IN RE PETITION OF STATE TREASURER FOR FORECLOSURE
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STATE OF MICHIGAN
COURT OF APPEALS
In re Petition by State Treasurer for Foreclosure
of certain parcels of property due to unpaid 2000
and prior years’ taxes, interest, penalties and fees.
ATTORNEY GENERAL,
UNPUBLISHED
March 26, 2009
Petitioner-Appellee,
v
MUHAMMAD DEVELOPMENT GROUP, INC.,
No. 281176
Eaton Circuit Court
LC No. 02-000839-CZ
Respondent-Appellant.
Before: Murphy, P.J., and Fitzgerald and Markey, JJ.
PER CURIAM.
Respondent Muhammad Development Group, Inc. (MDG), appeals the trial court’s order
denying its motion to set aside a judgment of foreclosure and to void certain quitclaim deeds.
We reverse and remand for entry of judgment in favor of MDG.
In January 2000, MDG purchased six parcels of land owned by a living trust and trustassociated individuals for $270,000, and the warranty deed evidencing the conveyance was
recorded with the Eaton County Register of Deeds on February 22, 2000. The deed, listing
“MDG, Inc.,” as the vendee, reflected that MDG's address was 1740 Beatrice Street in Detroit.
All six parcels are located in Eaton County, but four of the parcels are situated in Windsor
Township and the two remaining parcels, numbers five and six, are located within the city limits
of Lansing. Only the Lansing property is at issue here, and these parcels are comprised of vacant
land. The tax assessment notices for 2000 were sent to the address of the living trust vendors
despite the fact that the conveyance had already been completed and the warranty deed recorded.
We note that the register of deeds had a statutory obligation to notify the assessing officer of the
appropriate local taxing unit of any recorded transaction involving the ownership of the property,
even assuming that MDG had a comparable notification obligation under the statute that may not
have been satisfied. MCL 211.27a(8)(version of statute under 1996 PA 476), now found at MCL
211.27a(10). MDG was unaware of the 2000 tax assessment notices issued by the city.
In the summer of 2001, a representative of MDG personally met with an official in the
city assessor’s office and requested that the two Lansing parcels be combined into a single tax
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parcel. Information was conveyed to the city that MDG was the owner and taxpayer of record
relative to the property and that its address was now 1338 Village Drive in Detroit. The city
official did not communicate the fact that there existed outstanding property taxes for the year
2000. The city granted MDG’s request, combining the parcels into one parcel for tax assessment
with a new tax identification number. Documentation from the city identified the name and
address of the owner on its assessment roll, after the parcels were combined as "MDG INC[,]
1338 VILLAGE DR[,] DETROIT MI 48207-4025." An affidavit from the city tax official who
handled the request and change averred that the new description, tax parcel number, and related
information were entered into the computer system for the assessor’s office, which information
also automatically carried over to a computer database operated by the Lansing Property Tax
Division.
From 2001 through 2004, all notices regarding taxes on the city property were sent to
MDG at the Village Drive address, and the property taxes for those years were fully paid by
MDG. As reflected in a certificate of forfeiture of real property and a treasurer affidavit, on
March 1, 2002, the property was forfeited and then turned over to the Eaton County Treasurer for
collection with respect to the unpaid 2000 taxes. The forfeiture certificates, recorded on April
24, 2002, inaccurately listed individuals associated with the living trust as the property owners.
On June 13, 2002, a petition of foreclosure was filed. Title Check, LLC, a state contractor that
handles foreclosure notices, subsequently attempted to serve notices of the show cause hearing
and judicial foreclosure hearing. Title Check discovered the 2000 warranty deed that transferred
the property to MDG. As indicated above, the deed showed that the address for MDG was 1740
Beatrice Street in Detroit. On the basis of this information, Title Check sent notices concerning
the show cause and foreclosure proceedings via certified mail to the Beatrice Street address in
December 2002. This was done despite the fact that the taxing unit, city of Lansing, had
information in its possession regarding the Village Drive address and was mailing assessment
notices to that address for 2001 forward and receiving tax payments from MDG. The certified
mail notices were returned with the notation “FOE,” which is understood to mean, according to
the affidavit of Title Check’s general manger, that “any forwarding order had expired and the
mail was undeliverable.” Title Check thereafter conducted a personal visit to the property, which
revealed that the property was vacant land, and it published notification of the foreclosure
proceedings for three successive weeks in a local paper, the Eaton Rapids Community News.
