Button v. Chumney et al
Filing
45
MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS MOTION FOR SUMMARY JUDGMENT DKT. NO. 27 . Court GRANTS Chesapeakes motion for summary judgment and DISMISSES this case in its entirety WITH PREJUDICE. Signed by District Judge Irene M. Keeley on 6/27/2014. (Copy counsel of record via CM/ECF)(jmm)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF WEST VIRGINIA
MARY LOU BUTTON,
Plaintiff,
v.
//
CIVIL ACTION NO. 1:13CV232
(Judge Keeley)
KEVIN L. CHUMNEY and JANET L.
CHUMNEY, husband and wife, and
CHESAPEAKE APPALACHIA, LLC,
Defendants.
MEMORANDUM OPINION AND ORDER GRANTING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 27]
Pending before the Court is the motion for summary judgment
(dkt.
no.
27),
filed
by
one
Appalachia, LLC (“Chesapeake”).
of
the
defendants,
Chesapeake
For the following reasons, the
Court GRANTS the motion.
I. BACKGROUND
This case concerns the 2008 tax foreclosure sale of the
mineral interest in and underlying 46.25 acres, lying and being
situated upon Kings Run Well in Clay District, Monongalia County,
West Virginia. The issue on summary judgment is whether the tax
sale purchaser, Kevin Chumney (“Chumney”), exercised reasonably
diligent efforts to provide notice to redeem in accordance with
West Virginia law and constitutional due process.
BUTTON V. CHUMNEY, ET AL.
1:13CV232
MEMORANDUM OPINION AND ORDER GRANTING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 27]
A.
Factual Background
R.W. Sine owned the real estate situated upon Kings Run Well
(including both the surface and mineral estates) prior to his death
in 1939.
By will, he devised a dower interest in the property to
his wife, Lou Kent Sine, who died in 1949.
She, in turn, devised
the entire interest to her daughter, Hazeltine S. Mills (“Mills”).
In 1981, Mills conveyed the surface estate and her mineral interest
lying above the Pittsburgh vein of coal to Consol Land Development
Company.
In the same instrument, Mills excepted and reserved all
of the mineral interest lying below the Pittsburgh seam of coal
(the “Subject Minerals”).
When Mills died in 1999, the Subject
Minerals passed by will to her daughter and the plaintiff in this
case, Mary Lou Button (“Button”).1
For nine years, Button failed to record the will in the
Monongalia County Circuit Court, and never paid the requisite
property
taxes.2
Accordingly,
the
Deputy
Commissioner
of
Delinquent and Nonentered Lands of Monongalia County, Darrell W.
Ringer (“Ringer”), sold the Subject Minerals at auction. On August
8, 2008, Chumney, an entrepreneurial real estate investor, placed
1
It appears from the record that Button resides in New Mexico.
(Dkt. No. 28 at 22-24).
2
As of 2009, the redemption amount totaled $680.15.
2
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the winning bid of one dollar.
On October 27, 2008, the West
Virginia State Auditor approved the transaction, which triggered a
statutory
45-day
period
for
Chumney
to
compile
a
list
of
individuals entitled to notice to redeem and submit it to Ringer.
See W. Va. Code § 11A-3-52(a)(1).
Through his search, Chumney determined that Mills was the
record owner of the Subject Minerals and that her address was
located in Triangle, Virginia.3
Accordingly, Ringer sent a notice
to redeem through certified mail to the Virginia address.
A week
later, unbeknownst to Chumney, the notice was returned to Ringer as
undeliverable.
Under § 11A-3-55, “[i]f the address of any person entitled to
notice . . . is unknown to the purchaser and cannot be discovered
by due diligence on the part of the purchaser, the notice shall be
served by publication.”
In accordance with the statute, Ringer
published the notice in a local newspaper once a week for three
successive weeks.
The delinquent taxes remained unredeemed, and
Ringer conveyed the Subject Minerals to Chumney by quitclaim deed
dated July 6, 2009.
Attached to the deed was the envelope of the
3
In fact, Mills had left Virginia in the 1970s to move to State
College, Pennsylvania, where she resided until her death.
3
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1:13CV232
MEMORANDUM OPINION AND ORDER GRANTING
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notice that had been returned to Ringer as undeliverable.
Chumney
recorded the quitclaim deed on July 24, 2009.4
On December 23, 2009, Chumney and his wife (collectively, the
“Chumneys”) conveyed five tracts of property to William and Diane
Gaston
(collectively,
the
“Gastons”),
Minerals, via a general warranty deed.
including
the
Subject
On March 31, 2010, as part
of a 17-tract transfer through a special warranty deed, the Gastons
conveyed
the
Subject
Minerals
to
Chesapeake
Appalachia,
LLC
(“Chesapeake”).
B.
Procedural Background
On July 5, 2012, Button sued the Chumneys, the Gastons, and
Chesapeake in Monongalia County Circuit Court.5
She eventually
filed an amended and second amended complaint, seeking to set aside
the tax deed and its successor deeds.
