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DLT List, LLC v. M7VEN Supportive Housing & Development Group

Supreme Court of Georgia

May 15, 2017

DLT LIST, LLC et al.


         In Wester v. United Capital Financial of Atlanta, LLC, 282 Ga.App. 392 (638 S.E.2d 779) (2006), and again in United Capital Financial of Atlanta v. American Investment Assoc., 302 Ga.App. 400 (691 S.E.2d 272) (2010), the Court of Appeals held that a creditor who redeems property following a tax sale has first priority to excess funds resulting from that tax sale. The Court of Appeals overruled those decisions in DLT List, LLC. v. M7VEN Supportive Housing & Dev. Group, 335 Ga.App. 318 (779 S.E.2d 436) (2015), concluding that a redeeming creditor has no such priority; we granted certiorari to consider whether a redeeming creditor after a tax sale has a first priority claim on excess tax-sale funds. Though we disagree with the rationale employed by the Court of Appeals below, we nevertheless affirm its decision.

         The facts are not in dispute. Appellee M7VEN Supportive Housing and Development Group ("M7") failed to pay taxes on two properties ("the properties") located in Carroll County, and, consequently, Vickie Bearden, Tax Commissioner of Carroll County, conducted a tax sale. The properties were purchased by Appellant DLT List, LLC ("DLT"), for a total of $110, 000, and the tax sale resulted in excess funds of approximately $105, 000. On June 6, 2014, Bearden notified M7, DLT, and others of excess funds, and, on July 14, 2014, M7 filed a certificate of authorization seeking to receive the excess funds; though there were no other claims made on the funds, Bearden did not release the funds.

         In September 2014, Appellee Design Acquisition, LLC ("Design Acquisition") as a lienholder against M7, [1] redeemed the properties from DLT for a total of $132, 000, and DLT issued quitclaim deeds of redemption to M7. In October 2014, Design Acquisition filed a declaratory judgment action claiming entitlement to the excess funds, and, in November 2014, Bearden filed an equitable interpleader action for the purpose of distributing the excess funds, see OCGA § 48-4-5 (b); the two actions were consolidated. The trial court determined that, because M7 was the only entity to have made a claim for the excess funds or to have had a recorded interest in the properties at the time of the tax sale, Bearden should have timely released the excess funds to M7. DLT and Design Acquisition appealed, arguing that, pursuant to Wester and United Capital, Design Acquisition had first priority to the excess funds as the redeeming creditor. The Court of Appeals, however, overruled United Capital and Wester, concluding that those decisions were an improper expansion of our decision in National Tax Funding v. Harpagon Co., 277 Ga. 41 (586 S.E.2d 235) (2003); the appellate court applied OCGA § 48-4-5 (a)[2] to the question of excess funds and determined that Design Acquisition had no claim to the excess funds because it was not a lienholder at the time of the tax sale. DLT List, 335 Ga.App. at 322.

         1. In National Tax Funding, this Court construed various statutes governing tax sales to address the interest acquired by a party obtaining a tax-sale deed to a property, the status of competing tax liens in existence at the time of the tax sale, and the options available to the holder of a competing tax lien. 277 Ga. at 42-45. Regarding the options available to the holder of a competing tax lien following a tax sale, this Court explained that such a lienholder

may either file a claim to collect against any proceeds from the sale, or it may assert its rights following the tax sale via a statutory claim for redemption, in which case it obtains a first priority lien on the property, which it may then enforce by levy and sale.

(Emphasis added.) 277 Ga. at 44. Thereafter, in Wester and United Capital, the Court of Appeals reasoned that the first priority lien, as quoted above, applies to excess funds arising out of the tax sale. However, in its decision below, the Court of Appeals discounted that reasoning and concluded that National Tax Funding does not permit a redeeming creditor to "both redeem the property and receive excess funds from the tax sale to pay for the priority lien created by the redemption." DLT List, 335 Ga.App. at 323 (emphasis supplied). This is a misinterpretation of our decision in National Tax Funding.

