In Re: The Carroll County 2012 Tax Sale Twin Lakes Regional Sewer District v. Steven E. Hruska, Virginia Hanna & Equity Trust Co. FBO#80677 & Carroll Cnty, Indiana, by & through Carroll Cnty Auditor
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Aug 08 2013, 5:25 am
ATTORNEY FOR APPELLANT:
ATTORNEYS FOR AMICUS CURIAE:
DONALD J. TRIBBETT
Tribbett Law Office
ANNE H. POINDEXTER
STEPHENIE K. GOOKINS
Campbell Kyle Proffitt LLP
COURT OF APPEALS OF INDIANA
IN RE: THE CARROLL COUNTY
2012 TAX SALE
TWIN LAKES REGIONAL SEWER DISTRICT, )
STEVEN E. HRUSKA, VIRGINIA HANNA,
and EQUITY TRUST COMPANY FBO #80677, )
CARROLL COUNTY, INDIANA, by and
through the CARROLL COUNTY AUDITOR,
APPEAL FROM THE CARROLL CIRCUIT COURT
The Honorable Benjamin A. Diener, Judge
The Honorable Julian L. Ridlen, Judge
The Honorable Kathy R. Smith, Senior Judge
The Honorable David A. Cox, Senior Judge
Cause No. 08C01-1208-MI-15
August 8, 2013
The primary issue in this case is whether the trial court erred in interpreting
Indiana Code section 13-26-14-4, which prohibits real property from being sold at a tax
sale when the only lien against the property was for unpaid sewer bills. The appelleespetitioners Steven Hruska, Virginia Hanna, and Equity Trust Company (collectively, the
petitioners) successfully petitioned the trial court to have their respective properties
removed from the county tax sale list when it was determined that unpaid sewage bills
were the only liens on the parcels.
The appellant-intervenor, Twin Lakes Regional Sewer District (TLRSD), appeals
that determination, alleging that the trial court misinterpreted the provisions of Indiana
Code section 13-26-14-4 regarding the removal of the properties from the tax sale list.
We conclude that the trial court properly determined that the statute prohibits foreclosure
on the property at a tax sale when an unpaid sewer bill is the only lien that exists on the
property. Thus, we affirm the judgment of the trial court.
TLRSD is a regional sewer district that services areas in Carroll and White
counties. The petitioners own properties in Carroll County that are served by TLRSDâs
sewers. When those property owners did not pay their sewer bills, TLRSD perfected
liens against the properties and certified those liens to the Carroll County Auditor for
collection with the property tax bill.
Apparently, payments had been made to the
Treasurer of Carroll County, and the Treasurer credited those payments entirely to
property taxes that had accrued against the property, thus leaving the sewer liens unpaid.
On August 28, 2012, the Treasurer and Auditor of Carroll County filed a joint
application for a judgment and order of sale in the Carroll Circuit Court, together with
their joint affidavit. The application for the judgment and sale requested that the trial
court order judgment against the listed properties as a result of unpaid property taxes and
special assessments. The application also requested that the properties be sold to satisfy
obligations for unpaid property taxes and special assessments.
We note that Indiana Regional Sewer District Association (IRSDA) filed an amicus brief in this case.
The IRSDAâs mission is to support the various sewer districts and to collect and share information that
focuses on their role in protecting the environment and public health, while also supporting economic
development and providing a public convenience. The IRSDA submits that the âmisinterpretation of Ind.
Code Â§ 13-26-14-4 by the trial court and its application to all collection processes for sewer lines is of
paramount importance and will affect all sewer districtsâ ability to collect unpaid sewer bills.â Amicus
Br. p. 1.
The application averred that notice had been sent to the petitioners at least twentyone days before the judgment application was filed. Both the application and affidavit
identified the properties that the petitioners owned as being subject to sale for unpaid
property taxes and assessments.
On August 29, 2012, the trial court entered a judgment and order of sale, directing
the sale of the properties to satisfy the payment of taxes and special assessments.
Thereafter, in September 2012, Hanna and Hruska filed letters with the trial court, stating
that TLRSDâs liens against their properties were the sole liens against those properties.
