment Association, LLC v. Carmen G. Muniz; Des Capital, LLC; New Orleans Land Holdings, LLC; Richard Rachal Sdira, LLC; City of New Orleans

• Court: Louisiana Court of Appeal
• Decided: February 10, 2021
• Docket: 2020-CA-0421
• Status: Published

Opinion

CRESCENT CITY PROPERTY * NO. 2020-CA-0421 REDEVELOPMENT ASSOCIATION, LLC * COURT OF APPEAL VERSUS * FOURTH CIRCUIT CARMEN G. MUNIZ; DES * CAPITAL, LLC; NEW STATE OF LOUISIANA ORLEANS LAND HOLDINGS, ******* LLC; RICHARD RACHAL SDIRA, LLC; CITY OF NEW ORLEANS

APPEAL FROM CIVIL DISTRICT COURT, ORLEANS PARISH NO. 2015-09728, DIVISION “A” Honorable Ellen M Hazeur, Judge ****** JAMES F. MCKAY III CHIEF JUDGE ****** (Court composed of Chief Judge James F. McKay III, Judge Terri F. Love, Judge Edwin A. Lombard)

JULIUS C. FORD LAW OFFICE OF J. CHRISTOPHER FORD, LLC 927 Kerlerec Street New Orleans, Louisiana 70116 COUNSEL FOR PLAINTIFF/APPELLANT

WESLEY M. PLAISANCE BREAZEALE, SACHSE & WILSON, L.L.P. 909 Poydras Street, Suite 1500 New Orleans, Louisiana 70112 -and- LAURA S. ACHORD 300 Washington Street, Suite 210 Monroe, Louisiana 71201 COUNSEL FOR DEFENDANT/APPELLEE

AFFIRMED

FEBRUARY 10, 2021 JFM TFL EAL The plaintiff, Crescent City Property Redevelopment Association, LLC

(“CCPRA”) appeals a trial court judgment1 holding that: (1) the tax sale and tax

sale deed for property in New Orleans, located at 3028-30 Bienville Street, and

held by CCPRA are an absolute nullity for lack of sufficient pre-tax sale notice and

for lack of pre-tax sale advertisement, and (2) CCPRA lacks just title to the

Bienville Street property. We affirm.

FACTS AND PROCEDURAL HISTORY

On November 10, 1994, Carmen G. Muniz purchased the property located at

3028-30 in New Orleans by credit sale, which was recorded in the conveyance

records for Orleans Parish as instrument number 96169. On August 5, 1997, a

judgment was recorded in the mortgage records for Orleans Parish in favor of the

Succession of Roy J. Gonzalez, Winifred Gonzales Dolan, Althea Rodriguez

Maroney, and Michael J. Rodriguez (the record lienholders), which granted a

1 The trial court’s judgment actually encompassed the granting of two motions for partial summary judgment filed by defendant, Richard Rachal SDIRA, LLC.

1 judicial mortgage over the property as well as a legally protected mortgage over

the property.

On November 17, 1997, Arizona Pacific, LP acquired an ownership interest

via a tax sale for unpaid 1996 taxes on the property. The tax sale deed was

recorded in the conveyance records of Orleans Parish on May 8, 1998. Des

Capital, LLC acquired the rights under the tax sale deed by a quitclaim deed from

Arizona Pacific, LP, which was recorded in the conveyance records of Orleans

Parish on May 3, 2002.

CCPRA purchased the property on November 18, 2002 at a tax sale for

unpaid ad valorem taxes for the years 1997-2001. The tax sale deed was recorded

in the conveyance records of Orleans Parish on July 18, 2003. On the face of the

tax sale deed, the City of New Orleans provided notice to Carmen G. Muniz and

published two advertisements prior to the tax sale in The Times Picayune on

October 18, 2002 and November 14, 2002.

New Orleans Land Holdings, LLC purchased the property at a tax sale on

November 26-28, 2007 for unpaid ad valorem taxes for the years 2002-2005. The

tax sale deed was recorded in the conveyance records of Orleans Parish on

February 22, 2008.

On September 14, 2010, Richard Rachal SDIRA, LLC (Rachal) purchased

the tax sale title to the property at a tax sale for unpaid ad valorem taxes for the

years 2007-2009. The tax sale certificate was recorded in the conveyance records

of Orleans Parish on November 4, 2010.

2 The City of New Orleans adjudicated the property at a tax sale on September

25, 2012 for unpaid ad valorem taxes for the years 2010-2011. The tax sale

certificate was recorded in the conveyance records for Orleans Parish on July 16,

2015.

