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Crusader As Custodian For Strategic Municipal Lien Investments, LLC v. Charles E. Heyward

May 26, 2011

CRUSADER AS CUSTODIAN FOR STRATEGIC MUNICIPAL LIEN INVESTMENTS, LLC, APPELLANT,
v.
CHARLES E. HEYWARD, ET AL., APPELLEES.



Appeal from the Superior Court of the District of Columbia (CAL3563-07) (Hon. Alfred S. Irving, Jr., Trial Judge)

The opinion of the court was delivered by: King, Senior Judge:

Submitted February 1, 2011

Before BLACKBURNE-RIGSBY and THOMPSON, Associate Judges, and KING, Senior Judge.

This appeal comes to us from the trial court's dismissal of a complaint to foreclose on Charles Heyward's right of redemption to his property, filed by appellant Crusader as Custodian for Strategic Municipal Lien Investments, LLC's ("Crusader"). Crusader seeks reversal of the trial court's decision and a case remand with instructions that the complaint for foreclosure be reinstated. We affirm.

I.

Crusader, the assignee of a water and sewage lien on Heyward's property, contends that the court erred in dismissing its complaint because the instant foreclosure action may be brought under D.C. Code § 34-2407.02 (2001), and D.C. Code § 47-1303.04 (2001). We disagree.

Heyward purchased real property in the northeast quadrant of the District of Columbia in 1992. In June 1996, the Water and Sewer Administration of the District of Columbia Department of Public Works ("WSA") issued a Certificate of Delinquent Water/Sewer Charges to Heyward because the District had a lien on Heyward's property in the amount of $359.63 for unpaid water and sewer charges. This certificate was mailed to Heyward at 715 Irving Street, N.W., but the lien was on property located at 715 Irving Street, N.E.

Also in June 1996, the District created the District of Columbia Water and Sewer Authority ("WASA") to be "an independent authority of the District government" and transferred WSA's functions to WASA. D.C. Code §§ 34-2202.02 & -2202.19 (2001). Pursuant to this transfer, the District's $359.63 lien on Heyward's property was assigned to WASA. See D.C. Code § 34-2202.07 (e) (2001); § 34-2202.19 (b).

From 1998 until 2007, WASA and its successors-in-interest conveyed and assigned the instant interest in unpaid water and sewer charges to several purchasers, most recently to Crusader.*fn1

On May 24, 2007, DC Lien Acquisitions, LLC ("DC Lien"), Crusader's predecessor-in-interest,*fn2 filed the instant complaint to foreclose Heyward's right of redemption as to the lien on Heyward's property. The complaint alleged that WASA had "sold and assigned to [p]laintiff [Crusader] the water and sewer liens" on Heyward's property. However, the complaint did not state that the property was sold at a foreclosure proceeding or public tax auction. On November 10, 1997, DC Lien moved to substitute Crusader as the plaintiff as its "successor-in-interest," and the trial court granted the motion.

Heyward filed a pro se answer arguing that the action should be dismissed because it was filed more than one year after the sale of the lien, and he contested the amount and existence of the lien. Heyward later argued that he never received notice of the certificate of delinquent charges because the address to which the certificate would have been mailed did not match the property address.

The District of Columbia, named as a defendant in the trial court pursuant to D.C. Code § 47-1371 (b)(1)(G) (2001), argued that Crusader was not entitled to a foreclosure judgment because Crusader had not obtained a certificate of sale for Heyward's property, which would have been issued pursuant to a public tax sale in accordance with District law. D.C. Code § 34-2407.02 (b). In response, Crusader eventually conceded that Heyward's property was not sold at a public tax auction, and that the "assignment . . . was pursuant to a purchase and sale agreement."

Ultimately, the trial court dismissed the action. First, it found that Crusader was not entitled to foreclose Heyward's right of redemption because Crusader wrongfully asserted that D.C. Code § 34-2407.02 (a)(3) (2001) permitted Crusader to file its complaint under Chapter 13A of Title 47. Chapter 13 of Title 47 pertains to tax sales conducted in 2000 and earlier, while Chapter 13A pertains to tax sales conducted since 2001. D.C. Code § 47-1385 (2001).*fn3 The trial court noted that § 34-2407.02 (a)(3) provides: "the Mayor, and not a private entity such as [Crusader], with authority to file an action to foreclose redemption under 'Subchapter IV of Chapter 13A of Title 47.'" Furthermore, pursuant to D.C. Code § 47-1385 (2001),*fn4 the trial court found that because WASA sold the instant lien before January 1, 2001,*fn5 Crusader should have filed its complaint under Chapter 13 of Title 47, and not Chapter 13A. The court also found that Crusader's lien was invalid because the original sale of the lien from WASA to Breen Capital Services Corporation (one of Crusader's predecessors-in-interest) did not comport with the requirements of D.C. Code § 47-1303.04 (d) (2001)*fn6 because the document assigning the lien to Breen Capital Services Corporation failed to state Heyward's ...


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