ECLECTIC INVESTMENT PARTNERS, LP v. CITY OF NEW ORLEANS

TERRI F. LOVE, Judge.

This appeal arises from the trial court's denial of a writ of mandamus requested by plaintiff. Plaintiff purchased subject property at a tax sale. Once purchased, plaintiff discovered that additional taxes were owed. Plaintiff sought a mandamus to clear the tax debts owed on the subject property that were allegedly prescribed. The trial court found that the taxes remained due and owing and denied the petition for a writ of mandamus.

We find that the matter is indistinguishable from and controlled by this Court's previous jurisprudence. As such, the trial court correctly denied plaintiffs request for a writ of mandamus. The judgment of the trial court is affirmed.

FACTUAL BACKGROUND AND PROCEDURAL HISTORY

On April 12, 2016, Eclectic Investment Partners, LP ("Eclectic") purchased property located at 4012-14 General Ogden Street in New Orleans via a tax sale. The property was previously owned by Altlia Shelton Nora and Anna Mae Gillan Nora and was subject to the tax sale for non-payment of taxes for the years 2013-2015 and for a 2015 code enforcement lien.1

On May 5, 2016, the City, through its ex-officio tax collector, Norman White, executed a tax sale certificate to Eclectic, which was registered on May 27, 2016, in the Orleans Parish mortgage records. Pursuant to La. R.S. 47:2157(D), Eclectic filed an affidavit in the mortgage record, indicating that written notice was sent to the Noras at their last known addresses. The affidavit further indicated that, pursuant to La. R.S. 47:2157(E), certain interests in the property were canceled.

Following the tax sale, Eclectic filed a Verified Petition for Writ of Mandamus against the City and Mr. White contending that the City issued Eclectic a tax bill, which erroneously included taxes assessed to the Noras prior to the filing of the tax certificate. Eclectic asserted that Mr. White "refused to perform his ministerial duty to correct the tax bill by removing the taxes for 2008 film 2012 from the tax bill, despite repeated request[s]" from Eclectic.

The trial court denied Eclectic's Verified Petition and designated the judgment as final and appealable. Eclectic's devolutive appeal followed.

WRIT OF MANDAMUS

On appeal, Eclectic contends that the trial court erred by denying its request for a writ of mandamus because the 2008-2012 ad valorem taxes as well as 2009 and 2013 code enforcement liens were no longer due.

This Court previously enumerated the law on mandamus as follows:

Constr. Diva, L.L.C. v. New Orleans Aviation Bd., 16-0566, pp. 12-14 (La. App. 4 Cir. 12/14/16), 206 So.3d 1029, 1037.

La. R.S. 47:2134(A) states:

Further, La. R. S. 47:2157 provides, in pertinent part:

We find our interpretation of the above statutes and the present matter is controlled by Harrier Enterprises, LLC v. Imbornone, 19-0613, p. 4 (La.App. 4 Cir. 1/29/20), ___ So. 3d ___, ___, 2020 WL 486804, *2, wherein this Court found that "the legislature did not intend for Title 47 to authorize the courts to cancel property taxes." We further held that "the purpose of the provision allowing for the cancellation of statutory impositions by affidavit was to eliminate only those prior encumbrances that were actually satisfied through the proceeds of the tax sale." Id., 19-0613, p. 6, ___ So. 3d at ___, 2020 WL 486804, *4. Accordingly, as in Harrier, the 2008-2012 ad valorem taxes and the 2009 and 2013 code enforcement liens were neither included in, nor satisfied by the price of the property at the tax sale. Therefore, we find that the trial court did not abuse its discretion by denying Eclectic's Verified Petition for Writ of Mandamus. The judgment of the trial court is affirmed.

DECREE

For the above-mentioned reasons, we find that the ad valorem taxes on the property from 2008-2012, as well as the 2009 and 2013 code enforcement liens remain unsatisfied. As such, the trial court did not err in denying Eclectic's Verified Petition for Writ of Mandamus and the trial court's judgment is affirmed.

AFFIRMED.

DYSART, J., DISSENTS.