On October 12, 2015, CCPRA filed a petition to quiet title and annul tax

sales against Carmen G. Muniz, Des Capital, LLC, New Orleans Land Holdings,

LLC, Rachal, and the City of New Orleans, seeking a judgment decreeing that it

owned the property in absolute unconditional ownership. On March 15, 2016, Ms.

Muniz assigned all of her rights, title, and interest in and to the property as well as

all rights to set aside or nullify the tax sale and the tax sale deed based on “lack of

pretax sale notice, insufficient publication or any other defense” to Rachal via a

quitclaim deed recorded in the conveyance records of Orleans Parish on March 16,

2016.

Rachal filed a motion for partial summary judgment on April 23, 2019,

seeking a declaration that CCPRA lacked just title to the property due, in part, to

the fact that there were three tax sales for the property (November 26-28, 2007,

September 14, 2010, and September 25, 2012) after the tax sale to CCPRA on

November 18, 2002. Rachal also argued that the tax sale deed was defective on its

face because it listed invalid pre-tax sale advertisement dates, failed to list Des

Capital LLC, a record owner, and failed to list the record lienholders for pre-tax

sale notice. CCPRA filed an opposition to the motion for partial summary

3 judgment based on the grounds that it was the rightful owner of the property via

ten (10) year acquisitive prescription.

Rachal filed another motion for partial summary judgment on November 15,

2019, seeking a declaration that the tax sale of the property and the tax sale deed

were an absolute nullity for lack of sufficient pre-tax sale notice and lack of

sufficient pre-tax sale advertisement. On January 29, 2020, CCPRA filed a

supplemental memorandum in opposition to this motion. CCPRA contended that

the court’s analysis of just title to the property was limited to review of the four

corners of the 2003 deed, and asserted that the 2003 deed was valid on its face.

A hearing on the motions for summary judgment took place on February 14,

2020. The trial court granted partial summary judgment on the first motion finding

that CCPRA lacked just title to the property. The trial court also granted partial

summary judgment on the second motion, declaring that the tax sale and the tax

sale deed held by CCPRA were an absolute nullity for lack of sufficient pre-sale

notice and lack of sufficient pre-sale advertisement. The trial court’s judgment

was rendered in open court on February 14, 2020 and signed on February 28, 2020.

It is from this judgment that CCPRA now appeals.

DISCUSSION

On appeal, CCPRA raises the following assignments of error: (1) the district

court erred by declaring that CCPRA’s tax sale deed is not just title when the tax

sale deed is written, valid in form (notary, two witnesses, legal property

description, appearance and declaration by city tax assessor), and filed for registry

4 in the conveyance records for Orleans Parish; (2) the district court erred by

declaring that CCPRA’s tax sale is an absolute nullity when the affidavit testimony

of two different city officials contradicted each other regarding tax sale notices,

creating a triable issue of fact; (3) the district court erred by placing the burden of

proof on CCPRA in its summary judgment analysis; and (4) the district court erred

by incorrectly treating Derrick Muse’s affidavit as having been objected to by

Richard Rachal SDIRA, LLC in its summary judgment analysis.

Appellate courts review the grant or denial of a motion for summary

judgment de novo, using the same criteria applied by the trial courts to determine

whether summary judgment is appropriate. This standard of review requires the

appellate court to look at the pleadings, depositions, answers to interrogatories, and

admissions on file, together with the affidavits, if any, to determine if they show

that no genuine issue as to a material fact exists, and that the mover is entitled to

judgment as a matter of law. Mandina, Inc. v. O’Brien, 13-0085, pp. 8-9 (La.App.

4 Cir. 7/31/13), 156 So.2d 99, 104 (internal citations omitted); see also La. C.C.P.

arts. 966 and 967.

A fact is material when its existence or nonexistence may be essential to the

plaintiff’s cause of action under the applicable theory of recovery. A fact is

material if it potentially insures or precludes recovery, affects a litigant’s ultimate

success, or determines the outcome of the legal dispute. A genuine issue is one as

to which reasonable persons could disagree. If reasonable persons could reach

5 only one conclusion, no need for trial on that issue exists and summary judgment is

appropriate. Id.

CCPRA contends that it has just title to the property because its tax sale

deed was in proper form, i.e., it was a written, authentic act that included a legal

property description, an appearance and declaration by the tax assessor, and it was

recorded in the conveyance records of Orleans Parish. As such, it should constitute

just title for acquisitive prescription purposes.

However, the undisputed facts and evidence establish that CCPRA’s tax sale

deed was an absolute nullity and defective on its face due to its failure to comply

with Louisiana Constitution Article VII, Section 25(A) and La. R.S. 43:203(2),

governing pre-tax sale publications. The tax sale deed also fails to list/provide

written pre-tax sale notice to record owners or list/provide written pre-tax sale

notice to record lienholders.

