Red Flower, Inc., a Kansas corporation, Plaintiff-Appellant and Cross-Appellee,
Kevin R. McKown, Defendant-Appellee and Cross-Appellant.
County District Court No. 11CV14 Honorable Douglas Tallman,
AFFIRMED IN PART, REVERSED IN PART, AND CASE REMANDED WITH
Steerman & Shinn, Donald L. Steerman, Lamar, Colorado,
for Plaintiff-Appellant and Cross-Appellee
R. Lilly, LLC, Brett R. Lilly, Wheat Ridge, Colorado, for
Defendant-Appellee and Cross-Appellant
1 If a property owner fails to pay his or her property taxes,
the county may sell a tax lien on the property to a third
party. §§ 39-11-101 to -109, C.R.S. 2016. After
three years, and upon notice to the owner, occupant, and
other interested parties, the holder of an unredeemed lien
may obtain a treasurer's deed for the property. §
39-11-120(1), C.R.S. 2016.
2 Plaintiff, Red Flower, Inc., bought tax liens on farmland
owned by defendant, Kevin R. McKown. After the redemption
period expired, the Baca County Treasurer issued the tax
deeds to Red Flower. McKown subsequently challenged the
validity of the deeds on the ground that the Treasurer had
failed to provide notice to a tenant farmer who grew crops on
3 The district court ruled that unlike owners and other
interested parties - who are subject to a "diligent
inquiry" standard of notification - the occupant is
entitled to actual notice of the issuance of the
treasurer's deed. Because the tenant farmer had not
received actual notice, the court voided the deeds.
4 We disagree with the district court's interpretation of
the relevant statute, but we affirm, in part, on the
alternative ground that, with respect to one of the deeds,
Red Flower's publication notice was deficient. With
respect to the other deed, we remand to the district court to
determine whether the Treasurer used diligent efforts to
notify the tenant farmer of the issuance of the deed.
5 McKown owned 320 acres of farmland in rural Baca County.
There were no structures, fencing, corner posts, or other
improvements on the property. Access to the property is by
"field roads"; the nearest county road is two miles
6 From 2004 until 2011, Don Lohrey farmed the property
pursuant to an oral sharecrop agreement. He received the
value from two-thirds of the harvest and McKown, as the
owner, received the remaining one-third.
7 Lohrey lived approximately ten miles away from McKown's
property, in Walsh, Colorado. During the winter months,
Lohrey was present at McKown's farm about once every two
weeks. During the growing season, he was on the property more
frequently - about once a week. Lohrey had similar oral
agreements with six other property owners, and he farmed a
total of 5000 acres in the general vicinity.
8 Though McKown's agreement with Lohrey was not recorded
with the county clerk and recorder's office, it was
documented in a form required by the United States Department
of Agriculture and kept on file at the Baca County Farm
9 After McKown failed to pay his county property taxes, the
Treasurer sold tax liens for the real property and the
mineral rights. Red Flower bought the tax lien certificates
on November 15, 2007. In August 2010, a few months before the
expiration of the redemption period, Red Flower applied for
treasurer's deeds. The Treasurer attempted to notify
McKown, but her efforts were unsuccessful. She published a
series of notices in the newspaper in September 2010 and, in
December 2010, she issued the deeds to Red Flower.
10 The following year, Red Flower filed a C.R.C.P. 105 action
to quiet title in the property. McKown appeared and defended
on the ground that the tax deeds were invalid, based on
insufficient notice to McKown and also to Lohrey, whom the
parties stipulated had been in actual possession or occupancy
of the property but had not received notice.
11 The district court found that the Treasurer had made a
"diligent inquiry" to find the owner, McKown, as
required by the statute, and it entered judgment for Red
Flower. A division of this court affirmed that ruling,
Red Flower, Inc. v. McKown, (Colo.App. No. 12CA2128,
July 11, 2013) (not published pursuant to C.A.R. 35(f))
(Red Flower I), but remanded for a determination of
whether the Treasurer had complied with the separate
requirement to notify the occupant.
12 On remand, the district court considered the plain
language of the statute, which requires that, prior to
issuance of a tax deed, the county treasurer serve, by
personal service or mail, notice "on  every person in
actual possession or occupancy" of the property,
"and also on  the person in whose name [the property]
was taxed" if, "upon diligent inquiry, such person
can be found in the county or if his residence outside the
county is known, " and on  "all persons having
an interest or title of record in" the property if,
"upon diligent inquiry, the residence of such persons
can be determined." § 39-11-128(1)(a), C.R.S. 2016.
13 The court determined that the Treasurer's obligation
to make "diligent inquiry" applied only to
notification of owners and other interested parties, but not
to actual occupants. It reasoned that the absence of the
qualifier "if, upon diligent inquiry, " in the
clause referring to occupants meant that the Treasurer was
obligated to make all efforts necessary to notify the
occupant. Indeed, according to the district court, there was
no limit on the efforts required of the Treasurer to provide
the occupant with notice of the issuance of the deed.
14 The court determined - presumably based on the
parties' stipulation - that Lohrey qualified as a person
in possession of the property. From there, it concluded that
because the Treasurer had not complied with her statutory
obligation to provide Lohrey with actual notice, the tax
deeds were void.
15 On appeal, Red Flower argues that the district court's
construction cannot be squared with the language or intent of
the statutory scheme. McKown contends that the district court
could have granted summary judgment in his favor for the
additional reason that the Treasurer's publication notice
was deficient and therefore the deeds were void.
16 Though we do not fully adopt Red Flower's reasoning,
we agree that the district court's interpretation is
incorrect. However, we agree with McKown that, at least with
respect to the real property deed, publication notice was
17 Red Flower contends that the district court's
interpretation of the notification requirement in section
39-11-128(1)(a) places an illogically high burden on the
Treasurer to notify persons in "actual possession or
occupancy" of the property. It urges a reading of the
statute that essentially adds a "diligent inquiry"
element to the clause referring to actual possessors or
occupants. Though we disagree with Red Flower's