Summary
The Nebraska Supreme Court considered constitutional challenges to Nebraska’s tax certificate sale and tax deed process. The court held that Kevin Fair’s claims under the Takings, Due Process, Excessive Fines, and Nebraska constitutional provisions lacked merit, and it affirmed summary judgment quieting title in Continental Resources. The court also addressed Fair’s standing to challenge the tax deed.
Topics
Practice areas
Questions Presented
- Whether Fair had standing to assert constitutional challenges despite failing to pay or tender the taxes required by Neb. Rev. Stat. § 77-1844.
- Whether Nebraska's tax certificate sale and tax deed process violated procedural due process by failing to give Fair notice when the tax certificate was sold or more than three months before expiration of the redemption period.
- Whether issuance of the tax deed constituted a taking under the federal or Nebraska Takings Clauses, including whether Fair had a protected property interest in surplus equity exceeding the tax debt.
- Whether transfer of the property under the tax certificate process constituted an excessive fine under the Eighth Amendment.
- Whether the statutes violated article I, § 25, of the Nebraska Constitution by discriminating in property rights.
- Whether the statutes created a special class prohibited by article III, § 18, of the Nebraska Constitution, and whether that argument was preserved for appellate review.
Holdings
- The court could reach the merits of Fair's constitutional challenges because he sought alternative damages and equitable relief concerning property he owned, even if Neb. Rev. Stat. § 77-1844 barred him from directly questioning Continental's title without paying or tendering the taxes.
- The tax certificate sale process did not violate procedural due process because Fair received actual notice three months before expiration of his redemption right, which was reasonably calculated to apprise him of the pending tax deed and afford him an opportunity to redeem.
- The issuance of a tax deed under Nebraska's tax certificate process was not a taking subject to just-compensation analysis because it was an exercise of the government's taxing and tax-collection power rather than eminent-domain or regulatory power.
- Fair's claim for compensation for the property's surplus equity failed because he did not establish a vested property right under Nebraska law to the difference between the property's value and the tax debt when the tax deed was issued.
- Transfer of Fair's property under the tax certificate sale process was not a fine under the Eighth Amendment and therefore was not subject to the Excessive Fines Clause.
- Fair failed to establish that the tax certificate statutes violated article I, § 25, because he identified no unlawful discrimination concerning property rights and merely repeated his rejected takings arguments.
- The court did not reach the merits of Fair's article III, § 18, special-class argument because the record did not indicate that he had raised it in the district court.
Key quotations
“Simply put, a property owner is not deprived of his or her property at the time the tax certificate is issued. Rather, the property owner is deprived of the property when the county treasurer issues the tax deed.” (311 Neb. at 194)
“We have held that the Takings Clause “applies only to vested property rights” and that “[t]o be considered a vested right, the right must be fixed, settled, absolute, and not contingent upon anything.”” (311 Neb. at 202)
“Because we find that there was no fine imposed for purposes of the Eighth Amendment, Fair’s Excessive Fines Clause argument lacks merit.” (311 Neb. at 204)
Factual background
Kevin and Terry Fair owned an unencumbered home in Scotts Bluff County and failed to pay property taxes due in 2014. The county published the delinquent-property list, sold a tax certificate to Continental for $588.21 in March 2015, and Continental later paid subsequent taxes. In April 2018, Continental gave the Fairs actual notice that they had three months to redeem the property for approximately $5,268; they did not pay, and the county treasurer issued Continental a tax deed in July 2018. The county assessed the property at $59,759 when the deed was issued.
Procedural history
Continental purchased a tax certificate on the Fairs' tax-delinquent property, later obtained a tax deed after the redemption period expired, and filed a quiet title action. Fair asserted constitutional counterclaims and third-party claims against county officials and the County of Scotts Bluff. The district court granted Continental summary judgment and quieted title in Continental's favor. Fair timely appealed, and the Nebraska Supreme Court moved the appeal to its docket because constitutional challenges were raised.