In addition, Button seeks
compensatory and punitive damages, as well as attorneys’ fees.
4
In August 2009, notwithstanding Chumney’s recorded tax deed,
Button leased the Subject Minerals to Novus Exploration, LLC for a
primary term of five years.
5
According to Button, prior to filing her complaint, pursuant to
§ 11A-4-3(b), she tendered to the defendants payment of the amount which
would have been required for redemption, together with any taxes which
had been paid on the property since delivery of the tax deed, with 12%
annual interest.
4
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1:13CV232
MEMORANDUM OPINION AND ORDER GRANTING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 27]
The second amended complaint asserts two counts.
In Count I,
Button alleges that “Chumney failed to exercise reasonably diligent
efforts to provide notice of [his] intention to acquire title to
the subject mineral interest.”
In Count Two, Button asserts a
cause of action under 42 U.S.C. § 1983 for the violation of her
Fourteenth Amendment due process right to fair notice preceding the
sale of her property.6
Moreover, she alleges that Chumney’s
conduct was “malicious, intentional, avaricious, reckless and/or
callously indifferent to [her] constitutionally and statutorily
protected rights.”
On October 3, 2013, the parties agreed to dismiss the Gastons
from the case.
In exchange, the Gastons assigned their claims
against the Chumneys to Chesapeake.
Chesapeake and the Chumneys
removed Button’s second amended complaint to this Court on October
15, 2013.
claim
On the same date, Chesapeake filed an answer and cross-
against
the
Chumneys,
asserting
6
the
Gastons’
right
to
The Court’s subject-matter jurisdiction is based on Count II of
Button’s
second
amended
complaint,
which
“aris[es]
under
the
Constitution, laws, or treaties of the United States.” 28 U.S.C. § 1331.
Moreover, this Court has previously asserted federal question
jurisdiction over an identical § 1983 claim. See Huggins v. Prof’l Land
Resources, LLC, No. 1:12CV46, 2013 WL 431770, at *4 (N.D.W. Va., Jan. 25,
2013) (citing Plemons v. Gale, 396 F.3d 569, 572 n.3 (4th Cir. 2005))
(holding that “lien purchasers required to perform a reasonably diligent
search by the State’s tax sale statutes act under color of state law”).
5
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MEMORANDUM OPINION AND ORDER GRANTING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 27]
contribution and indemnification, pursuant to the December 23, 2009
general warranty deed.
On April 14, 2014, Chesapeake filed a motion for summary
judgment, arguing that “Chumney exercised reasonable diligence in
searching the public records of Monongalia County to discover the
identity and whereabouts of Mills.”
On May 5, 2014, Button
responded that a reasonably diligent search would have led Chumney
to Mills’s State College, Pennsylvania address and, ultimately, to
Button.
II. STANDARD OF REVIEW
Summary
documents,
judgment
is
electronically
declarations,
stipulations
appropriate
stored
.
.
where
the
information,
.,
admissions,
“depositions,
affidavits
or
interrogatory
answers, or other materials” show that “there is no genuine dispute
as to any material fact and the movant is entitled to judgment as
a matter of law.”
Fed R. Civ. P. 56(a), (c)(1)(A).
When ruling on
a motion for summary judgment, the Court reviews all the evidence
“in the light most favorable” to the nonmoving party.
Providence
Square Assocs., L.L.C. v. G.D.F., Inc., 211 F.3d 846, 850 (4th Cir.
2000).
The Court must avoid weighing the evidence or determining
the truth and limit its inquiry solely to a determination of
6
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MEMORANDUM OPINION AND ORDER GRANTING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 27]
whether genuine issues of triable fact exist.
Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 249 (1986).
The moving party bears the initial burden of informing the
Court
of
the
basis
for
the
motion
and
nonexistence of genuine issues of fact.
477 U.S. 317, 323 (1986).
of
establishing
the
Celotex Corp. v. Catrett,
Once the moving party has made the
necessary showing, the nonmoving party “must set forth specific
facts showing that there is a genuine issue for trial.”
Anderson,
477 U.S. at 256 (internal quotation marks and citation omitted).
The “mere existence of a scintilla of evidence” favoring the
nonmoving party will not prevent the entry of summary judgment; the
evidence
must
be
such
that
a
rational
reasonably find for the nonmoving party.
trier
of
fact
could
Id. at 248–52.
III. DISCUSSION
The West Virginia legislature has provided a statutory scheme
that enables the state’s counties to foreclose on property for
which those obligated to pay taxes on the property have failed to
do so.
See § 11A-3-1, et seq.
Its purposes include, among others,
“to permit deputy commissioners of delinquent and nonentered lands
to sell such lands” and “to secure adequate notice to owners of
delinquent and nonentered property of the pending issuance of a tax
deed.”
§ 11A-3-1.