I recognize that this Court's recent decision of Harrier Enterprises, LLC v. Imbornone, 19-0613 (La. App. 4 Cir. 1/29/20), 2020 WL 486804, ___ So.3d ___ addressed the very issues raised in this appeal and, in fact, is the first reported decision to address those issues. In my view, however, the Harrier decision, and the majority in the instant matter, have applied the tax sale statutes in a manner inconsistent with the underlying intent of these laws. While ordinarily the law of a circuit is binding on that circuit, this Court has authority to refer this case to an en banc panel to review the propriety of the Harrier decision, and determine whether it should be overruled. Uniform Rules for the Courts of Appeal, Rule 1-5, provides that, "[w]hen authorized by law, or when the court deems it necessary to promote justice ..., the court may sit in panels of more than 3 judges or en banc." See also, State v. Wright, 483 So.2d 1104, 1105 (La. App. 4 Cir. 1986)("this court's internal rule ... prohibits handing down a decision that would be inconsistent with a prior decision, and requires that it first be referred to the court en banc to decide whether the panel may overrule or must follow the earlier decision); Bridgett v. Odeco, Inc., 93-1536, p.8 (La. App. 4 Cir. 12/15/94), 646 So.2d 1249, 1254 ("[i]n accordance with the internal rules of this court, this proposal to overrule a prior decision of this court was submitted to each member of the court); State v. Dean, 588 So.2d 708, 709, al (La. Ct. App. 1991)(rehearing granted "in accordance with the internal rules of the court this opinion which overrules a previous opinion of this court was considered by the court en banc); Fleckinger v. Smith, 319 So.2d 881, 889, n.4 (La. App. 4 Cir. 1975)(rehearing granted so that the matter could be "submitted it to the Court en banc pursuant to [the] internal rules because of an apparent conflict between [the] original opinion and the previous decision of this Court").

The issue in this matter is whether a tax sale purchaser, who purchases property at a tax sale for the delinquent taxes for which the sale was invoked, can be required to pay other delinquent taxes which were not included in the tax sale (and could not have been included in that sale). In my opinion, under the tax sale laws, the tax sale purchaser owes only those taxes which were included in the tax sale; the tax selling authority cannot require it to pay those taxes for which it could no longer invoke a tax sale. Accordingly, I would find that the City of New Orleans improperly included taxes delinquent for more than three years on Eclectic's tax bill. As such, the trial court erred in failing to grant Eclectic's petition for a writ of mandamus.

"A writ of mandamus may be issued in all cases where the law provides no relief by ordinary means or where the delay involved in obtaining ordinary relief may cause injustice...." La. C.C.P. art. 3862(A). La. C.C.P. art. 3863 then provides that "[a] writ of mandamus may be directed to a public officer to compel the performance of a ministerial duty required by law." A "`ministerial duty' is one in which no element of discretion is left to the public officer, in other words, a simple, definite duty, arising under conditions admitted or proved to exist, and imposed by law.'" Constr. Diva, L.L.C. v. New Orleans Aviation Bd., 16-0566, pp. 12-13 (La. App. 4 Cir. 12/14/16), 206 So.3d 1029, 1037, writ denied, 17-0083 (La. 2/24/17), 216 So.3d 59, quoting Landis Const. Co., LLC v. Reg'l Transit Auth., 15-0854, p. 10 (La. App. 4 Cir. 5/25/16), 195 So.3d 598, 605. La. C.C.P. art. 3865 indicates that, when a petition for a writ of mandamus is filed, "the court shall order the issuance of an alternative writ directing the defendant to perform the act demanded or to show cause to the contrary."

A taxing authority may only issue a bill for taxes actually owed and may not seek the payment of taxes to which a taxpayer is not liable, as is the case here. Thus, I would find the removal of improper taxes on an ad valorem tax bill to be ministerial in nature. See, e.g., Goux v. St. Tanunany Par. Gov't, 13-1387 (La. App. 1 Cir. 10/24/14), 156 So.3d 714, 724 (the Parish's failure to correct an error in a zoning map "`is a simple, definite fix of an undisputed ministerial error in mapping [for which a] writ of mandamus was appropriate ... as the requested action ... was simply a ministerial duty...."); Gootee Court., Inc. v. Atkins, 15-0376, p. 4 (La. App. 4 Cir. 11/4/15), 178 So.3d 629, 632 ("[m]andamus has been held to be the proper remedy for compelling a recorder of mortgages to cancel or erase an illegal or unauthorized inscription")(internal citations omitted); State ex rel. Coltraro v. City of New Orleans, 1 Pelt. 155 (La. Ct. App. 1918)(mandamus was appropriate to compel the City to accept payment of taxes on real estate).

