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Adair Asset Mgmt., L.L.C. v. Terry's Legacy, LLC

Supreme Court of Nebraska

March 11, 2016

ADAIR ASSET MANAGEMENT, L.L.C., APPELLEE,
v.
TERRY'S LEGACY, LLC, APPELLANT, AND FIRST STATE BANK ET AL., APPELLEES

Page 422

Appeal from the District Court for Cheyenne County: DEREK C. WEIMER, Judge.

Sterling T. Huff, of Island & Huff, P.C., L.L.O., for appellant.

Deana K. Walocha for appellee Adair Asset Management, L.L.C.

HEAVICAN, C.J., WRIGHT, CONNOLLY, MILLER-LERMAN, CASSEL, and STACY, JJ.

OPINION

Page 423

Cassel, J.

INTRODUCTION

This appeal presents an issue of first, and perhaps last, impression--whether a tax sale certificate issued following a sale of real estate for delinquent property taxes " bid down" [1] to an undivided 1-percent interest in the property limits the lien to be judicially foreclosed[2] to only that fractional share. Because we conclude that it does, we modify the decree of foreclosure accordingly. And to cure a ministerial failure to seal a confidential document, we remand the cause with directions.

BACKGROUND

In March 2011, Cheyenne County, Nebraska, conducted its annual tax sale. Rather than using a traditional " round robin" format at the sale, and at the request of one of the bidders, the county treasurer used the " bid down" format provided by § 77-1807. That section has since been amended--thereby repealing the bid-down procedure--but the parties agree that the former version controls this appeal.

During the tax sale, Adair Asset Management, L.L.C. (Adair), purchased a tax sale certificate on certain real estate (the property) now owned by Terry's Legacy, LLC. The tax sale certificate was bid down to an undivided 1-percent interest. According to the certificate, Adair paid $2,223.44, representing the 2009 delinquent taxes on the property. After the sale, Adair paid all of the property taxes assessed against the property for the years 2010 through 2012.

In due course, Adair filed an action and obtained a decree judicially foreclosing the lien provided by the tax sale certificate. Although the complaint alleged that there was a potential claim against the property by First State Bank by virtue of a deed of trust and an assignment of rents and leases, the decree made no determination of

Page 424

the amount or extent of any lien under First State Bank's deed of trust. The decree found that " the right, title and interest of each of the Defendants named in the cause of action are wholly junior and inferior to the lien of [Adair]." The court determined that Adair was due $8,722.72 for the tax sale certificate, plus specific amounts representing interest, costs, and attorney fees. The decree provided for the customary relief in the form of an order of sale to be issued to the sheriff after the ...


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