7
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MEMORANDUM OPINION AND ORDER GRANTING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 27]
Accordingly, when taxes are delinquent, and other statutory
means of selling the property have failed, the deputy commissioner
“may sell such lands . . . to any party willing to purchase such
property.”
§
11A-3-48.
Within
two
weeks
following
the
transaction, the deputy commissioner must report the sale to the
state auditor, whose approval is then required.
§ 11A-3-51.
If
the sale is approved, before receiving a deed to the property, the
purchaser, within 45 days of approval, must “[p]repare a list of
those to be served with notice to redeem and request the deputy
commissioner to prepare and serve the notice.”
§ 11A-3-52.
In serving the notice, the deputy commissioner is required to
provide the form notice set forth in § 11A-3-54 to non-resident
recipients by certified mail.
§ 11A-3-55.
However, “[i]f the
address of any person entitled to notice . . . is unknown to the
purchaser and cannot be discovered by due diligence on the part of
the purchaser, the notice shall be served by publication.”
Id.
Finally, “[i]f the real estate described in the notice is not
redeemed within the time specified therein, . . . the deputy
commissioner shall, upon the request of the purchaser, make and
deliver to the person entitled thereto a quitclaim deed for such
real estate.”
§ 11A-3-59.
8
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MEMORANDUM OPINION AND ORDER GRANTING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 27]
Those entitled to notice to redeem, but who were not properly
served with the requisite notice, may bring a civil action to set
aside a tax deed within three years of its delivery to the grantee.
§ 11A-4-4(a).
However,
[n]o title acquired pursuant to this article shall be set
aside in the absence of a showing by clear and convincing
evidence that the person who originally acquired such
title failed to exercise reasonably diligent efforts to
provide notice of his intention to acquire such title to
the complaining party or his predecessors in title.
§ 11A-4-4(b) (emphasis added).
Button, of course, is the “complaining party” in this case.
Importantly, she admits that she was “not reasonably ascertainable
as an owner of any interest in the Subject Minerals from the public
records pertaining to the Subject Minerals maintained by the
Monongalia
County
Clerk,
the
Monongalia
County
Sheriff’s
Tax
Office, or the Monongalia County Assessor’s Officer prior to July
6, 2009.”
(Dkt. No. 28-2 at 3).
Thus, no triable issue exists as
to whether Chumney’s efforts to notify Button were reasonably
diligent.
The statute, however, permits Button to satisfy her burden of
proving,
by
clear
and
convincing
evidence,
the
absence
of
reasonably diligent efforts vis-a-vis the complaining party or the
tax purchaser’s predecessors in title.
9
Chesapeake refutes this
BUTTON V. CHUMNEY, ET AL.
1:13CV232
MEMORANDUM OPINION AND ORDER GRANTING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 27]
straightforward interpretation and, in reliance on a footnote in
the decision of the West Virginia Supreme Court of Appeals in
Reynolds v. Hoke, 702 S.E.2d 629, 633 n.8 (W. Va. 2010) (per
curiam), urges the Court to eliminate “predecessors in title” from
its reading of the statute.
(Dkt. No. 38 at 3-4) (“[E]fforts aimed
at providing notice to the complaining party’s predecessor in
interest
are
language
irrelevant,
found
in
despite
Section
the
‘predecessors
11A-4-4(b).”).
in
title’
Chesapeake’s
interpretation of Reynolds is unpersuasive.
In Reynolds, Jerry Hoke purchased the subject real estate at
the Monroe County Sheriff’s tax sale in October 2006, and received
a
certificate
of
sale identifying
“BEVERLY HAYNES” as the taxpayers.
“REYNOLDS
Id. at 630.
BILL ET
UX”
and
Accordingly, Hoke
notified the Reynoldses and Haynes of their right to redeem.
Id.
He also searched the public records in the Monroe County Clerk’s
office
for
Reynolds.”
any
deed
Id. at 632.
transfers
indexed
under
the
name
“Bill
He did not, however, search for transfers
indexed under “Beverly Haynes.”
Id.
Finding no transfers, Hoke
did not notify any additional parties.
By not searching for transfers indexed under Haynes’s name,
Hoke failed to discover that the Reynoldses had passed away and
that Haynes subsequently had conveyed the property to Earl and Anna
10
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DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 27]
Reynolds by quitclaim deed dated February 2, 2006.
Id. at 631.
Earl and Anna Reynolds had recorded their deed with the Monroe
County Clerk on June 7, 2006 - four months prior to the tax sale.
Id.
In April 2008, the taxes remained delinquent, and the Monroe
County Commission conveyed the property to Hoke by tax deed.
Id.
Two months later, Earl and Anna Reynolds sued Hoke to set aside the
tax deed.
Id.
The Monroe County Circuit Court granted Hoke
summary judgment after determining that, under § 11A-4-4(b), Earl
and Anna Reynolds had failed to prove by clear and convincing
evidence that Hoke’s efforts at notification were not “reasonably
diligent.”