Tax sales are authorized by Louisiana Constitution Article VII, § 25(A)(1) which provides, in pertinent part, that "[t]here 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 the sale of the property on which the taxes are due." (Emphasis added). The use of the word "shall" indicates the mandatory nature of this article. See La. R.S. 1:3 ("[t]he word "shall" is mandatory and the word "may" is permissive."); Oubre v. Louisiana Citizens Fair Plan, 11-0097, p. 12 (La. 12/16/11), 79 So.3d 987, 997. The Louisiana Supreme Court has made clear that the only method by which delinquent ad valorem taxes may be collected is through a tax sale. See Jackson v. City of New Orleans, 12-2742, p. 12 (La. 1/28/14), 144 So.3d 876, 887 (quoting Fransen v. City of New Orleans, 08-0076 (La. 7/1/08), 988 So.2d 225, 241 ("the constitution prohibits any method other than a tax sale to collect delinquent ad valorem taxes ...")). See also, Mooring Tax Asset Grp., L.L.C. v. James, 14-0109, p. 12 (La. 12/9/14), 156 So.3d 1143, 1151. ("collection of delinquent real estate taxes can only be collected by tax sale of the property, not a personal suit against the property owner.").

Thus, La. Const. art. 7 § 25 imposes a mandatory duty upon a tax collector (here, the City) to seek redress for recalcitrant taxpayers by seizing and selling their property, the sole method by which it may do so.

This obligation is not without limitations. A taxing authority may only proceed to a tax sale for ad valorem taxes which have been delinquent for no more than three years. La. R.S. 47:2126 requires each assessor to "deliver to the appropriate tax collector the tax roll for the year in which the taxes are collectible by November fifteenth of each calendar year." Under La. R.S. 47:1993 G, "[f]rom the day the [assessment] roll is filed in the recorder's office, it shall act as a lien upon each specific piece of real estate thereon assessed," which lien "is subject to a legal mortgage after the thirty-first day of December of the current year for the payment of taxes due on it." Importantly, "[o]nce three years after December thirty-first of the year in which ad valorem taxes are due have passed, ... no tax sale shall be conducted with regard to such taxes." La. R.S. 47:2131. (Emphasis added).

The City contends that, because the Louisiana Constitution indicates that real property taxes do not prescribe,1 and because the City had "valid tax liens recorded on the subject property," the delinquent taxes can be collected from a tax sale purchaser. I find this argument to lack merit.

A plain reading of La. R.S. 47:2131 indicates that a taxing authority may only conduct a tax sale for the non-payment of taxes for the three-year period prior to the tax sale. Any other delinquent taxes are simply uncollectible at that point by the taxing authority from the original ad valorem tax debtor. I fund no authority for passing on that uncollectible ad valorem tax debt to a subsequent tax sale purchaser.

It is clear that a taxing authority's failure to timely institute a tax sale results in the legal consequence that taxes snore than three years delinquent cannot not be included in the tax sale. It is, thus, incumbent upon a taxing authority (here, the City) to timely comply with its obligation under La. Const. art. 7 § 25 to "advertise the sale of the property on which the taxes are due." Its failure to do so should not result in a third party's bearing the adverse consequences of its neglect. To hold otherwise would allow a taxing authority, careless in timely instituting tax sales (or realizing that a repeatedly delinquent taxpayer will not pay taxes) to wait indefinitely to provoke a tax sale, and then recoup all of the outstanding taxes from a tax sale purchaser. This could lead to the absurd consequence of a tax sale purchaser paying many years, perhaps decades or more, of delinquent taxes. Accepting the City's argument, the result would be to render La. R.S. 47:2131, and the limitations set forth therein, meaningless. The mandate set forth in La. Const. art. VII, § 25(A)(1), to advertise a property for sale when taxes are overdue for a year, would likewise be rendered meaningless, and a taxing authority could simply proceed with a tax sale for all outstanding ad valorem taxes at any time.

