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Wood v. Tax Ease Lien Investments 1, LLC

Court of Appeals of Kentucky

February 28, 2014

M.D. WOOD, APPELLANT
v.
TAX EASE LIEN INVESTMENTS 1, LLC; VICTORIA L. RAISOR; KELLY J. RAISOR; CITIZENS UNION BANK OF SHELBYVILLE; ASSET ACCEPTANCE, LLC; LEGAL RECOVERIES, INC., ASSIGNEE OF CREDITORS LAW CENTER; COMMONWEALTH OF KENTUCKY, DEPARTMENT OF REVENUE, AND LAW; PERRY AND SICKMEIER, INC.; MOORING TAX ASSET GROUP; AND KENTUCKY PROPERTY TAX INVESTMENTS, APPELLEES

Page 898

APPEAL FROM SHELBY CIRCUIT COURT. HONORABLE CHARLES R. HICKMAN, JUDGE. ACTION NO. 09-CI-00827.

BRIEF FOR APPELLANT: Joseph S. Elder, II, Louisville, Kentucky.

BRIEF FOR APPELLEE CITIZENS UNION BANK OF SHELBYVILLE: Donald T. Prather, Shelbyville, Kentucky; M. Thurman Senn, Louisville, Kentucky.

BEFORE: COMBS, DIXON AND VANMETER, JUDGES.

OPINION

Page 899

DIXON, JUDGE

Appellant, M.D. Wood, appeals from an order of the Shelby Circuit Court denying his motion to intervene in an action filed by Tax Ease to enforce its Certificates of Delinquency for unpaid real estate taxes on property for which he had also purchased a tax lien. Finding no error, we affirm.

In 2003, Victoria and Kelly Raisor borrowed $45,000 from Citizens Union Bank (" CUB" ) to purchase property located on Woodlawn Road in Shelby County. To secure repayment on the loan, the Raisors granted CUB a mortgage lien on the property. As is typical in the lending industry, the CUB mortgage contained the following provision related to real estate taxes:

3. Taxes and Assessments. Mortgager shall pay all taxes and assessments now or hereinafter levied against the Property. In default hereof, Mortgagee may pay such taxes and assessments and Mortgager shall reimburse Mortgagee therefore together with interest thereon at the highest rate allowed in the Note.

A related provision is contained in the promissory note to CUB signed by the Raisors:

PAYMENTS BY LENDER. If you are authorized to pay, on my behalf, charges

Page 900

I am obligated to pay . . . then you may treat those payments made by you as advances and add them to the unpaid principal under this note . . . .

In the years that followed, the Raisors fell behind in paying their real estate taxes. On August 11, 2010, Appellant purchased a Certificate of Delinquency for the Raisors' unpaid 2009 ad valorem taxes on the property, which totaled $509.63 based upon a property tax assessment of $45,000. Due to interest and penalties, Appellant paid $862.91 for the 2009 certificate.

At the time Appellant purchased the certificate for the unpaid 2009 ad valorem taxes, a lawsuit had already been filed against the Raisors by Tax Ease, the holder of the Certificate of Delinquency for their unpaid 2006 ad valorem taxes. It is from the lawsuit filed by Tax Ease that this appeal arises. Both the Raisors and CUB, as the mortgage holder on the property, were named as parties in the lawsuit but, because such was filed some ten months prior to Appellant's purchase of the 2009 certificate, he was not named in Tax Ease's original complaint. When CUB filed its answer in November 2009 setting forth its mortgage lien, the Raisors were current on their monthly principal and interest payments under the mortgage.

At some point during the proceedings in the trial court, the Raisors also fell behind on their mortgage payments. In response, CUB began to work with them to get the Certificates of Delinquency paid, as well as to get the case in such a posture that CUB could enforce the mortgage if necessary. Accordingly, CUB, with the Raisors' agreement and assistance, attempted to obtain payoff quotes from the holders of the various Certificates of Delinquency. At the same time, CUB updated its pleadings in the trial court to add other defendants having an interest in the property. On September 26, 2012, CUB moved for leave to file an amended answer, counterclaim and cross-claim. Therein, CUB sought to dismiss the holders of the Certificates of Delinquency for the 2005 and 2008 ad valorem taxes as they had provided payoff quotes and had, in turn, been paid in full. CUB's motion also sought to add the U.S. Internal Revenue Department (federal tax liens) and Appellant as parties.

CUB's motion was initially scheduled to be heard on October 17, 2012, but CUB's attorney, Donald Prather, sought to reschedule such because he had been unable to secure a payoff amount from Appellant. In fact, as the trial court noted, " [t]he representative for [Appellant] when contacted repeatedly refused to provide a payoff amount for the tax bill confirmed in writing or a recorded verbal confirmation of the amount." Accordingly, in compliance with Kentucky Revised Statutes (KRS) 134.127(3)(e)(1), Prather sent a registered letter to Appellant requesting a " written September payoff, including itemization of all fees." A courtesy copy of the letter was also mailed to Appellant's son, an attorney who later appeared as his counsel in the trial court. Notably, although the letter stated that Prather was CUB's attorney, there is no dispute that the Raisors had, in the mortgage and promissory note, authorized CUB to pay on their behalf. Further, CUB points out that at that time the payoff request letter was mailed to Appellant, it was not known whether CUB or the Raisors would pay the 2009 certificate.

After Appellant failed to respond to the registered letter, Prather took a copy of the payoff demand letter and proof of mailing to the Shelby County Clerk and, pursuant to KRS 134.127(3)(e)(1), was provided a payoff quote for the 2009 Certificate of Delinquency. The Certificate was

Page 901

paid the following day by a check in the amount of $1,050.01 drawn on the account of " YLB Accounting & Consulting Services," the Raisors' accountant. The county clerk, having received payment in full, completed a " release of Certificate of Delinquency" dated October 26, 2012, and placed the funds ...


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