Id.
On appeal, the West Virginia Supreme Court of Appeals reversed
and remanded.
Id. at 634.
It reasoned that, based on the
certificate of sale, Hoke had notice that Haynes was a person
entitled to pay taxes on the property.
undertaking
reasonably
diligent
Id. at 632.
efforts
to
Thus, in
ascertain
those
individuals entitled to notice to redeem, Hoke should have searched
for transfers indexed under “Beverly Haynes.” Id. at 632-33. Such
a search would have uncovered the June 2006 deed conveying the
property to Earl and Anna Reynolds.
11
Id. at 633.
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MEMORANDUM OPINION AND ORDER GRANTING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 27]
Hoke argued that, because he had properly notified Earl and
Anna Reynolds’ “predecessors in title” under § 11A-4-4(b), he was
absolved from the responsibility of notifying the record owners.
Id. at 633 n.8.
The court dismissed Hoke’s argument as follows:
We find [Hoke’s] argument to be unavailing.
In the
instant case, the sheriff’s sale at which the appellee
acquired the tax lien to the subject property occurred on
October 24, 2006. Therefore, [Hoke] was required by W.
Va. Code § 11A-4-4(b), to provide notice to parties who
were of record at any time after October 31, 2007, and on
or before December 31, 2007.7 This certainly includes
[Earl and Anna Reynolds] who were of record as of June 7,
2006, which was several months prior to the sheriff’s
sale. Therefore, under our law, [Hoke] was required to
provide notice to [Earl and Anna Reynolds].
Id.
From this passage, Chesapeake infers that predecessors in
title
are
efforts
“irrelevant,”
Chumney
“inapposite.”
should
and
have
that
Button’s
undertaken
(Dkt. No. 38 at 3-4).
argument
to
notify
regarding
Mills
is
A fair reading of Reynolds
does not support such an inference, however.
Footnote 8 does
nothing more than explain that, as record owners of the property
during the relevant time period, Earl and Anna Reynolds were
entitled to notice, and Hoke could not skirt his obligation by
7
See § 11A-3-19(a); see also Syl. Pt. 1, Wells Fargo Bank, N.A. v.
UP Ventures II, LLC, 675 S.E.2d 883, 884 (W. Va. 2009).
12
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providing notice to predecessors in title in lieu of the record
owners.
Although the West Virginia Supreme Court of Appeals did not
elaborate further on this issue, Hoke’s argument was flawed in
another respect.
West Virginia’s legislature did not draft § 11A-
4-4(b) to provide notification options to a tax lien purchaser.
That is to say, Hoke incorrectly wielded the statute as a means of
satisfying his duties by notifying either Earl and Anna Reynolds or
their predecessors in title.
Rather, the statute’s functions all
relate to a plaintiff’s obligations in a suit to set aside a tax
deed based on insufficient notice.
First, § 11A-4-4(b) places the
burden of proof on the plaintiff. Second, it defines the burden as
“clear and convincing evidence.”
Third, it permits the plaintiff
to satisfy his or her burden of proof relative to either the
“complaining
party”
(i.e.,
himself
or
herself)
or
the
tax
purchaser’s “predecessors in title.”
Thus, the Court rejects Chesapeake’s assertion that § 11A-44(b) should be read as if the final five words had never been
written.
See Syl. Pt. 6, Davis Mem’l Hosp. v. West Virginia State
Tax Comm’r, 671 S.E.2d 682, 683 (“A cardinal rule of statutory
construction is that significance and effect must, if possible, be
given to every section, clause, word or part of the statute.”)
13
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DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 27]
(quoting Syl. Pt. 3, Meadows v. Wal-Mart Stores, Inc., 530 S.E.2d
676, 679 (W. Va. 1999)).
Instead, the Court will analyze whether
Button has satisfied her burden of demonstrating by clear and
convincing evidence that Chumney’s efforts to notify Mills, a
predecessor in title, were reasonably diligent.8
Although Button challenges Chumney’s notification efforts
under both West Virginia law and the Fourteenth Amendment, the
Court addresses her claims together as a single issue because “West
Virginia’s statutory notice requirements parallel the requirements
of the United States Constitution.”9
569, 572 (4th Cir. 2005).
Plemons v. Gale, 396 F.3d
For this reason, the Court draws on both
bodies of law to resolve the case sub judice.10
“An elementary and fundamental requirement of due process in
any
proceeding
which
is
to
be
accorded
finality
is
notice
8
Whether due process requires a tax sale purchaser to provide
notice to a decedent, or whether a decedent is legally capable of
receiving notice, are questions left for another day, as the matter
presently before the Court does not require their resolution.
9
In Plemons, the Fourth Circuit rejected the argument that notice
as required under West Virginia law is less exacting than the notice
requirements mandated by the Constitution. 396 F.3d at 572 n.2.
