TL 20-000268

NOVEMBER 16, 2020




Plaintiff Oak Ledge Properties, LLC filed an action in this Court on April 21, 2020, pursuant to G.L. c. 60, § 65. In its complaint, Oak Ledge sought to foreclose all rights of redemption in a 10.5-acre parcel located on Oak Street in Randolph, Massachusetts (the "Property"). The Town of Randolph recorded a tax taking against the Property in July 1975 (the "Tax Title").

Section 65 requires the plaintiff in a tax-title foreclosure action (§ 65 calls that plaintiff the "petitioner") to state, among other things, "the petitioner's source of title. . . ." That requirement helps the court ascertain whether the plaintiff has standing to seek relief under § 65. In its § 65 complaint, Oak Ledge claimed it had received its title to the Property as the result of the Town's assignment to Oak Ledge of the Tax Title.

General Laws c. 60, § 52 states in part that "[t]he treasurer of any city or town holding 1 or more tax titles may assign and transfer such tax title or titles, individually or bundled, to the highest bidder after a public auction" that conforms with various procedural requirements set forth elsewhere in § 52. The documents that Oak Ledge has filed in this case demonstrate that the Town's assignment to Oak Ledge of the Tax Title is void, as the Town never held a "public auction" within the meaning of § 52 prior to making the purported assignment. Oak Ledge thus does not have standing to foreclose on the Property, and so its § 65 complaint will be dismissed.

The undisputed facts are these. Thinking that it owned the Property, the Town advertised to sell it. It did so by publishing a request for proposals (the "RFP") in a local newspaper. State law allows Massachusetts municipalities to advertise their properties for sale via RFPs. See G.L. c. 30B, § 16 (municipalities may advertise and sell properties via RFPs). Oak Ledge responded to the RFP and submitted a sealed written bid to buy the Property. The Town determined that Oak Ledge's bid was the highest.

The Town signed a purchase and sale agreement with Oak Ledge promising to sell the Property. It was only then that someone discovered that the Town hadn't exercised its rights under the Tax Title and state law to foreclose on the Property. The Town thus couldn't convey clear title to the Property. Undaunted, the parties appear to have resorted to the following fix: Oak Ledge agreed to pay (and actually may have paid) the Town the unpaid balance of the Property's tax-title account. The town manager of the Town then signed an Assignment of Tax Taking and Related Rights (the "April 2020 Assignment"), under which the Town purported to assign to Oak Ledge the Tax Title. Oak Ledge then filed its § 65 action in this Court, and supplied to the Court as proof of its title the April 2020 Assignment.

Alert Court staff noticed several problems with the April 2020 Assignment. First, § 52 allows the "treasurer of a city or town" to assign a tax title. The Town of Randolph's treasurer didn't sign the Assignment. Second, the Assignment didn't recite that the Town had held a public auction of the Tax Title. Third, the Assignment didn't comply with § 52's requirements as to the form municipalities must use for such things (the Massachusetts Commissioner of Revenue's State Tax Form 431), and hence the Assignment lacked other information § 52 requires in a § 52 assignment. Finally, there was no indication that anyone had recorded the Assignment, another § 52 requirement.

When confronted with these problems, Oak Ledge filed with the Court a second document, an "Instrument of Assignment" (the "June 2020 Assignment"). Someone fashioned the June 2020 Assignment from Form 431; the Town's treasurer had signed that document; and someone had recorded it timely. The June 2020 Assignment thus fixed three of the problems detected in the April 2020 Assignment. But the June 2020 Assignment still had flaws: someone had altered Form 431 to state that the assignment resulted from a "winning bid at an auction and/or in response to a Request for Proposals. . . ." (Form 431 doesn't contain the emphasized language.) Only when the Court asked Oak Ledge a second time to explain what had happened did Oak Ledge disclose fully how it purportedly ended up with the Tax Title.

Oak Ledge contends that, "although denominated in a different fashion, the entirety of the bid process followed by the Town of Randolph in its assignment of rights to Oak Ledge was consistent with the statutory requirements of M.G.L. c. 60, § 52." The Court rejects that claim. Section 52 straightforwardly says that a municipality may assign a tax title only "to the highest bidder after a public auction . . . ." Chapter 60 doesn't define the term "public auction," and thus the Court looks first to the plain meaning of "public auction" to figure out what the Legislature intended by the term. See International Fid. Ins. Co. v. Wilson, 387 Mass. 841 , 853 (1983) (1977) ("the primary source of insight into the intent of the Legislature is the language of the statute"). Where language in c. 60 is plain and unambiguous, "'it is conclusive as to the legislative intent,'" Tallage Lincoln, LLC v. Williams, 485 Mass. 449 , 459 (2020), quoting Commonwealth v. Wassilie, 482 Mass. 562 , 572 (2019). The courts also "ought not declare rights for § 52 assignees that the statutory scheme does not expressly grant." Williams, 485 Mass. at 457.

Black's Law Dictionary (11th ed. 2019) defines "auction" as "[a] public sale of property to the highest bidder; a sale by consecutive bidding, intended to reach the highest price of the article through competition for it." See also 7 Am. Jur. 2d Auctions and Auctioneers § 1 (Nov. 2020 update) (same definition); Outpost Café, Inc. v. Fairhaven Sav. Bank, 3 Mass. App. Ct. 1 , 2-3 (1975) (discussing particulars of sale by auction pursuant to mortgagee's statutory power of sale). Case law reinforces that definition. At its core, an auction is a competitive enterprise, one in which all bidders stand on equal footing and where all aim to achieve the best price for the thing being sold or service being offered. See Alex Lyon & Son, Sales Managers & Auctioneers, Inc. v. Leach, 844 S.E.2d 120, 126 (W. Va. 2020). Auction sales thus "must be made with [a] full understanding between auctioneer and bidders, and when such is not the case intelligent competition, which auction sales are supposed to invite, cannot be had." Ives v. Tregent, 29 Mich. 390, 394 (1874).

The Town's RFP process was not a "public auction." There is no evidence that, before accepting Oak Ledge's bid, the Town exposed it to any public scrutiny, or allowed others to offer a higher price. Instead, the purported assignment of the Tax Title was merely an attempt to rescue a failed purchase and sale agreement. The parties' workaround may have made sense to them, but their chosen fix -- an assignment of the Tax Title -- didn't comply with § 52.

For these reasons, Oak Ledge lacks standing under c. 60, § 65, to foreclose on the Tax Title this action. The Court will thus dismiss Oak Ledge's complaint for lack of subject-matter jurisdiction. Judgment to enter accordingly.