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Wells Fargo Financial Colorado, Inc. v. Olivas

Court of Appeals of Colorado, First Division

December 14, 2017

Wells Fargo Financial Colorado, Inc., Plaintiff-Appellant,
v.
Del Olivas, in his official capacity as Treasurer of Pueblo County, Colorado, Defendant, and Bob Housman and John Moran, Defendants-Appellees.

          Pueblo County District Court No. 15CV30438 Honorable Jill S. Mattoon, Judge

          Akerman LLP, Michael J. McKleroy, Jr., Ashley E. Calhoun, Justin D. Balser, Dallas, Texas, for Plaintiff-Appellant

          BuxmanKwitek, P.C., Linda McMillan, Pueblo, Colorado, for Defendants-Appellees

          OPINION

          RICHMAN JUDGE

          ¶ 1 Plaintiff, Wells Fargo Financial Colorado, Inc., appeals the district court's summary judgment in favor of defendants regarding a tax deed issued by defendant Pueblo County Treasurer Del Olivas (the Treasurer) to defendant Bob Housman. Defendant John Moran currently holds the deed to the property. We reverse the summary judgment and remand to the district court to conduct further proceedings in accordance with this opinion.

         I. Background

         ¶ 2 When property taxes are unpaid, the county in which the property is located may sell a tax lien by public auction to recover the taxes owed on the property. §§ 39-11-101 to -110, C.R.S. 2017. Upon the sale of a tax lien, the county treasurer must prepare a tax lien certificate of purchase to record the sale and any subsequent taxes paid. § 39-11-117, C.R.S. 2017. Three years after the tax lien is purchased, a lawful holder of the certificate may present it to the treasurer, who, after providing notice to the owner of the property, any occupant, and any interested parties of record, shall issue a tax deed on the property to the certificate holder if the tax lien remains unredeemed. §§ 39-11-120, 39-11-128, C.R.S. 2017.

          ¶ 3 The following facts regarding this case are undisputed. Buyers purchased a house in Pueblo in 2004. On June 24 of that year, buyers signed (1) a deed of trust in favor of "Wells Fargo Financial Colorado, Inc." (WFFC), a Colorado company with an address of 1721 South Pueblo Blvd., Pueblo, Colorado, to secure a mortgage loan in the amount of $267, 000.52; and (2) an open-end deed of trust to "Wells Fargo Financial Bank" (WFFB), with an address of P.O. Box 5943, Sioux Falls, South Dakota, to secure a line of credit with a maximum amount of $20, 000. The open-end deed of trust referenced the WFFC deed of trust as a prior encumbrance on the property. Both deeds of trust were recorded in the Pueblo County Clerk and Recorder's Office on June 30, 2004, and assigned sequential document numbers.

         ¶ 4 Beginning in 2008, buyers failed to pay both the monthly mortgage installments to WFFC and the property taxes on the house.[1] WFFC apparently did not maintain an escrow account on the mortgage loan, but it paid the 2008 taxes in September 2009. WFFC did not pay the taxes thereafter. Housman paid the 2009 taxes on October 20, 2010, when the Treasurer sold a tax lien on the house by public auction.

         ¶ 5 Housman also paid taxes on the property for tax years 2010, 2011, and 2012. In 2013, Housman applied for a tax deed. In early January 2014, the Treasurer took steps to notify all parties with an interest in the property, as required by section 39-11-128, of an impending issuance of a tax deed and a right to redeem by May 28, 2014.

         ¶ 6 The Treasurer acquired a title report and, on January 2 and 3, 2014, sent notices by certified mail to the buyers, the public trustee of Pueblo County, and to WFFB and WFFC at the addresses on the two deeds of trust referenced above. The Treasurer also had a notice physically posted on the property and advertised for three consecutive weeks in a local newspaper, the Pueblo Chieftain. The notice sent to plaintiff WFFC at 1721 South Pueblo Blvd., Pueblo, CO 81005 was returned to the Treasurer on January 13, 2014, marked "undeliverable as addressed . . . unable to forward." During discovery, WFFC reported that it had ceased to occupy that address "on or about October 31, 2010." The notice sent to WFFB was not returned to the Treasurer.

          ¶ 7 Although the notice to WFFC was returned, the Treasurer believed that he had provided the notice required by law because one Wells Fargo entity had received the notice. He testified that he believed that WFFB and WFFC were "the same entity" because they operated under the "same trade name, " and he assumed that WFFB, which received a notice, would notify the proper office if necessary. The Treasurer himself did not inquire further as to the correct address for WFFC and took no steps to issue a further notice to WFFC. He could not say whether any staff in his office had rechecked the records for an alternative address.

         ¶ 8 The Treasurer issued Housman a tax deed on the house on May 28, 2014. Housman sold the property to Moran a few weeks later, and Housman continued to hold a deed of trust on the property. On December 30, 2014, WFFC requested related records from the Treasurer. And on May 20, 2015, WFFC filed a complaint seeking to void the tax deed to Housman, the special warranty deed from Housman to Moran, and the deed of trust held by Housman.

         II. Procedural History

         ¶ 9 WFFC claimed that (1) upon return of the original notice as undeliverable, the Treasurer failed to perform his statutory duty of diligent inquiry to find an alternative address and notify it of an impending tax sale; and (2) it was deprived of its constitutional due process right to notice. WFFC requested declaratory relief and moved for summary judgment on those grounds, arguing that the Treasurer's duty requires him to search county records of other properties to find a correct address. Housman and Moran responded and cross-moved for summary judgment, disputing that the Treasurer was required to search the county records of other properties and asserting that the WFFC's complaint should be barred by the doctrine of laches.

         ¶ 10 The district court denied both motions, finding that

. "a search of any county records associated with the property at issue in this case would not have yielded an alternative address for [WFFC]";
. "a search of all properties in the county to determine if [WFFC] held an interest in other unrelated properties for an alternative address is not ...

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