10
Of course, if West Virginia law demanded notice more exacting
than that required under the Constitution, then the body of case law
interpreting the Fourteenth Amendment’s due process clause would be
relevant only to Button’s § 1983 cause of action in Count II of her
second amended complaint.
14
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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.” Mullane v. Cent. Hanover
Bank & Trust Co., 339 U.S. 306, 314 (1950).
This test has long
been applied to determine whether notice passes constitutional
muster.
See, e.g., Jones v. Flowers, 547 U.S. 220, 226 (2006);
Plemons, 396 F.3d at 573.
In 1983, the Supreme Court honed its
standard by requiring the state to undertake “reasonably diligent
efforts” to ascertain the address of one entitled to notice.
See
Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 798 n.4 (1983).
To this end, West Virginia law requires tax lien purchasers,
through the deputy commissioner, to notify individuals of their
right to redeem the property before title is transferred.
And
efforts undertaken by the purchaser to identify these individuals
must be “reasonably diligent.”
performs his
or
her
duties
Whether a tax lien purchaser
in
a
reasonably
diligent
manner,
however, can be examined only “under all the circumstances” of a
given case.
See Mullane, 339 U.S. at 314.
In Citizens Nat’l Bank v. Dunnaway, 400 S.E.2d 888, 889 (W.
Va. 1990) (per curiam), Constance Persinger had owned land that was
indexed in
the
Putnam
County
records
for
tax
purposes
under
“Persinger.” After she married Troy Dunnaway, the couple executed
15
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a deed of trust on the property, naming Citizens National Bank as
the beneficiary and identifying “Troy E. Dunnaway and Constance L.
Dunnaway (formerly Constance L. Persinger)” as the grantors.
Id.
Although Citizens recorded the deed of trust, the Putnam County
Clerk indexed it only under “Dunnaway” and not “Persinger.”
Id.
After the Dunnaways failed to pay the property taxes, the
Putnam
County
Sheriff
delinquent property.
commenced
Id. at 890.
the
process
of
selling
the
In an effort to identify those
entitled to notice of the sale, the Sheriff searched for any deeds
indexed under “Persinger,” but did not search under “Dunnaway.”
Id.
Thus, he did not find Citizens’s deed of trust, and did not
send notice to the bank prior to selling the land at auction to the
State of West Virginia.
Id. 890-91.
The state subsequently sold
the land to the highest bidder, in favor of whom the Putnam County
deputy commissioner of forfeited and delinquent lands executed and
delivered a tax deed.
Id. at 891.
Citizens then sued to set aside the tax deed, arguing that it
had not received constitutionally required notice of the sale. Id.
The circuit court granted summary judgment to the defendants and
Citizens appealed.
“the
lack
of
Id.
personal
West Virginia’s highest court held that
notice
to
the
Bank
was
caused
by
an
improperly indexed deed of trust that could not be located by
16
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reasonably
diligent
efforts,
and,
therefore,
violation exists to vitiate the sale.”
no
due
process
Id. at 893.
A decade after Dunnaway, the West Virginia Supreme Court of
Appeals again addressed the issue of whether an organization with
a claim of interest in real property was entitled to due process
notification that the state was selling the property for delinquent
taxes.
See Mingo Cnty. Redev. Auth. v. Green, 534 S.E.2d 40, 49
(W. Va. 2000). In Green, the Mingo County Redevelopment Authority,
which had brought condemnation proceedings against the subject
property in November 1995, received a favorable judgment granting
it immediate possession in September 1997.
Id. at 42-43. In April
1997, while the condemnation proceedings remained pending, the
state deputy commissioner of delinquent and nonentered lands sold
the property at auction for delinquent taxes.
Id. at 43.
In
October 1997, the state auditor conveyed the property to the
grantee designated by the tax lien purchaser by a tax deed.
Id.
The Mingo County Redevelopment Authority then sued to have the tax
deed set aside.
Id.
After the Mingo County Circuit Court set aside the tax deed,
the state auditor appealed.
Supreme
Court
of
Appeals
Id. at 42.
explained,
“the
As the West Virginia
only
way
that
the
Redevelopment Authority may successfully challenge the conveyance
17
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of the deed to the new purchaser is to show that [it] should have
been on the list prepared pursuant to W. Va. Code § 11A-3-52,”
which requires a tax lien purchaser to “[p]repare a list of those
to be served with notice to redeem.”
Id. at 49.
Interestingly,
rather than focusing on the efforts undertaken by the purchaser or
the
state
to
notify
the
Redevelopment
Authority,
the
court
concentrated on the efforts of the Redevelopment Authority to place
the state auditor on notice of the condemnation proceedings.
Id.
It
the
observed
that,
“as
of
the
time
of
the
[tax]
sale,
Redevelopment Authority had not given constructive notice of its
standing by filing a lis pendens, nor had it served the Auditor or
Deputy Commissioner Sluss with the complaint in its condemnation
action.”
Id.
