Larto Lake, LLC v. Sit General Partner, LLC

STATE OF LOUISIANA
COURT OF APPEAL, THIRD CIRCUIT
19-228

LARTO LAKE, LLC

VERSUS

SIT GENERAL PARTNER, LLC, ET AL.

***********

APPEAL FROM THE
SEVENTH JUDICIAL DISTRICT COURT
PARISH OF CATAHOULA, NO. 28,971
HONORABLE JOHN C. REEVES, DISTRICT JUDGE

**********

JONATHAN W. PERRY
JUDGE

**********

Court composed of Shannon J. Gremillion, Candyce G. Perret, and Jonathan W.
Perry, Judges

AFFIRMED.

Michael E. Kramer
Attorney at Law
6658 Kinloch Street
Winnsboro, LA 71295
(318) 435-7525
Counsel for Defendant/Appellant:
SIT II, LLC

Jonathan T. Gaspard
The Gaspard Law Firm
P. O. Box 546
Marksville, LA 71351
(318) 240-7329
Counsel for Plaintiff/Appellee:
Larto Lake, LLC

Bradley Burget
Attorney at Law
P. O. Box 298
Jonesville, LA 71343
(318) 339-8526
Counsel for Plaintiff/Appellee:
Larto Lake, LLC

Ronald S. Bryant
Usry, Weeks & Matthews
1615 Poydras, Suite 1250
New Orleans, LA 70112
(504) 592-4600
Counsel for Defendant:
Catahoula Parish Sheriff Toney Edwards

PERRY, Judge.

SIT II, LLC (“SIT II”) appeals the trial court’s grant of summary judgment

in favor of Larto Lake, LLC (“Larto Lake”), ordering the annulment of a tax sale.

We affirm.

FACTS AND PROCEDURAL HISTORY

By cash deed dated May 15, 2010, Acalre Holdings, LP (“Acalre”) sold

certain immovable property in Catahoula Parish, Louisiana to Larto Lake. Listed

as the address for both Acalre and Larto Lake was 534 Wisteria Street, Bellaire, TX

77401. David Ferdman was listed as the managing partner for each company. After

receiving tax notices at the 534 Wisteria Street, Bellaire, TX 77401 address, Larto

Lake paid the property taxes for 2010 and 2011. However, the property taxes for

2012 were unpaid. The Tax Collector for Catahoula Parish (“Tax Collector”)

mailed a “Notice of Delinquent Taxes” to Larto Lake at 534 Wisteria Street,

Bellaire, TX 77401. This notice was returned bearing the United States Postal

Service mark “RETURN TO SENDER, UNCLAIMED, UNABLE TO

FORWARD” as of March 21, 2013, and a different address, 5202 Braeburn Drive,

Bellaire, TX 77401-4815, was handwritten on the front of the envelope. Without

further investigation, on May 8, 2013, the Tax Collector sold the immovable

property to SIT II at a tax sale.

The Tax Collector mailed notice of the tax sale to Larto Lake at the 5202

Braeburn Drive, Bellaire, TX 77401-4815 address as well as the 534 Wisteria

Street, Bellaire, TX 77401 address. The notices were returned marked “RETURN

TO SENDER, UNCLAIMED, UNABLE TO FORWARD.” In addition to the Tax

Collector’s notice, SIT II sent at least seven certified letters to Larto Lake at the 534

Wisteria Street, Bellaire, TX 77401 address, attempting to advise it of the tax sale.

All those letters were returned “unclaimed.”

On October 5, 2017, Larto Lake filed suit against SIT II, LLC1 seeking the

annulment of the tax sale and the recovery of title to the subject immovable

property. Larto Lake alleged that the required notices regarding delinquent property

taxes and the subsequent notice of tax sale were never received. SIT II contended

the notices forwarded to Larto Lake, despite being returned, constituted reasonable

notice under the circumstances sufficient to satisfy the notice requirements of

Louisiana law.

On August 22, 2018, Larto Lake moved for summary judgment, alleging

there was no dispute as to the material facts. SIT II filed an opposition to the motion

for summary judgment. After conducting a hearing, the trial court granted Larto

Lake’s motion for summary judgment.

SIT II now appeals the trial court judgment, contending the trial court erred

in finding that there was no dispute as to the material facts concerning the

sufficiency of service of the Notice of Tax Sale dated May 8, 2013, whereby SIT II

purchased property belonging to Larto Lake.

STANDARD OF REVIEW

A motion for summary judgment is a procedural device used when there is

no genuine issue of material fact for all or part of the relief prayed for by a litigant.

