Preview:

Supreme Court
No. 2003-635-Appeal.
(PC 03-2062)
Sycamore Properties, LLC                                                                    :
v.                                                                                          :
Tabriz Realty, LLC et al.                                                                   :
Present:  Williams, C.J., Goldberg, Flaherty, and Suttell, JJ.
O P I N I O N
PER CURIAM.   This case came before the Supreme Court on September 28,
2004, pursuant to an order directing the parties to appear and show cause why the issues
raised in this appeal should not summarily be decided.    After hearing arguments of
counsel and reviewing the memoranda submitted by the parties, we are satisfied that
cause has not been shown.  Accordingly, we shall decide the appeal at this time.
The plaintiff, Sycamore Properties, LLC (Sycamore or plaintiff), appeals from a
summary judgment granted in favor of the defendants, Tabriz Realty, LLC  (Tabriz),
Albert R. Beaupalant (Beaupalant), and Benedict S. Gambino (Gambino or, collectively,
defendants) in an action to remove and vacate a default judgment foreclosing plaintiff’s
right of redemption for property at 77-79 Sycamore Street, Providence.   For the reasons
set forth herein, we vacate the judgment of the Superior Court.
In October 2000, Grant Dahlgreen (Dahlgreen), purchased the property identified
as  77-79 Sycamore Street, Providence.    After Dahlgreen failed to make timely tax
payments on the property, the tax collector for the City of Providence sent him notice of
an impending tax sale, scheduled for August 28, 2001.   However, the notice erroneously
1




was sent to  189 Wickenden Street, Providence.    At all relevant times, Dahlgreen’s
personal  address  was  either                                                               5  Bay  View  Avenue,  Kingston,  Massachusetts,  or  29
Mayflower Street, Plymouth, Massachusetts.  On August 27, 2001, the day before the tax
sale, Dahlgreen conveyed the subject property to Sycamore, a corporation formed by
Dahlgreen,  by  quitclaim  deed  listing  Sycamore’s  address  as                            29  Mayflower  Street,
Plymouth, Massachusetts.   At the tax sale on August 28, 2001, John Shekarchi purchased
77-79 Sycamore Street, Providence, on behalf of defendant Tabriz.
In  January                                                                                  2003,  Tabriz  filed  a  petition  to  foreclose  plaintiff’s  right  of
redemption, sending notice to plaintiff at 19 Mayflower Street, Plymouth, Massachusetts,
and to plaintiff’s registered agent for service of process, Leonard Accardo, Jr., Esq.
(Accardo), 311 Angell Street, Providence.  No one disputes that notice to Sycamore at the
Plymouth, Massachusetts, address was ineffective because the mailing was returned to
sender; nor is it disputed that the notice sent to Accardo was proper.   In his affidavit,
Dahlgreen stated that when Accardo informed him of the petition to foreclose his right of
redemption, he mistakenly believed that it pertained to unpaid taxes.   Consequently,
Sycamore neither answered the petition nor appeared at the foreclosure hearing; the
hearing justice entered default judgment in favor of Tabriz.1    Sycamore’s motion to
vacate the judgment, pursuant to Rule  60(b) of  the  Superior  Court  Rules  of  Civil
Procedure, was denied.
On April 23, 2003, plaintiff filed an independent action seeking to vacate the
default judgment.   At the hearing held on July 9, 2003, plaintiff argued that G.L. 1956
1 During the course of this controversy, Tabriz transferred the subject property to Cobble
Hill Development, LLC, and Johnston Corporation Profit Plan and Trust, which entities
in turn sold the property to defendant Beaupalant, with financing provided by defendant
Gambino.
2




§ 44-9-24, as amended by P.L. 2002, ch. 140, § 1,2 provides taxpayers with a second
chance to redeem property sold at an invalid tax sale.   The crux of plaintiff’s argument
was that, notwithstanding the language of § 44-9-313 requiring that any challenge to the
validity of a tax sale be raised in the foreclosure proceeding, his ability to contest the tax
sale should not be lost.   The hearing justice granted summary judgment to defendants,
agreeing with their position that plaintiff’s argument did not fall within the rubric of
§ 44-9-24 and, therefore, was barred by § 44-9-31.
2 General Laws 1956 § 44-9-24, as amended by P.L. 2002, ch. 140, §1, provides:
“Title absolute after foreclosure of redemption - Jurisdiction
of proceedings. * * * - The title conveyed by a tax collector’s deed shall
be absolute after foreclosure of the right of redemption by decree of the
[S]uperior [C]ourt as provided in this chapter.   Notwithstanding the rules
of civil procedure or the provisions of chapter 21 of title 9, no decree shall
be vacated except in a separate action instituted within one year following
entry of the decree and in no event for any reason, later than one year
following the entry of decree.  Furthermore, the action to vacate shall only
be instituted for inadequacy of notice amounting to a denial of due process
or  for  the  invalidity  of  tax  sale.    The                                                  [S]uperior   [C]ourt  shall  have
exclusive jurisdiction of the foreclosure of all rights of redemption from
titles conveyed by a tax collector’s deed, and the foreclosure proceedings
shall  follow  the  course  of  equity  in  a  proceeding  provided  for  in
§§ 44-9-25 - 44-9-33.”   (Emphasis added.)
3 Section 44-9-31 provides, in pertinent part:
“Contest of validity of tax title. - If a person claiming an interest
desires to raise any question concerning the validity of a tax title, the
person shall do so by answer filed in the proceeding on or before the
return day, or within that further time as may on motion be allowed by the
court, or else be forever barred from contesting or raising the question in
any other proceeding.   He or she shall also file specifications setting forth
the matters upon which he or she relies to defeat the title; and unless the
specifications are filed, all questions of the validity or invalidity of the title
* * * shall be deemed to have been waived.”
3