Moreover, although the Redevelopment Authority had
called the auditor’s office to notify it of the condemnation
proceedings, the court declined to find that a tax lien purchaser’s
reasonably diligent efforts included inquiry into phone calls to
the auditor’s office from a potential claimant.
Id.
Taken together, the Reynolds, Dunnaway, and Green decisions
provide useful guidance as to the efforts tax sale purchasers in
West
Virginia
function
of
must
undertake
notice.
For
to
perform
example,
their
Dunnaway
constitutional
explains
that
“extraordinary efforts [i.e., searching beyond publicly available
18
BUTTON V. CHUMNEY, ET AL.
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MEMORANDUM OPINION AND ORDER GRANTING
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records] are not constitutionally required.”
400 S.E.2d at 893.
And Green reminds us that the reasonableness of a tax purchaser’s
search often depends on the efforts of the complaining party to
place others on notice of his or her interest in the property.
534
S.E.2d at 49.
The facts of the instant case, however, are more neatly
couched between the decision of the Fourth Circuit in Plemons and
the decision of the West Virginia Supreme Court of Appeals in Wells
Fargo Bank, N.A. v. UP Ventures II, LLC, 675 S.E.2d 883 (W. Va.
2009).
In Plemons, the plaintiff purchased property located on
Echo Road in South Charleston, West Virginia and duly recorded the
deed.
396 F.3d at 571.
Because she did not pay the property
taxes, however, the Kanawha County Sheriff sold a tax lien on the
property to Advantage 99 TD in November 2000.
Id.
Unaware of the
tax sale, in 2001, the plaintiff moved to an address on Quarry
Pointe and rented the Echo Road property to tenants.
Id.
In order
to receive a tax deed, Advantage prepared a list of those entitled
to notice to redeem - which included the names of the plaintiff and
her tenants - and filed it with the Kanawha County Clerk.
Id.
The
clerk then sent notice by certified mail, return receipt requested,
to several Echo Road addresses and a Garden Street address, but not
to the Quarry Pointe address.
Id.
19
The notices were promptly
BUTTON V. CHUMNEY, ET AL.
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returned as undeliverable.
Id.
Nevertheless, in May 2002, the
Clerk issued a tax deed for the Echo Road property to Advantage,
which then conveyed it to Douglas Gale.
Id.
The plaintiff became
aware of the sale in January 2003, and sued to set aside the tax
deed.
Id.
The United States District Court for the Southern District of
West
Virginia
granted
the
plaintiff
summary
judgment
after
concluding that she had not received constitutionally adequate
notice.
Id. at 572.
It determined that, in response to the
undelivered notices, Advantage could have consulted the telephone
directory, asked the tenants at the Echo Road property, or inquired
with the mortgagee-bank in order to find the plaintiff’s address.
Id. at 577.
On appeal, the Fourth Circuit framed the issue as “what
efforts must be made by a party charged with giving notice of
irrevocable loss of property via a tax sale, when it is, or should
be, apparent from the initial mailings’ prompt return that they
have failed to provide any notice to the intended recipient.”
at 574.
The Fourth Circuit reasoned as follows:
[I]nitial reasonable efforts to mail notice to one
threatened with loss of property will normally satisfy
the requirements of due process. However, when prompt
return of an initial mailing makes clear that the
original effort at notice has failed, the party charged
20
Id.
BUTTON V. CHUMNEY, ET AL.
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with notice must make reasonable efforts to learn the
correct address before constructive notice will be deemed
sufficient. . . . Thus, the district court properly held
that the reasonable diligence standard mandated by
Mullane and its progeny required some followup effort
here.
Id. at 576.
Nonetheless, the Court of Appeals determined that the followup
efforts that the district court suggested Advantage could have
taken fell outside the scope of what is reasonably diligent.
at 577.
Id.
Instead, it concluded that “reasonable diligence required
Advantage to search all publicly available county records once the
prompt
return
of
the
mailings
made
clear
that
its
initial
examination of the title to the Echo Road property had not netted
Plemons’ correct address.”
Id. at 578. Because the record did not
reveal the efforts Advantage had taken in this regard, or whether
such a search would have uncovered Plemons’ proper address, the
Fourth Circuit
remanded
the
case
resolution of these questions.”
to the
district
court
“for
Id.
On remand, the district court found that Advantage made no
further efforts
to
locate
the
plaintiff
when
her
notice
was
returned as undeliverable; however, any additional efforts would
have proved futile because the plaintiff’s correct address was not
ascertainable from the public records.
21
Plemons v. Gale, 382 F.
BUTTON V. CHUMNEY, ET AL.
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MEMORANDUM OPINION AND ORDER GRANTING
DEFENDANT’S MOTION FOR SUMMARY JUDGMENT [DKT. NO. 27]
Supp. 2d 826, 828 (S.D.W. Va. 2005), aff’d by Plemons v. Gale, 161
Fed. App’x 334 (4th Cir. 2006) (per curiam).