Duncan v. U.S.A.A. Ins. Co., 06-63 (La. 11/29/06), 950 So.2d 544. It is well

accepted that an appellate court reviews a motion for summary judgment de novo,

using the identical criteria that govern the trial court’s consideration of whether

summary judgment is appropriate, i.e., whether there is any genuine issue of

material fact and whether the movant is entitled to judgment as a matter of law.

1
Originally, Larto Lake sued SIT GENERAL PARTNER, LLC (“SIT GENERAL
PARTNER”). Later, after Larto Lake was met with a peremptory exception of no right of action,
it cured the improperly named defendant by substituting SIT II as the proper. SIT GENERAL
PARTNER then dismissed its peremptory exception, and the matter continued against SIT II.
2

Wright v. La Power & Light, 06-181 (La. 3/9/07), 951 So.2d 1058. A motion for

summary judgment is properly granted only if the pleadings, memoranda,

depositions, answers to interrogatories, and admissions on file, together with the

affidavits, if any, show there is no genuine issue of material fact, and the mover is

entitled to judgment as a matter of law.2 La.Code Civ.P. art. 966(A)(4). A fact is

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

success, or determines the outcome of the legal dispute. Hines v. Garrett, 04-0806

(La. 6/25/04), 876 So.2d 764. “A genuine issue is one as to which reasonable

persons could disagree; if reasonable persons could reach only one conclusion, there

is no need for a trial on that issue and summary judgment is appropriate.” Larson

v. XYZ Ins. Co., 16-745, pp. 6-7 (La. 5/3/17), 226 So.3d 412, 416.

The burden of proof remains with the mover to show that no material issues

of fact exist. La.Code Civ.P. art. 966(D). The mover must present supportive

evidence that the motion for summary judgment should be granted. Robicheaux v.

Adly, 00-1207 (La.App. 3 Cir. 1/31/01), 779 So.2d 1048. Once the mover has made

a prima facie showing that the motion for summary judgment should be granted,

the burden of proof shifts to the nonmoving party to present evidence demonstrating

the existence of issues of material fact which preclude summary judgment. Hayes

v. Autin, 96-87 (La.App. 3 Cir. 12/26/96), 685 So.2d 691, writ denied, 97-281 (La.

3/14/97), 690 So.2d 41.

2
In addition to the pleadings and supporting memoranda, the following were entered into
evidence at the hearing on the motion for summary judgment: (1) the cash sale from Aclare to
Larto Lake; (2) the annual reports of Larto Lake filed with the Louisiana Secretary of State from
2009-2016; (3) the certified copy of the tax sale to SIT II along with the newspaper
advertisements; (4) the deposition of and responses to interrogatories from Mr. Robert Swayze,
an employee of the Tax Collector; (5) the deposition of and responses to interrogatories from
Vernon Pettigrew, an officer of SIT II; (6) two affidavits, one from Jacque B. Pecheu, the
registered agent of Larto Lake in Louisiana, and David H. Ferdman, the owner of Larto Lake; (7)
the various notices sent by the Tax Collector and the returned mail; and (8) the various post-tax
sale letters sent by SIT II to Larto Lake and evidence of the failed attempts at delivery.
3

ON THE MERITS

SIT II contends that whether the notices of tax sale were mailed to Larto

Lake’s correct address is a material fact which is in dispute. Thus, it urges us to

find the trial court erred when it granted Larto Lake’s motion for summary

judgment.

This tax sale case comes to us on a grant of a motion for summary judgment

filed by the tax debtor; thus, the primary legal issue is whether the lower court

correctly found that summary judgment in favor of the tax debtor was warranted.

Because the trial court granted summary judgment in favor of the tax debtor,

accepting its claim that the tax sale was null and void because it was conducted

without affording due process of law to the record property owner, the law

governing tax sales underlies our review of the grant of summary judgment.

It is well-settled that, under the Fourteenth Amendment to the United States

Constitution and La.Const. art. 1, § 2,3 deprivation of property by adjudication must

be preceded by notice and opportunity to be heard appropriate to the nature of the

case. Mullane v. Cent. Hanover Bank & Trust Co., 339 U.S. 306, 70 S.Ct. 652

(1950); Tietjen v. City of Shreveport, 09-116 (La. 5/11/10), 36 So.3d 192. In

Mullane, 339 U.S. at 314, the Supreme Court established that “[a]n 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.” See also Tietjen, 36 So.3d at 195; Hamilton v. Royal Int’l

3
Louisiana Constitution Article 1, §2, provides that “No person shall be deprived of life,
liberty, or property, except by due process of law.”