In my view, a finding that a tax sale purchaser cannot be required to pay delinquent taxes not expressly included in the tax sale (i.e., those taxes which are more than three years delinquent) is supported by the statutory scheme for tax sales.

After the period of redemption has elapsed following a tax sale,2 "the tax sale purchaser may file with the recorder of mortgages an affidavit indicating how the tax sale parties whose interest the purchaser intends to be terminated were identified, how the address of each tax sale party was obtained, how the notice was sent, the results of sending the notice, and the dates of publication." La. R.S. 47:2157 D. La. R.S. 47:2157 further provides:

La. R.S. 47:2157 E. (Emphasis added). Notably, "statutory impositions" are defined as "ad valorem taxes and any imposition in addition to ad valorem taxes that are included on the tax bill sent to the tax debtor." La. R.S. 47:2122 (14).

Thus, under La. R.S. 47:2157 E, two sets of encumbrances are specifically and effectively canceled with the filing of the affidavit — (1) "all statutory impositions" (defined as ad valorem taxes, "owed ... prior to" the tax certificate's filing) and other impositions included in the tax debtor's bill; and (2) all other interests and encumbrances listed in the affidavit. The statute, thus, expressly provides that the filing of the affidavit "eras[es]" all prior ad valorem taxes. It does not, as the City suggests, erase only those for which the tax sale was conducted. Given that La. R.S. 47:2131 bars tax sales for ad valorem taxes delinquent for more than three years, a taxing authority has no legal authority for the inclusion of older ad valorem taxes in a tax sale.

Notably, the Legislature did make exceptions for certain encumbrances which are not canceled even with the filing of an affidavit. La. R.S. 47:2157 E specifically provides that liens and privileges of governmental entities, other than the taxing authority invoking the tax sale, are not canceled. Clearly, this evidences a legislative intent, and the necessary corollary, that the selling tax authority's liens and privileges are canceled by the affidavit's filing. After the tax sale, a tax sale purchaser is liable for valorem taxes subsequently accruing on the property. See La. R.S. 47:2161 ("From the date of filing a tax sale certificate selling tax sale title to a tax sale purchaser, all taxes on the property shall, after that date, be assessed to and paid by the tax sale purchaser").

I likewise find no merit to the City's argument that the 2008 Comment (f) to La. R.S. 47:2157 supports its position that EIP is liable for those taxes not included in the tax sale and which were delinquent for more than three years.3 The Comment states, in pertinent part:

This Comment, in fact, reinforces the finding that all statutory impositions are, indeed, canceled by the filing of the affidavit pursuant to La. R.S. 47:2157 E. While the Comment simply explains the rationale behind the statute, it definitively indicates that the affidavit "cancels all" outstanding statutory impositions (i.e., ad valorem taxes), and those other encumbrances (non-statutory impositions) included in the affidavit. As the Comment illustrates, the affidavit can include non-statutory impositions which are canceled, if listed in the affidavit; examples include weed liens, and condemnation liens.

Accordingly, for these reasons, I would find that the City improperly included in Eclectic's tax bill taxes for which it is not responsible. In my view, this finding advances several of the purposes for which the tax sale legislation was enacted, including to encourage "the payment and efficient collection of property taxes," La. R.S. 47:2121 A(2), and to encourage "the return to commerce of tax sale and adjudicated properties." La. R.S. 47:2121 A(5). I would reverse the trial court's judgment and grant the request for a writ of mandamus.

BROWN, J., CONCURS AND ASSIGNS REASONS.

I agree with the majority, but I write separately to highlight Judge Chase's concurrence in Harrier Enterprises, LLC v. Imbornone, 19-0613 (La. App. 4 Cir. 1/29/20) ___ So.3d ___, 2020 WL 486804 *2. Particularly, I find there is a need for legislative action to rectify the juxtaposition that the constitutional and statutory provisions to which we must adhere create. Judge Chase espoused:

Id., 19-0613, p. 6, ___ So.3d at ___, 2020 WL 486804 *5 (footnote omitted).