The letters stated that because TLRSDâs liens were the only liens that existed on the
properties, the land could not be sold at a tax sale. In support of that proposition, the
petitioners cited Indiana Code section 13-26-14-4, which provides in part that
rates, fees, or charges made, assessed, or established by the district are a
lien, . . . for municipal sewage works, on a lot, parcel of land, or building
that is connected with or uses the works of the district. . . . A lien under
this chapter that is the only lien on a property may not be foreclosed. 2
On September 7, 2012, a petition to remove the parcels from a tax sale was filed
by Zachary Dague as a beneficiary of the Equity Trust Company. Dagueâs petition
requested that the trust property be removed from the tax sale based on claims that the
property had been purchased at a tax sale and TLRSDâs sewer liens against the property
This statute is more fully set out in our discussion below.
The petition apparently was sent to the Carroll County Auditor and
Although none of the three requests for relief from the tax sale were served on
TLRSD, the trial court entered orders on September 10, 2012, as to the Hanna and
Hruska properties. These orders recited Hannaâs and Hruskaâs contention that TLRSDâs
sewer liens were the sole liens against the properties and, therefore, those properties
should be removed from the tax sale that was scheduled for September 14, 2012.
The trial court determined that while a sewer lien existed on the properties,
Indiana Code section 13-26-14-4 prohibits foreclosure if that is the only type of lien on
the property. The trial courtâs order also provided that if the Auditor believed that other
liens existed against the Hanna or Hruska properties, TLRSD could request a hearing.
The trial court also ordered on September 10, 2012, that the Equity Trust
Company property should be removed from the tax sale âin order to hold a hearing in this
matter.â Appellantâs App. p. 2, 25. That order set a hearing on that petition for October
9, 2012. On the day of the hearing, Lisa Dague appeared for Equity Trust Company.
Lisa argued the merits of the petition, but no evidence was presented, and no action was
taken. Instead, the trial court rescheduled the matter for a hearing on November 26,
2012, to provide the petitioners the opportunity to serve notice on any lienholders.
Although Lisa again appeared at the November 26 hearing, the trial court took no action
because Lisa was not licensed to practice law and she was attempting to represent the
corporation. As a result, the trial court continued the matter indefinitely pending a
request for a hearing.
On January 29, 2013, TLRSD moved to intervene in the action.
stated that the orders removing the Hanna, Hruska, and the Equity Trust Company
properties from the 2012 tax sale were entered âwithout appropriate noticeâ to TLRSD
and that TLRSD was entitled to intervene pursuant to Indiana Trial Rule 24(A) to protect
its interest in the sewer liens. Appellantâs App. p. 26-28.
TLRSDâs motion to intervene included a motion to set aside the trial courtâs
orders removing the properties from the tax sale. The motion asserted that the September
10, 2012, orders were entered without notice to TLRSD and that the trial court failed to
properly apply the provisions of Indiana Code section 13-26-14-4.
The trial court granted TLRSDâs request to intervene on February 6, 2013, and on
that same day, an additional order was entered denying TLRSDâs motion to set aside the
September 10, 2012 judgments. The trial court ruled, among other things, that because
no other liens on the properties existed, the land could not be sold âat the tax saleâ
pursuant to Indiana Code section 13-26-14-4. Appellantâs App. p. 4.
On February 26, 2013, TLRSD filed a motion to correct error, which the trial court
subsequently denied. This appeal ensues, and TLRSD alleges that nothing warranted the
removal of the properties from the tax sale.
DISCUSSION AND DECISION
The issue to be resolved comes to us as a denial of a motion to correct error. We
review a trial courtâs decision to deny a motion to correct error for an abuse of discretion,
and reversal will occur only when the trial courtâs decision was against the logic and
effect of the facts and circumstances before it, together with the inferences that can be
drawn therefrom. Ind. State Bd. of Educ. v. Brownsburg Comm. Sch. Corp,, 842 N.E.2d
885, 889 (Ind. Ct. App. 2006).
As noted above, TLRSD maintains that the trial court erred in removing the
petitionersâ property from the tax sale. More particularly, TLRSD claims that the trial
court âerred in its interpretation of I.C. Â§ 13-26-14-4âs prohibition against foreclosure of
a lien if a sewer lien is the only lien against the property.â Appellantâs App. p. 5. Put
another way, TLRSD contends that the trial courtâs broad interpretation of Indiana Code
section 13-26-14-4 regarding the prevention of the sale of property at a tax sale merely
because of a sewer lien has the potential to âbankrupt a regional sewer district.â Id. at 42.
We note that the petitioners have not filed an appelleeâs brief. When the appellee
has failed to submit a brief, we need not undertake the burden of developing arguments
on the appelleesâ behalf. Trinity Homes, LLC v. Fang, 848 N.E.2d 1065, 1068 (Ind.