4

Petroleum Corp., 05–846 (La. 2/22/06), 934 So.2d 25, cert. denied, 549 U.S. 1112,

127 S.Ct. 937 (2007).

In Mennonite Bd. of Missions v. Adams, 462 U.S. 791, 103 S.Ct. 2706 (1983),

the Supreme Court recognized that the sale of property for nonpayment of taxes is

an action affecting a property right protected by the Due Process Clause of the

Fourteenth Amendment. In Mennonite, the mortgagee of a property contested a tax

sale that occurred after the homeowner had failed to pay her property taxes. The

mortgagee was not provided notice of the homeowner/mortgagor’s delinquent

payment of the taxes or the subsequent tax sale. The Supreme Court held that “a

mortgagee possesses a substantial property interest that is significantly affected by

a tax sale” and, therefore, “is entitled to notice reasonably calculated to apprise him

of a pending tax sale.” Id. at 798. The Supreme Court stated: “Notice by mail or

other means as certain to ensure actual notice is a minimum constitutional

precondition to a proceeding which will adversely affect the liberty or property

interests of any party, whether unlettered or well versed in commercial practice, if

its name and address are reasonably ascertainable.” Id. at 800. Because the

mortgagee was not afforded its constitutional right to due process, the Supreme

Court reversed the decision that upheld the tax sale.

Article 7, Section 25(A) 4 of the Louisiana Constitution of 1974 requires the

tax collector to provide notice of the tax delinquency and the tax sale to all owners

of record of any interest in the property. Lewis v. Succession of Johnson, 05–1192

4
In pertinent part, La.Const. art. 7, § 25(A) states:

(A) Tax Sales. 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.

5

(La. 4/4/06), 925 So.2d 1172.5 In La.R.S. 47:2153,6 the legislature set forth the

manner by which notice of delinquencies in immovable property taxes must be

provided in compliance with La.Const. art. 7, § 25(A). Louisiana Revised Statutes

47:2153 provides in pertinent part:

(A)(1)(a) No later than the first Monday of February of each year,
or as soon thereafter as possible, the tax collector shall send a written
notice by certified mail, return receipt requested, to each tax notice
party when the tax debtor has not paid all the statutory impositions
which have been assessed on immovable property, notifying the person
that the statutory impositions on the immovable property shall be paid
within twenty days after the sending of the notice or as soon thereafter
before the tax sale is scheduled, or that tax sale title to the property will
be sold according to law. . . .

....

(C)(1) In the absence of actual notice of the sale to a tax sale
party, including a transferee, or the demonstration of a reasonable
effort to provide notice, where the name and address of the tax sale
party were reasonably ascertainable or where the transfer was recorded
after the tax sale collector completed his pre-sale tax sale party
research, the tax collector shall cancel the sale of the property and
refund the tax sale purchaser the tax sale purchase price.

Thus, under Louisiana law, as stated in Lewis, 925 So.2d at 1177:

5
As noted in Cent. Properties v. Fairway Gardenhomes, LLC, 16-1855 (La. 6/27/17), 225
So.3d 441, the Lewis decision was superseded, in part, by statute. In footnote 3 of Cent.
Properties, 225 So.3d at 447, the court stated:
[T]he legislature changed the law in 2008 with regard to the manner by which
notice of delinquencies in immovable property taxes must be provided in
compliance with La. Const. art. VII, § 25. [Smitko v. Gulf South Shrimp, Inc. 11-
2566 (La. 7/2/12), 94 So.3d 750], for example, analyzed the law prior to the 2008
amendment, namely former La. Rev. Stat. 47:2180. Under the former law, “in order
to give property owners reasonable notice so as not to deprive them of
constitutionally protected property rights, the tax collector [was] required to
provide ‘each taxpayer’ with written notice, sent by certified mail return receipt
requested, alerting each record owner of the immovable property that the owner’s
failure to pay the taxes within twenty days will result in the sale of the property.”
Smitko, pp. 10–11, 94 So.3d at 757 (quoting C & C Energy, 09–2160, p. 7, 41 So.3d
at 1139). Failure to provide this notice was deemed fatal to a tax sale. Id. (relying
on Lewis, 05–1192, pp. 8–9, 925 So.2d at 1177, and C & C Energy, 09–2160, pp.
6–7, 41 So.3d at 1139)).
6
The provisions relative to the payment and collection procedure and tax sales were
revised in 2008. As noted in the Comments-2008, to La.R.S. 47:2153, “This Section consolidates
and generally reproduces the substance of former R.S. 47:2180, 2180.1 and 2181 with certain
modifications.”
6

[I]n order to give property owners reasonable notice so as not to deprive
them of constitutionally protected property rights, the tax collector is
required to provide ‘each taxpayer’ with written notice, sent by certified
mail return receipt requested, alerting each record owner of the
immovable property that the owner’s failure to pay the taxes within
twenty days will result in the sale of the property.

It is well settled that the giving of notice of tax delinquency required by

La.Const. art. 7, § 25(A)(1) is mandatory and that failure to give this notice is

constitutional grounds for the annulment of a tax sale. Hamilton, 934 So.2d 25.

