Limiting Mennonite - The LA Sup. Ct. Stabilizes Certain Tax Sale Titles
As I commented in my last Industry Alert, the seminal United States Supreme Court decision on pre-tax sale notice in Mennonite Bd. of Missions v. Adams, 462 U.S. 791 (1983) and its Louisiana progeny have called into question the validity of some confirmed tax sale titles and has undoubtedly injected caution into title attorneys and tax sale purchasers across Louisiana. In a recent decision, the Louisiana Supreme Court limited application of the Mennonite decision in tax sale litigation and increased the stability of certain pre-Mennonite tax sale titles. See Quantum Resources Management LLC v. Pirate Lake Oil Corp., 2012-1472 (La. 3/19/13); 112 So.3d 209. In Quantum Resources, the Court held as a matter of first impression that the U.S. Supreme Court precedent in Mennonite could not apply retroactively to invalidate a 1925 tax sale for lack of adequate pre-tax sale notice. In so holding, the Louisiana Supreme Court explained that under the U.S. Supreme Court’s retroactivity jurisprudence, a new rule of constitutional law announced by the U.S. Supreme Court applies to all future cases and cases pending on direct review on the date the Court’s decision is rendered and further, that retroactivity is limited by the doctrines of res judicata and statutes of limitation or repose (termed prescriptive and peremptive periods under Louisiana law). The Louisiana Supreme Court then noted that the Quantum Resources case was not pending on direct review at the time Mennonite was decided and that a suit to annul the tax sale at issue perempted 53 years before Mennonite. Based on these findings, the Louisiana Supreme Court refused to allow the tax sale to be challenged by retroactive application of the Mennonite notice requirements and reversed the decisions of both the trial and appellate courts.
The Louisiana Supreme Court’s holding in Quantum Resources provides stability to certain tax sale titles where a suit to annul perempted and/or prescribed prior to the U.S. Supreme Court’s Mennonite decision in 1983. While Quantum Resources provides stability to these pre-Mennonite tax sale titles, the current Louisiana jurisprudence on post-Mennonite tax sales continues to cause great concern for title attorneys and tax sale investors across Louisiana. For example, under the Louisiana Supreme Court’s recent decision in Smitko v. Gulf South Shrimp, Inc., the Louisiana Supreme Court held that a post-Mennonite tax sale is still subject to attack on due process grounds for lack of pre-tax sale notice even if the time limitation to file an action to annul the tax sale has lapsed because a tax sale conducted in violation of due process is an absolute nullity having “no legal force or effect.” See Smitko, 2011-2566, p. 14 (La. 7/2/12); 94 So.3d 750, 759.
Wesley M. Plaisance is a Partner in the New Orleans office of Breazeale, Sachse & Wilson LLP (www.bswllp.com) where he heads the Tax Sale and Quiet Title Litigation group and practices other commercial litigation with a focus on real estate related litigation. Wesley M. Plaisance regularly handles tax sale litigation matters across Louisiana including without limitation in the City of New Orleans (Orleans Parish), East Baton Rouge Parish, St. Tammany Parish (including Covington, Mandeville and Slidell), Jefferson Parish, Lafayette Parish, Livingston Parish, Plaquemines Parish and Lafourche Parish. Mr. Plaisance represents tax sale purchasers in suits to confirm tax sale title(s) and ownership with and/or without cancellation of mortgages and other encumbrances and in partition proceedings commenced after a tax sale purchaser confirms only a fractional ownership interest.
Mr. Plaisance has also represented and represents tax debtors, landowners, mortgage holders including banks and other interested parties in actions to annul and/or nullify tax sales. Mr. Plaisance additionally handles complex commercial litigation matters arising out of large investment funds created to purchase tax sale certificates and/or tax deeds in Louisiana, Georgia, Indiana and Florida.