A foreclosure hearing was conducted on February 20, 2003, and MDG, not being aware
of the proceedings, failed to appear, even though it was continuing to pay current taxes on the
property. A judgment of foreclosure was entered, made effective February 28, 2003, and it
ordered that fee simple title would vest absolutely in petitioner within 21 days absent payment of
all forfeited delinquent taxes, interest, penalties, and fees. On September 19, 2003, one of the
previously combined city parcels was sold at public auction to Henry Hill, Howard Singleton,
and James Horn as tenants in common pursuant to a quitclaim deed. The other city parcel was
sold to Hamilton Rd., LTD (Hamilton), also by quitclaim deed. MDG asserts that it did not
receive any notice of the foreclosure and sales until Hamilton initiated a quiet title action. MDG
repurchased the one parcel from Hamilton, but could not negotiate a sale for the second parcel
from Hill, Singleton, and Horn.
MDG filed a motion to set aside the foreclosure judgment and to void the quitclaim
deeds, claiming lack of constitutionally adequate notice. MDG filed the motion pursuant to
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MCR 2.612(C)(1)(d) (relief from judgment on the basis that “[t]he judgment is void”). A motion
brought under MCR 2.612(C)(1)(d) may be filed within a reasonable time following entry of
judgment.
Aside from an issue concerning whether MDG was a proper assumed name for
Muhammad Development Group, Inc., such that it was a legally recognizable entity capable of
holding title, which matter will be discussed below, the focus of the parties and the court was on
the applicability of Jones v Flowers, 547 US 220; 126 S Ct 1708; 164 L Ed 2d 415 (2006), and
whether it should be applied retroactively. Jones held that due process demanded, if practical to
do so, that the government take additional reasonable steps to provide notice to a property owner
before selling property at a tax sale after mailed notice is initially returned as unclaimed. Id. at
225. Here, the trial court denied MDG's motion, finding that Jones was not to be applied
retroactively and that MDG was not an identifiable entity entitled to notice.
On appeal, MDG argues that Jones should apply retroactively, and if so applied, the
notice in this case was deficient given the undeliverable notices and the failure to take additional
reasonable steps at providing notice. Petitioner argues that Jones does not apply retroactively
and, even if it did, it would not apply to the case at bar because the case was no longer subject to
direct review. Ultimately, we find it unnecessary to conclusively determine whether Jones
applies because even under existing pre-Jones caselaw, due process was not satisfied under the
facts of this case.
Questions of law, including constitutional issues, are reviewed de novo by this Court. In
re Petition by Wayne Co Treasurer, 478 Mich 1, 6; 732 NW2d 458 (2007).
As known by lawyers and law students across the country, the seminal case on notice and
due process is Mullane v Central Hanover Bank & Trust Co, 339 US 306, 314; 70 S Ct 652; 94 L
Ed 865 (1950), in which the United States Supreme Court ruled that due process requires the
government to provide notice that is reasonably calculated, under all of the circumstances, to
apprise an interested party of the pendency of an action and to afford the party the opportunity to
voice objections. See also Jones, supra at 226. We find that petitioner failed to provide notice
to MDG that was reasonably calculated, under all of the circumstances, to apprise MDG of the
foreclosure proceedings.
In Smith v Cliffs on the Bay Condo Ass’n, 463 Mich 420, 421-422, 617 NW2d 536
(2000), which was abrogated by Jones, our Supreme Court held that the “mailing of tax
delinquency and redemption notices to a corporation at its tax address of record in the manner
required by the General Property Tax Act [GPTA], MCL 211.1 et seq., . . . is sufficient to
provide constitutionally adequate notice.” It is important to note the factual circumstances that
existed in Smith. The Court stated that the only information in the record which indicated that
the township (taxing unit), county, or state had reason to believe that the address to which notice
was mailed was incorrect was the state’s affidavit that the notice was returned as undeliverable
as addressed. Id. at 424. The Smith Court also stated:
The statute generally provides that mailed notice to the owner is to be at
the owner's last known address. In this case there is nothing to indicate that the
township, county, or state had been informed of a new address for the association.
Thus, it was appropriate for notices to be sent to the Birmingham address stated in
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the deed conveying the disputed parcel to the association. The fact that one of the
mailings was returned by the post office as undeliverable does not impose on the
state the obligation to undertake an investigation to see if a new address for the
association could be located. [Id. at 429.]