The Constitution provides:

There shall be no forfeiture of property for nonpayment of taxes. However, at the expiration of the year in which the taxes are due, the collector, without suit, and after giving notice to the delinquent in the manner provided by law, shall advertise for sale the property on which the taxes are due. The advertisement shall be published in the official journal of the parish or municipality, or, if there is no official journal, as provided by law for sheriffs’ sales, in the manner provided for judicial sales.

La. Const., Art. VII, Sec. 25(A).

La. R.S. 43:203(2) states:

When two publications are required of notice of a judicial sale by public auction, the first newspaper advertisement of such notice shall be published at least thirty days before the date of the judicial sale, and the second advertisement shall be published not earlier than seven days before, and not later than the day before, the judicial sale.

6 Louisiana courts have recognized that La. R.S. 43:203 is a mandatory

provision that the tax collector must follow in connection with tax sales and that a

tax sale is an absolute nullity where the first advertisement is published thirty days

or less prior to the sale in violation of La. R.S. 43:203(2). See Western Lands Co.

v. Lindsay, 307 So.2d 412, 414 (La.App. 4 Cir. 1975); see also San Roman

Enterprises, Inc. v. Plaisance, 01-1082, p. 2 (La.App. 5 Cir. 12/26/01), 806 So.2d

788, 790.

In the instant case, the tax collector failed to comply with this mandate,

which is apparent from the face of CCPRA’s tax sale deed. The tax sale occurred

on November 18, 2002. On its face, the tax sale deed provides that the tax

collector published notice of the tax sale on October 18, 2002 and November 14,

2002. Thirty days from November 18, 2002 was October 19, 2002, which was a

legal holiday. Pursuant to La. C.C.P. art. 5059 (dealing with computation of time),

October 19, 2002 could not be the thirtieth day. Due to the fact that the first

publication was on October 18, 2002, the thirtieth day prior to the tax sale, it

violated the strict measures of La. R.S. 43:203(2). Therefore, the tax sale deed is

defective on its face for lack of proper pre-tax sale notice by advertisement.

Accordingly, the trial court’s ruling that CCPRA lacked just title to the property

was correct.

The tax sale deed is also defective on its face due to failure to list record

owners and record lienholders. Lack of pre-tax sale notice to a record owner is a

constitutional due process violation to a tax sale and renders it an absolute nullity.

Smitko v. Gulf South Shrimp, Inc., 11-2566, p. 5 (La. 7/2/12), 94 So.2d 750, 757.

The requirement of pre-tax sale notice to record owners and record lienholders has

been in place since the United States Supreme Court promulgated its opinion in

7 Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706, 77 L.Ed.2d

180 (1983). “[T]he failure to provide notice of delinquency to an owner or

mortgagee offends the Due Process Clause of the Fourteenth Amendment to the

U.S. Constitution and consequently, renders the tax sale an absolute nullity, such

that neither preemption nor prescription can save the sale.” Orleans Dist.

Redevelopment Corp. v. Ocwen Loan Servicing, L.L.C., 11-0260, pp. 11-12

(La.App. 4 Cir. 12/21/11), 83 So.3d 105, 112.

On the face of the tax sale deed in the instant case, the tax collector only

issued notice to Carmen Muniz. The tax sale deed provides: “I made and mailed to

the said Ms. Carmen G. Muniz by certified letter a notice in conformity with said

Laws of the State . . .” The facts established that Des Capital, LLC was also a

record owner based on its recorded tax sale deed and quitclaim deed, and that the

succession of Roy J. Gonzales, Winifred Gonzales Dolan, Althea Rodriguez

Maroney, and Michael J. Rodriguez were mortgage holders by virtue of a recorded

judgment dated August 5, 1997, which granted a judicial mortgage of record over

the property and a legally protected mortgage over the property. The City of New

Orleans and its tax collector are deemed to have knowledge of its publicly recorded

and legally protected interests in the property based on the recorded tax sale deed,

quitclaim deed, judgment, and the public records doctrine. The failure to provide

written pre-tax sale notice to Des Capital, LLC and to the lienholders of record is

apparent from the face of the tax sale deed and thus renders the 2002 tax sale and

CCPRA’s tax sale deed defective on its face and an absolute nullity.

CCPRA also lacks just title because three tax sales of the property took place

after it had purchased the property. The dates of these sales were November 26-

28, 2007, September 14, 2010, and September 25, 2012. Louisiana jurisprudence

8 does not allow a party to claim just title where it has not paid the taxes and the

property is sold at a tax sale. See Cole v. Martin, 343 So.2d 334, 336 (La.App. 2

Cir. 1977).