The plaintiff filed a timely appeal, reasserting that § 44-9-24 affords a taxpayer
one year, after the decree foreclosing the right of redemption has been entered, to
challenge the validity of the tax sale without regard to the taxpayer’s failure to raise the
challenge by way of an “answer filed in the proceeding on or before the return day.”4
The plaintiff argues that “a separate action instituted within one year following entry of
the decree”5 is anticipated in cases in which the taxpayer does not receive notice of the
tax sale.  The plaintiff argued to this Court that the amendment to § 44-9-24 operates as a
“safety valve” for taxpayers who have lost their right of redemption because of an invalid
tax sale, notwithstanding noncompliance with § 44-9-31.  We agree with this argument.
On several previous occasions, when faced with a petition to foreclose the right of
redemption to property sold at tax sale, we have held that failure to comply with the
provisions of § 44-9-31 by filing an answer “on or before the return day” bars a taxpayer
from contesting title or otherwise challenging the validity of the tax sale.   Karayiannis v.
Ibobokiwe, 839 A.2d 492, 495 (R.I. 2003); Smith v. City of Providence, 828 A.2d 536,
538  (R.I.  2003)  (mem.); Norwest Mortgage, Inc. v. Masse,  799 A.2d  259,  263  (R.I.
2002); Albertson v. Leca, 447 A.2d 383, 385-86 (R.I. 1982).   The defendants argue that
Sycamore’s failure to file an answer to the foreclosure petition, having been duly given
notice of the petition, is fatal to its claim.   However, the law applicable to plaintiff’s
action is not the law that governed our previous cases.
As noted,  § 44-9-24 was amended by the Legislature, to allow taxpayers to
institute an action to vacate a decree of foreclosure for “inadequacy of notice amounting
4 See note 3, supra.
5 See note 2, supra.
4




to a denial of due process or for the invalidity of tax sale,”6 and this amendment was in
effect at the time the foreclosure decree was entered, on March 6, 2003.7   This case is the
first to reach us under the recent amendment(s)8 and requires this Court to determine the
grounds upon which a final decree of foreclosure may be vacated.   We are satisfied that
the result in this case is governed by the amendment to § 44-9-24, which specifically
provides for a “safety valve” for taxpayers, anticipating “an action to vacate” a final
decree, based on a finding of “inadequacy of notice amounting to a denial of due process
or for the invalidity of tax sale.”
This Court reviews questions of statutory interpretation de novo.   Webster v.
Perrotta,                                                                                       774  A.2d  68,                          75  (R.I.   2001)   (citing  Rhode  Island  Depositors  Economic
Protection Corp. v. Bowen Court Associates, 763 A.2d 1005, 1007 (R.I. 2001)).                   “In
matters of statutory interpretation our ultimate goal is to give effect to the purpose of the
act as intended by the Legislature.”   Id. (citing Matter of Falstaff Brewing Corp. Re:
Narragansett Brewery Fire, 637 A.2d 1047, 1050 (R.I. 1994)).   When confronted with
statutory  provisions  that  are  unclear  or  ambiguous,                                       “this  Court,  as  final  arbiter  on
questions of statutory construction, * * * examines statutory provisions in their entirety,”
and will “glean the intent and purpose of the Legislature ‘from a consideration of the
6 See note 2, supra.
7 A taxpayer’s right of redemption and a tax sale purchaser’s rights stemming from the
tax sale are governed by the law in force on the date of the tax sale.   Town of Jamestown
v. Pennsylvania Company for Banking and Trusts, 101 R.I. 274, 279, 221 A.2d 821, 823
(1966).   The right to institute an independent action under § 44-9-24 is triggered by the
entry of a foreclosure decree and, therefore, we hold that the law in force on the date the
decree is entered governs such actions.
8 Section 44-9-24 was again amended by P.L. 2003, ch. 262, §1, with an effective date of
January 6, 2004.   The only change to the statutory language was the addition of the word
“the” in the phrase “for inadequacy of notice amounting to a denial of due process or for
the invalidity of the tax sale.”                                                                (Emphasis added.)
5