         As an initial matter, National Tax Funding does not control the specific issue presented in this case, nor did it control in Wester or United Capital. Instead, National Tax Funding addresses the status of liens following a tax sale and the options of competing lienholders; the opinion makes only a fleeting reference to excess tax-sale funds. See id. at 42. Likewise, the options available to competing lienholders following a tax sale as they were discussed in National Tax Funding - i.e., redeeming the property or claiming a portion of the tax sale proceeds - does not control the question of the distribution of excess tax-sale funds, and the contrary conclusion reached by the Court of Appeals below was error.

         2. The question we must now address is whether a redeeming creditor has a first priority claim on excess tax-sale funds. To answer that question, we must delve into the statutory authority governing tax sales and liens.

         Under our well-established rules of statutory construction, we

presume that the General Assembly meant what it said and said what it meant. To that end, we must afford the statutory text its "plain and ordinary meaning, " we must view the statutory text in the context in which it appears, and we must read the statutory text in its most natural and reasonable way, as an ordinary speaker of the English language would.

(Citations and punctuation omitted.) Deal v. Coleman, 294 Ga. 170, 172-173 (751 S.E.2d 337) (2013). We "look to the text of the provision in question and its context within the larger legal framework to discern the intent of the legislature in enacting it." Scott v. State, 299 Ga. 568, 571 (788 S.E.2d 468) (2016). See also OCGA § 1-3-1 (a), (b). Where the statutory text is "clear and unambiguous, " we attribute to the statute its plain meaning, and our search for statutory meaning ends. See Deal, 294 Ga. at 173.

         Real property sold under an execution issued for the collection of taxes may be redeemed by the payment of the statutorily prescribed redemption price by a defendant in fi. fa. or any person having any right, title, or interest in or lien upon such property. See OCGA § 48-4-40. Redemption places title to the real property back into the hands of the defendant in fi. fa., and "the amount expended by the [redeemer] shall constitute a first lien on the property and . . . shall be repaid prior to any other claims upon the property." (Emphasis added.) OCGA § 48-4-43. Thus, when read together, OCGA § 48-4-40 and § 48-4-43 grant a redeeming creditor a first lien on the subject real property in the amount expended to redeem the property that, once recorded, takes priority over any other claims upon the property. Design Acquisition urges us to conclude, as the Court of Appeals did in Wester and United Capital, that the super lien awarded to the redeemer of a tax-sale property also gives the redeemer first priority to excess tax-sale funds. See OCGA § 48-4-5 (a) (explaining that excess funds are distributed "to the owner or owners as their interests appear in the order of priority in which their interests exist"). We do not find the lien to be so broad.

         The super lien created by OCGA § 48-4-43, which is granted specifically to the redeemer of a tax-sale property, is in derogation of the common law, see United States ex rel. IRS v. McDermott, 507 U.S. 447 (II) (113 S.Ct. 1526, 123 L.Ed.2d 128) (1993) (recognizing the common-law lien principle of "first in time is the first in right"), and must be strictly construed, see White v. Aiken, 197 Ga. 29, 33 (28 S.E.2d 263) (1943) ("Lien laws are to be strictly construed, and one who claims a lien must bring himself clearly within the law."). See also OCGA § 44-14-320 (a) (establishing tax liens, along with tradesmen and mortgage liens). The plain language of OCGA § 48-1-40 permits the redemption of real property, and OCGA § 48-4-43 awards a priority lien to a redeeming creditor that is specific to the real property at issue; we are constrained by this language. See OCGA § 48-4-40 (establishing the right to redeem real property); OCGA § 48-4-43 (granting redeemer of real property "first lien on the property" to be paid "prior to any other claims upon the property" (emphasis added)). On the other hand, as the parties both recognize, excess funds from a tax sale are personal property that is separate and distinct from the real property itself. See Georgia Lien Services, Inc. v. Barrett, 272 Ga.App. 656 (1) (613 S.E.2d 180) (2005) (recognizing a distinction between the interest in real property associated with a tax sale and the resulting excess funds); Barrett v. Marathon ...

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