Here, the tax address of record by mid-2001, more than a year before Title Check
attempted service of the show cause and foreclosure notices, was for MDG at the Village Drive
address. The city of Lansing had been informed of the new address in 2001 and had the
information in its computer system. The accurate information was used to generate tax notices
from 2001 forward. We are not about to fault MDG for a failure by the city to communicate the
correct address to the county treasurer when the tax delinquency or forfeiture was turned over to
the county in March 2002. Neither will we allow MDG to lose its property because of a glitch in
the city’s computer system that resulted in the new address, not being reflected when pulling up
information on the parcels as they existed before being combined into the one tax parcel.
Moreover, it was the county register of deeds office that apparently failed to note the conveyance
in 2000 and to meet its statutory obligation of communicating the information to the city, which
in all likelihood, had there been compliance, would have resulted in the assessment notices being
sent to MDG and the payment of the taxes. Accordingly, the facts are easily distinguishable
from those in Smith and support a conclusion that MDG was denied due process. We also find
that publishing the notice in an Eaton County newspaper was not an act reasonably calculated,
under all of the circumstances, to apprise MDG of the foreclosure proceedings, where the
government indisputably was aware that a Detroit address for MDG existed, whether it be 1740
Beatrice Street or 1338 Village Drive.
In Jones, the petitioner had continued paying the mortgage on his home even after
separating from his wife and moving to another home, without officially changing his address.
The mortgage included escrowed amounts to cover the property taxes. But when the petitioner
finished paying the mortgage, he neglected to continue paying the taxes, subsequently resulting
in a foreclosure and tax sale. Notice had been sent by certified mail to the petitioner's old
address, which was the address of the property being foreclosed upon, and the mail was not
claimed by anyone. Notice of the public tax sale was also published in a local paper. No further
steps were taken by the governmental taxing unit to provide notice. Jones, supra at 223-224.
The Jones Court held "that when mailed notice of a tax sale is returned unclaimed, the
State must take additional reasonable steps to attempt to provide notice to the property owner
before selling the property, if it is practicable to do so." Id. at 225. The Court stated that the
failure to comply with a statutory obligation to keep one's address updated did not result in
forfeiture of the right to constitutionally sufficient notice, nor is there forfeiture of such right
simply because owners are generally aware that the failure to pay taxes will result in a
governmental foreclosure action. Id. at 232-233. The Court indicated that the notice could have
been resent by ordinary mail, resent but addressed to "occupant," or posted on the front door of
the home. Id. at 234-235. However, the Court would not require the government to search the
phonebook for the petitioner's new address, where the unclaimed mail did not necessarily
suggest that the address was incorrect, nor was the government required to search other
government records such as income tax rolls. Id. at 235-236. We note that here the notice was
returned FOE, indicating that there was a move to another address, and the correct address was
on record with the taxing unit itself. Unlike the facts in Jones, the circumstances in the case at
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bar reflect that the government had actual knowledge of the correct address. Therefore, MDG's
case does not hinge on the ruling in Jones, although Jones would certainly make MDG's case an
easier victory. Rather, pre-Jones principles regarding due process support a ruling in favor of
MDG. This is made clear by language in Jones itself wherein the Court stated that "we have
required the government to consider unique information about an intended recipient regardless of
whether a statutory scheme is reasonably calculated to provide notice in the ordinary case." Id.
at 230. Here, the government specifically had information at hand concerning the address of the
taxpayer, MDG.1
We also question the trial court's finding and petitioner's argument that Jones is not
retroactive or otherwise applicable, given that our Supreme Court cited Jones with favor in
Wayne Co Treasurer, supra at 9. As reflected in Justice Weaver's concurrence, the foreclosure
petition in Wayne Co Treasurer was filed in June 2002; the unpaid taxes dated back to the year
2000; the foreclosure judgment was entered in March 2003; the lot at issue was transferred by
quitclaim deed at auction in November 2003; and, on discovery of the sale, the property owner
filed a motion for relief from the foreclosure judgment under MCR 2.612 long after the tax sale
had been completed. Id. at 12-14. These dates and facts closely parallel those in the present
action, and if our Supreme Court cited and relied on principles found in Jones, we are hardly in a
position to state that Jones has no application here.