entire statute, keeping in mind [the] nature, object, language and arrangement’ of the
provisions to be construed.”   In re Advisory to the Governor, 668 A.2d 1246, 1248 (R.I.
1996) (quoting Algiere v. Fox, 122 R.I. 55, 58, 404 A.2d 72, 74 (1979)).
At issue are the grounds on which an aggrieved taxpayer can base a motion to
vacate a decree foreclosing his or her right of redemption.   The defendants assert that the
language requiring the “inadequacy of notice amounting to a denial of due process” refers
to notice of the foreclosure petition and not to notice of the tax sale.   However, because
the amendment also provides that “a separate action” may be instituted “for the invalidity
of the tax sale,” which can be based on lack of notice, we deem the statute to be
ambiguous.
We begin with the premise that when the General Assembly enacts or amends
legislation, it is presumed to know the state of the law.   Shelter Harbor Fire District v.
Vacca, 835 A.2d 446, 449 (R.I. 2003) (citing Simeone v. Charron, 762 A.2d 442, 446
(R.I. 2000)).   Here, the Legislature specifically provided for two independent grounds for
challenging the validity of a foreclosure decree:   inadequacy of notice amounting to a
denial of due process or an invalid tax sale.   We note that the inadequacy of notice
provision is neither defined nor strictly limited to the foreclosure proceeding, and we
decline to construe it as limited to petitions to foreclose the right of redemption.   We will
not attribute such a meaning to the statutory language, particularly when the second basis
for challenge explicitly refers to an invalid tax sale.   We consistently have held that a tax
sale based on inadequate notice may be declared invalid, and the failure to give notice
can certainly amount to a denial of due process.   See Robert P. Quinn Trust v. Ruiz, 723
6




A.2d 1127, 1129 (R.I. 1999) (holding insufficient notice of tax sale to an interested party
renders sale invalid as to all parties).
In the context of the statutory scheme governing tax sales, the phrase “inadequacy
of notice,” without more, is susceptible to three interpretations:   inadequacy of notice of
the tax sale; inadequate notice of the foreclosure petition; or both.   It is well settled that
ambiguities in revenue statutes are resolved in favor of the taxpayer.   Weybosset Hill
Investments, LLC v. Rossi, 857 A.2d 231, 239 (R.I. 2004) (quoting deZahara v. Weiss,
516 A.2d  879,  880  (R.I.  1986)  (“As with all revenue statutes, any doubt about the
meaning or scope  [of the enactment] must be resolved in favor of the taxpayer and
against the taxing authority.”).   In performing this function governed by this well-settled
doctrine, we conclude that § 44-9-24 affords a taxpayer the right to institute a separate
action, within one year from the decree foreclosing his or her right of redemption,
seeking to vacate the decree by demonstrating inadequacy of notice of the tax sale or the
foreclosure proceedings, which amounts to a denial of due process, or invalidity of the
tax sale on other grounds.
In this case, it is undisputed that plaintiff did not receive notice of the tax sale and
was  thereby  deprived  of  a  property  right  without  any  pre-deprivation  procedural
safeguards.   Although properly instituted foreclosure proceedings provide a mechanism
for taxpayers to reclaim property sold at such a tax sale, these proceedings are costly and
can result in expenditures that, but for the inadequacy of the notice, would not be
necessary.   Consequently, the failure to adequately notify a taxpayer that a tax sale is
pending before fees and interest are imposed, amounts to a denial of due process.
7




For the reasons set forth herein, the judgment is reversed and the record is
remanded to the Superior Court with directions to enter judgment for the plaintiff.
Justice Robinson did not participate.
8




COVER SHEET
TITLE OF CASE:   Sycamore Properties, LLC vs. Tabriz Realty, LLC et al.
DOCKET SHEET NO :                                                         2003-635-Appeal
COURT:                                                                    Supreme
DATE OPINION FILED:   March 8, 2005
Appeal from
SOURCE OF APPEAL:    Superior                                             County:  Providence
PC2003-2062
JUDGE FROM OTHER COURT:      Judge Stephen J. Fortunato
JUSTICES:                                                                 Williams, CJ., Goldberg, Flaherty, and Suttell, JJ.
Not Participating -  J. Robinson
Concurring-
Dissent-
WRITTEN BY:                                                               Per Curiam
ATTORNEYS:
For Plaintiff :  Armando E. Batastini III, Esq.
ATTORNEYS:
For Defendant:  Patrick T. Conley, Esq.
9

Download 03-635.pdf

Rhode Island Law