The law and facts establish that CCPRA lacked just title due to failure to

comply with pre-tax sale publication requirements, failure to provide pre-tax sale

notice to record owners and record lienholders, and because the property was sold

at a tax sale three times after CCPRA purchased the property at a tax sale. Any

one of the notice and publication defects is fatal to the tax sale deed and renders it

an absolute nullity. Therefore, under Louisiana law, an absolutely null deed cannot

serve as just title for acquisitive prescription. Willie v. Cox, 222 So.2d 85 (La.App.

3 Cir. 1969); see also La. C.C.P. art. 3483 Comment (c).

In its second and third assignments of error, CCPRA contends that the trial

court shifted the burden of proof to CCPRA to prove that the City of New Orleans

sent tax sale notices.

La. C.C.P. art. 966(D)(1) provides:

The burden of proof rests with the mover. Nevertheless, if the mover will not bear the burden of proof at trial on the issue that is before the court on the motion for summary judgment, the mover’s burden on the motion does not require him to negate all essential elements of the adverse party’s claim, action or defense, but rather to point out to the court the absence of factual support for one or more elements essential to the adverse party’s claim, action, or defense. The burden is on the adverse party to produce factual support sufficient to establish the existence of a genuine issue of material fact or that the mover is not entitled to judgment as a matter of law.

In the instant case, Rachal introduced: (1) a true and correct copy of the tax

sale deed issued to CCPRA, (2) a true and corrct copy of the recorded credit sale of

the property to Carmen Muniz, (3) a judgment recorded in the mortgage records

for Orleans Parish on August 5, 1997 in favor of the record lienholders granting

them a judicial mortgage over the property, (4) a true and correct copy of Des

9 Capital, LLC’s tax sale deed, (5) a true and correct copy of the recorded quitclaim

deed from Arizona Pacific LP to Des Capital, LLC, and (6) the tax sale deeds from

the three tax sales of the property (2007, 2010, and 2012) after CCPRA purchased

the property in 2002. In support of its position, Rachal also introduced the

affidavit of Walter O’Brien, Jr., who had served as the Finance Operations

Manager for the Bureau of Treasury for the City of New Orleans for more than

twenty years.

When the party moving for summary judgment has made a prima facie

showing that the motion should be granted, “the burden shifts to the adverse party

to present evidence demonstrating that material factual issues remain.” See Foster

v. Consolidated Employment Systems, Inc., 98-948, p. 5 (La.App. 5 Cir. 1/26/99),

726 So.2d 494, 495. “If the former owner ‘offers evidence sufficient to rebut the

presumption of regularity, it then becomes the duty of the tax purchaser to go

forward and prove that all requisites for a valid tax sale were complied with.’”

Smitko, 11-2566, p. 11, 94 So.3d at 758. Rachal introduced competent evidence to

establish facts sufficient to overcome the presumption of the validity of the tax sale

on several grounds, i.e., failure to provide pre-tax sale notice to a record owner,

failure to provide pre-tax sale notice to record lienholders, and failure to comply

with pre-tax sale publication. Therefore, the burden shifted to CCPRA to present

competent evidence establishing a genuine issue for trial, which it failed to do.

The district court’s application of the burden of proof on summary judgment was

correct.

In its final assignment of error, CCPRA complains that the district court

erred in its summary judgment analysis by finding that Derrick Muse’s affidavit

was insufficient to create a genuine issue of material fact. However, Mr. Muse

10 failed to set forth any specific facts to establish that the record owners and record

lienholders were provided pre-tax sale notice. Except for Carmen Muniz, Mr.

Muse did not identify any other record owner or the record lienholders by name.

He did not provide the addresses to which the notices were sent. He did not attest

to the dates that each record owner and record lienholder were provided notice, the

method of how notices were sent, or state where the records of the notices are

located. He merely stated that notices were sent to all parties “to the best of his

knowledge, information, and belief.” These are merely conclusory allegations on

the part of Mr. Muse.

“[A]ffidavits with conclusory allegations of fact which are devoid of specific

facts are not sufficient to defeat summary judgment.” Cheramie Services, Inc. v.

Shell Deepwater Production, Inc., 09-1633, p. 16 (La. 4/23/10), 35 So.2d 1053,

1062 (internal citations omitted); Surcouf v. Darling, 15-0278 (La.App. 4 Cir.

10/21/15), 177 So.3d 1085, 1093. Accordingly, the trial court correctly determined

that Mr. Muse’s affidavit was insufficient (and provided nothing specific to

contradict the affidavit of Mr. O’Brien) to establish a genuine issue of fact

regarding whether the record owners and record lienholders were provided pre-tax

notice.

CONCLUSION

For the above and foregoing reasons, we affirm the trial court’s granting of

summary judgments in favor of the defendants and the dismissal of the plaintiff’s

case.