Several years after Plemons, the West Virginia Supreme Court
of Appeals addressed a similar issue in Wells Fargo Bank, N.A. v.
UP Ventures II, LLC, 675 S.E.2d 883, 885-86 (W. Va. 2009).
There,
a bank that had recorded a mortgage lien on the subject property
after a tax purchaser had compiled the list of those entitled to
notice argued that Plemons required the tax purchaser to conduct
followup efforts to ascertain additional claimants.
The West
Virginia Supreme Court of Appeals rejected the bank’s argument, and
distinguished Plemons by pointing out that “the bank was not a
party of record at the time notice was required to be sent.”
Fargo, 675 S.E.2d at 887.
Wells
It determined that “Plemons does not
require a tax sale purchaser to conduct follow-up efforts, when the
proper parties are served, to identify those parties who are not of
record at the time the initial notices are required to be sent.”
Id.
Here, if the focus were on Button, who was not a party of
record, this case would fall directly in line with Wells Fargo.
But because the focus is on Mills, who was a party of record when
Chumney conducted his title abstract, the instant case and Wells
Fargo are not on all fours.
Plemons, likewise, is distinguishable
22
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from this case because, prior to the issuance of the tax deed,
Chumney lacked knowledge that the notice sent to Mills’s Virginia
address
had
been
returned
as
undeliverable.11
In
contrast,
“Advantage knew that [the plaintiff] had not received actual notice
of the pending tax sale.”
Plemons v. Gale, 298 F. Supp. 2d 380,
389 (S.D.W. Va. 2004), vacated and remanded by Plemons, 396 F.3d at
578.
Thus, because Chumney had no reason to follow up with his
research, the two-step inquiry set forth in Plemons does not apply.
Still, Button argues that, irrespective of any obligation
Chumney may have had to conduct followup research, he should have
reasonably ascertained Mills’s Pennsylvania address through his
original search.
In his responses to Button’s interrogatories,
Chumney explained that his title search consisted of speaking with
personnel at the Monongalia County Assessor’s Office and Tax
11
Button makes the novel argument that, given his experience in
delinquent property transactions, Chumney had a duty to inquire as to
whether the notice to Mills had been returned. The West Virginia Supreme
Court of Appeals has relied on the Black’s Law Dictionary definition of
“reasonable diligence,” which requires a “fair degree of diligence
expected from someone of ordinary prudence under circumstances like those
at issue.” Reynolds, 702 S.E.2d at 632 (emphasis added). The “ordinary
prudence” standard of reasonableness does not account for Chumney’s
individual experience or knowledge.
Moreover, even if Chumney had
learned that the notice had been returned, which he had not, he still
would have been in the same position as he was when he began his original
search, i.e., without knowledge of Button’s existence, let alone her
address.
Thus, the starting point under either scenario is what a
reasonably diligent search would have uncovered with respect to Mills.
23
BUTTON V. CHUMNEY, ET AL.
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Office; performing a computer search; checking the debtor/debtee,
grantor/grantee, and will indexes; and searching for records in the
Monongalia County Assessor’s Office.12
(Dkt. No. 28-8 at 1-2).
Despite these efforts, Chumney failed to find several leases and
deeds recorded with the Monongalia County Clerk in the 1980s, which
contained Mills’s Pennsylvania address and social security number.
Chesapeake does not dispute that Chumney should have found
Mills’s Pennsylvania address.
However, it argues that notice sent
to the State College, Pennsylvania address would have yielded an
outcome identical in result to the notice sent to the Triangle,
Virginia address.
Namely, the notice would have been returned to
Ringer as undeliverable without Chumney’s knowledge.
Ringer then
would have published notice in the local newspaper to the same
effect, the property taxes would have remained unredeemed, and a
tax deed would have been issued to Chumney.
Chesapeake’s expert,
J. Thomas Lane, confirms that, “if Mr. Chumney had provided the
last known State College, Pennsylvania address for Hazeltine Mills
to Mr. Ringer for use with the certified mailing, the return
receipt would have been returned to Mr. Ringer as undeliverable in
12
At his deposition, Chumney testified that he learned of Mills’s
Virginia address through “the lady in the map office.” (Dkt. No. 36-1
at 16).
24
BUTTON V. CHUMNEY, ET AL.
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MEMORANDUM OPINION AND ORDER GRANTING
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the same manner as the original mailing to the Triangle, Virginia
address was returned.”
(Dkt. No. 28-10 at 1-2).
Button counters that a previous mailing to the Pennsylvania
address had been returned to the tax office with the notation
“deceased.”
She half-heartedly speculates that a notice to redeem
sent to the Pennsylvania address likewise would have been returned
with the same notation.
Even if that were the case, however,
nothing suggests that Ringer would have notified Chumney of the
returned mailing simply because it was marked “deceased,” rather
than
“undeliverable.”
As
noted
earlier,
Chumney’s
lack
of
knowledge in this regard exempts him from the duty to perform
followup efforts.