Finally, with respect to the fact that the initials “MDG” refer to Muhammad Development
Group, Inc., and that the name “MDG” was never officially made an assumed named under state
law, we find that these facts do not render void the 2000 deed to MDG, nor preclude the absolute
need of the government to provide constitutionally adequate notice. And even if we are
incorrect, petitioner is equitably estopped from arguing that there was no valid conveyance and
no duty to serve notice, where the city served tax assessment notices on MDG and readily
1
It appears that notice in compliance with the GPTA may not even have been effectuated. At
the time the notices for the show cause and foreclosure hearings were mailed, MCL 211.78i, as
reflected in 2001 PA 101, entitled a property owner to notice if its interest was identifiable by
reference to, in part, “[r]ecords in the office of the local assessor” before the date that the county
treasurer recorded the certificate of forfeiture. MCL 211.78i(6)(c)(version of statute under 2001
PA 101; reference to records held by the register of deeds was another source prompting
entitlement to notice, §78i[6][a]). And the foreclosing governmental unit had to determine the
address reasonably calculated to apprise property owners of the pendency of the hearings and to
send notice accordingly. MCL 211.78i(2)(version of statute under 2001 PA 101). Here, the
certificate of forfeiture was recorded on April 24, 2002, and before that date MDG’s interest was
identifiable by reference to the records in the city assessor’s office, which handled the address
change the previous summer. MDG was thus entitled to notice, and an address reasonably
calculated to apprise it of the later foreclosure-related hearings would certainly have been the
address on file with the city. We acknowledge that former MCL 211.78i(1) spoke about the
governmental entity conducting a title search to identify owners. But it is not entirely clear how
that subsection was meant to work with former subsections (2) and (6)(referring to, in part,
assessor office and treasurer office tax records and information), which might explain subsequent
amendments that changed the language in subsection (1) such that it referred to any
informational source listed in subsection (6) and not just title searches and records. 2003 PA
263; 2006 PA 611.
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accepted property tax payments from MDG for several years after the tax year in question. We
view petitioner's argument as an attempt to avoid the repercussions of its failure to provide MDG
with constitutionally adequate notice.
MCL 450.1217(1) provides, in part, that “[a] domestic or foreign corporation may
transact business under any assumed name or names other than its corporate name, if not
precluded from use by section 212, by filing a certificate stating the true name of the corporation
and the assumed name under which the business is to be transacted.” The statute is silent with
respect to the consequences of transacting business under a name other than an entity’s corporate
name without filing a certificate identifying the assumed name. This Court has held that the
purpose of MCL 450.1217 “is to place the public on notice regarding corporations that are doing
business under an assumed name.” Penton Publishing, Inc v Markey, 212 Mich App 624, 627;
538 NW2d 104 (1995). Here, there is no dispute that MDG and Muhammad Development
Group, Inc., are one in the same entity, even though the MDG moniker is not an assumed name
under the statute. Further, there is no dispute that the entity paid consideration for the property,
that the living trust and others conveyed the property to the entity, that the entity paid the
property taxes on the land for the years 2001 through 2004, and that the city was more than
happy to accept the tax dollars from the entity. Petitioner does not claim that Muhammad
Development Group, Inc., is not a legally recognizable corporation. Unlike the caselaw cited by
petitioner, and putting semantics aside, this case did not truly involve a non-existent grantee or a
grantee incapable of taking title with respect to the 2000 conveyance; there was indeed an
existing grantee with the capacity to hold title, although it may not have been properly
identified.2
Given that MDG was deprived of its due process rights by the government's failure to
provide constitutionally adequate notice of the foreclosure proceedings, the remedy is an order
restoring title to MDG or Muhammad Development Group, Inc., as dictated by our Supreme
Court in Wayne Co Treasurer, supra at 4, 11.
Reversed and remanded for entry of judgment in favor of MDG consistent with this
opinion. We do not retain jurisdiction. Taxable costs are awarded to MDG as the prevailing
party under MCR 7.219.
/s/ William B. Murphy
/s/ E. Thomas Fitzgerald
/s/ Jane E. Markey
2
We recognize that had the corporation complied with MCL 450.1217 or had the deed provided
that Muhammad Development Group, Inc., was the vendee, it is conceivable that Title Check
may have discovered the correct address in 2002 by examining state corporate entity records.
Regardless, the due process failure would still exist because the taxing unit (city) had in its
possession the correct address, yet notice was not sent to that address.
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