2006). Rather, we will reverse the trial courtâs judgment if the appellantâs brief presents
a case of prima facie error. Id. Prima facie error in this context is defined as âat first
sight, on first appearance, or on the face of it.â Id. Where the appellant is unable to meet
this burden, we will affirm. Id.
In determining whether the trial court properly removed the petitionersâ property
from the tax sale, we initially set forth the provisions of Indiana Code section 13-26-14-4,
which provide that
rates, fees, or charges made, assessed, or established by the district are a
lien, in the same manner established under IC 36-9-23 for municipal
sewage works, on a lot, parcel of land, or building that is connected with or
uses the works of the district. Liens under this chapter:
(2) are recorded;
(3) are subject to the same penalties, interest, and reasonable
attorneyâs fees on recovery; and
(4) shall be collected and enforced;
in substantially the same manner as provided in IC 36-9-23-31 through IC
36-9-23-34. A lien under this chapter that is the only lien on a property
may not be foreclosed.
In construing this statute, we note that âforeclosureâ has been defined as a legal
proceeding âto terminate a mortgagorâs interest in property, instituted by the lender (the
mortgagee) either to gain title or to force a sale in order to satisfy the unpaid debt secured
by the property. Blackâs Law Dictionary (7th ed.1999). Also, a specific subsection of
the definition of foreclosure in Blackâs Law Dictionary defines âtax foreclosureâ as â[a]
public authorityâs seizure and sale of property for nonpayment of taxes.â Id.
In this case, notwithstanding TLRSDâs claims, it is apparent that the trial court
examined the plain language of Indiana Code section 13-26-14-4 and determined that the
type of lien here may not be enforced as provided in Indiana Code section 36-9-23-31
through Indiana Code section 36-9-23-34, namely by selling the property at a tax sale if
the unpaid sewer bill lien is the only lien that exists on the property.
To illustrate the remedies, procedures, and enforceability that may be available to
a sewer district for unpaid bills, we note that Indiana Code section 36-9-23-31 provides
If fees assessed against real property under this chapter . . . are not paid
within the time fixed by the municipal legislative body, they are delinquent.
A penalty of ten percent (10%) of the amount of the fees attaches to the
delinquent fees. The amount of the fee, the penalty, and a reasonable
attorneyâs fee may be recovered by the board in a civil action in the name
of the municipality.
(Emphasis added). In brief, Indiana Code section 36-9-23-32 sets forth the timing of the
recording of various liens, lists the superiority of the liens in most instances, and states
that notice of delinquency must be provided, when payment must be received, and how
notice must be sent. Another section, Indiana Code section 36-9-23-33, provides for the
deferral of the collection of unpaid fees and penalties in some instances. And the officer
in charge of collecting the fees should prepare a list of the delinquent fees along with the
penalty, record that list with the county recorder, and mail notice to the owner that a lien
has been recorded as a result of delinquent fees. The liens should then be released once
they have been fully paid. If delinquent fees and penalties, for example, are not paid,
they are to be collected by the county treasurer in the same manner that delinquent
property taxes are collected.
Finally, Indiana Code section 36-9-23-34 provides for a municipalityâs foreclosure
of a lien to collect fees and penalties. The municipality or board is entitled to recover the
amount of the fees and penalties and a reasonable attorneyâs fee. Also, the trial court
should order the sale without relief from valuation or appraisement laws.
In construing these provisions, it is apparent that although TLRSD could not
foreclose its liens against the petitionersâ properties, TLRSD may file a civil action to
recover its fees in accordance with Indiana Code section 36-9-23-31.
discussed above, once a judgment is obtained, nothing in the statutes prevents TLRSD
from executing, garnishing, and pursuing proceedings supplemental similar to other civil
judgments. That said, we cannot say that the trial court abused its discretion in removing
the parcels from the tax sale when construing the provisions of Indiana Code section 1326-14-4.3
The judgment of the trial court is affirmed.
MAY, J., and MATHIAS, J., concur.
We note that while TLRSD raises various procedural issues such as whether it was given adequate
opportunity to be heard and whether the petitionersâ properties could be removed when no hearings were
held, we need not address these issues in light of our conclusion that Indiana Code section 13-26-14-4
unambiguously states that a lien regarding the collection of unpaid sewer bills through foreclosure
proceedings is prohibited.