With regard to the envelope marked “deceased,” Button argues
that, had Chumney inquired further, the tax office would have
produced
it.
(“Shuman”),
However,
performed
his
Button’s
own
own
search
expert,
and
Robert
testified
Shuman
at
his
deposition that he was unable to find anything indicating that
Mills had died.
(Dkt. No. 28-11 at 8-9).
Moreover, Sheriff
Kenneth Kisner of Monongalia County, who oversees the tax office,
swore under oath that returned envelopes “are not made generally
available to the public in the Tax Office and are not publicly
recorded.”
(Dkt. No. 28-12 at 2).
25
Further, the envelope had been
BUTTON V. CHUMNEY, ET AL.
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stored in a warehouse since 2007 - well before Chumney performed
his search.
Id. at 3.
Finally, Button offers two avenues by which Chumney might have
discovered her identity as the titleholder. First, she argues that
Chumney should have inquired with the county in which Mills’s State
College, Pennsylvania address was located in order to identify any
wills indexed under Mills’s name.
According to Button, such
inquiry would have revealed her status as Mills’s heir.
However,
searching the records of counties other than the one in which the
property is located, and especially counties outside the state
where the property is located, exceeds the bounds of reasonable
diligence. Even Shuman concurs that “[i]t wouldn’t make much sense
to [search] outside the county.”
Plemons,
396
F.3d
Advantage
to
search
at
578
all
(Dkt. No. 28-11 at 4); see also
(“[R]easonable
publicly
available
diligence
county
required
records.”)
(emphasis added).13
Second,
Shuman
opines
in
his
deposition
testimony
that
reasonable diligence required Chumney to search Mills’s social
13
Indeed, within her own brief, Button states that “under West
Virginia law, tax sale purchasers are required to conduct a reasonably
diligent search of public records in the county in which the delinquent
property is located . . . .” (Dkt. No. 36 at 5) (emphasis added).
26
BUTTON V. CHUMNEY, ET AL.
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security number on the Internet.14
(Dkt. No. 28-11 at 4-5, 8-9).
According to Shuman, “Googling” the social security number, or
entering it into the Social Security Death Index, turns up Mills’s
date of death.
Id.
Besides lacking a basis in law, Shuman’s
opinion places a burden on tax sale purchasers to scrub Internet
search engines and databases to find any available information that
could then be used to locate the titleholder of the delinquent
property.
Such an extension of “reasonableness” inevitably would lead to
judicial line-drawing between search engines and databases that are
reasonable and those that are not.
Given the vast resources
available on the Internet, courts would be unable to define a
useful standard in this regard.
Additionally, courts would face
the impossible task of determining whether information currently
available was similarly available at the time of the tax sale
purchaser’s search.
For these reasons, the Court rejects the
proposition that reasonable diligence required Chumney to find and
utilize information available solely on the Internet.
Cf. Jones,
547 U.S. at 235-36 (“Jones believes that the Commissioner should
14
Notwithstanding Shuman’s testimony in this regard, Button
expressly abandons this line of argument in her brief. (Dkt. No. 36 at
8) (stating that the reasonableness of Internet searches “does not need
to be examined for the purposes of this motion”).
27
BUTTON V. CHUMNEY, ET AL.
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have searched for his new address in the Little Rock phonebook and
other government records such as income tax rolls.
We do not
believe the government was required to go this far.”); Mullane, 339
U.S. at 317-18 (“[I]mpracticable and extended searches are not
required in the name of due process.”).
IV. CONCLUSION
Under the circumstances of this case, Button has failed to
demonstrate by clear and convincing evidence that Chumney did not
exercise
reasonably
diligent
efforts
to
notify
the
deceased
predecessor in title of his intent to acquire the Subject Minerals
through
a
tax
ascertainable
deed.
as
the
It
is
undisputed
titleholder
records in Monongalia County.
from
that
the
Button
publicly
was
not
available
Moreover, contrary to Button’s
urging, notice sent to Mills’s Pennsylvania address only to be
returned to the deputy commissioner fails to cure any potential due
process concerns.
argues Chumney
Finally, the additional efforts that Button
should
have taken
fall outside
the
bounds
of
reasonableness.
For these reasons, both counts of Button’s second amended
complaint, as well as Chesapeake’s cross-claim, fail as a matter of
28
BUTTON V. CHUMNEY, ET AL.
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MEMORANDUM OPINION AND ORDER GRANTING
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law.
Therefore, the Court GRANTS Chesapeake’s motion for summary
judgment and DISMISSES this case in its entirety WITH PREJUDICE.
It is so ORDERED.
The Court directs the Clerk to enter a separate judgment
order, to remove this case from the Court’s active docket, and to
transmit a copy of this Memorandum Opinion and Order to counsel of
record.
DATED: June 27, 2014.
/s/ Irene M. Keeley
IRENE M. KEELEY
UNITED STATES DISTRICT JUDGE
29
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