Whether a tax collector has properly notified a delinquent taxpayer of an impending

tax sale, a fundamental due process right, must be closely scrutinized by the courts

should the notice be challenged. Id. Due process requires that such notice must be

sent by mail or other means certain to ensure actual notice if the party’s name and

address are reasonably ascertainable. Vincson, Inc. v. Ingram, 01-655 (La.App. 1

Cir. 11/8/02), 835 So.2d 813.

Where the tax debtor’s correct address is known and used, certified mail with

return receipt requested is a reasonable method of notifying the tax debtor of the

impending tax sale. Id. at 815; Dennis v. Vanderwater, 498 So.2d 1097 (La.App. 3

Cir. 1986), writ denied, 501 So.2d 211 (La. 1987). However, where the mailing of

a tax notice is required, and a mailed notice is returned to the tax collector

undelivered or unclaimed, the tax collector must take additional reasonable steps to

notify the tax debtor of a delinquency. Lewis, 925 So.2d 1172; Childress v.

Johnson, 387 So.2d 1217 (La.App. 1 Cir.), writ refused, 393 So.2d 744 (La.1980).

As the court in Lewis explained, “[t]he requirement that the tax collector take

additional reasonable steps to notify a delinquent taxpayer is a long-standing

principle.” Lewis, 925 So.2d at 1178; see also Adsit v. Park, 144 La. 934, 940, 81

So. 430, 432 (1919) (finding that “when informed that the notice had not been

delivered to the tax debtor, the tax collector should have used some diligence to

7

make an effective service of notice; and that his failure in that respect was fatal to

the tax sale.”). To determine the reasonableness of the tax collector’s actions, the

methods of attempted notice must be examined. Advertisements of tax sales have

generally been held as insufficient to provide notice, except in the case of unknown

owners whose identities are not readily ascertainable. Lewis, 925 So.2d 1172.

Thus, notice of the tax delinquency by publication of an advertisement for an

upcoming tax sale, alone, does not pass constitutional muster if the owners of the

property can be identified or are easily discovered. Id.

In Lewis, the supreme court noted that “a simple search of the conveyance

records would have revealed the addresses of the co-owners” who did not receive

notice of the tax sale by mail. Id. at 1182. In Vincson, Inc., 835 So.2d 813, the

notice mailed by the sheriff was returned marked “FOE” (FORWARDING ORDER

EXPIRED). In that case, the court observed that as the delinquent taxpayer was a

corporation, required to file annual reports with the secretary of state, a “simple call

by the [s]heriff would have provided him with the correct address for notice and

was an additional reasonable step that should have been taken[.]” Id at 816.

In the present case, the Tax Collector was made aware that the address for

Larto Lake was incorrect when the notice was returned with the notation “RETURN

TO SENDER, UNCLAIMED, UNABLE TO FORWARD.”7 Larto Lake, as a

Texas limited liability company who had applied for authority to transact business

in Louisiana, was required to and did file annual reports with the Louisiana

Secretary of State. In those filings, not only is the principal office address of the

limited liability company shown, its registered office address in Louisiana and the

registered agent’s name and address in Louisiana are provided. This information

7
The returned notice also shows that someone, whether it was the postal authorities in
Texas or someone else, struck out the address and inscribed a replacement address of 5202
Braeburn Dr., Bellaire, TX 77401-4815.
8

was reasonably ascertainable by simply contacting the Louisiana Secretary of

State’s office. As such, the Tax Collector could not merely rely on publication as

a means of notice. He was required to take additional reasonable steps to ascertain

the correct address and notify Larto Lake to comply with the mandate of due

process.

When the current address of a limited liability company tax debtor is on file

with the Secretary of State, the tax debtor’s address is reasonably ascertainable.

Mere reliance on notification by publication, without taking additional reasonable

steps to locate the correct address and notify the tax debtor, constitutes ineffective

notice and violates the tax debtor’s right to due process. Vincson, 835 So.2d 813.

It is clear Larto Lake in its motion for summary judgment has established a defect

in the tax adjudication proceedings, namely a lack of notice. SIT II’s opposition

has failed to establish a genuine issue of material fact sufficient to defeat Larto

Lake’s motion for summary judgment. SIT II’s contention that Larto Lake failed

to establish that the address to which the tax notice was mailed was not the correct

address is belied by the postal notation on the returned mail, “RETURN TO

SENDER, UNCLAIMED, UNABLE TO FORWARD.” Therefore, we find the

trial court properly granted Larto Lake’s motion for summary judgment which

declared the tax sale null and void.

DISPOSITION

For the foregoing reasons, the judgment of the trial court is affirmed.

AFFIRMED.

9