A State-Sanctioned Fraudulent Transfer?

Nebraska Pastureland

By: Donald L Swanson

The majority’s opinion “permits Vandelay to reap a windfall that borders on the obscene.”

Hon. William B. Cassel, Nebraska Supreme Court Justice, Dissenting in Wisner v. Vandelay Investments, L.L.C. (Decided 8/24/2018).

You’re not going to believe this . . . seriously.

Facts of the Case

In 2014, Vandelay Investments acquired 650 acres of farm and ranch land near North Platte, Nebraska. The land had an assessed value of $986,000.00. Vandelay acquired it by paying delinquent real estate taxes of $8,276.65 in 2011. Yes, that’s acquiring a million dollars of value for a payment of approximately 1%.

And get this. The owner they took it from was an elderly widow with diminished capacity in an assisted-living care center, because she failed to respond to formal notices in 2014—when she was 98 years old!

How did Vandelay provide notices, you ask? They did it in two ways:

(i) by sending a letter by both certified mail and first class mail to the widow at the care center—she failed to pick up the certified letter, which was returned as “unclaimed”; and

(ii) by publishing notice in a newspaper, since the widow could not be “found”—even though the purchaser knew of her presence in the care center.

The Widow’s Circumstance

Gladys P. Wisner entered the retirement center in 2009 (the year she turned 93), following the the deaths of her husband and her caretaker son, Roger.

The trial court said, “Gladys was generally unfamiliar with financial matters and did not pay her own bills.”

Here’s some further history:

By the time the tax sale certificates were sold in 2011, she was 94 years old;

In late 2013, at age 97, she suffered a number of falls and “was no longer ambulatory”;

“By March 2014, as she approached the age of 98,” she was “suffering from numerous chronic medical issues” and “having difficulty with her memory” and “with complicated tasks”; and

According to care center notes, Gladys was: “kind and easy to get along with,” “oriented to time, person and place,” “alert and cooperative,” “capable of performing simple tasks,” and having a “fairly consistent pattern of normal intellectual behavior.”

Gladys’s longtime physician, who (“from 2009 until the time of her death”) “saw her about every 60 days,” testified:

in 2006 “she had episodes of confusion and disorientation,” which are “typically associated with findings suggesting small strokes”;

by 2009, she was “not really able to make good judgments”—“You could ask her questions and she would give a good response, but if you asked detail, if you . . . asked her to make judgments, she really wasn’t able to do that very well”;

she could do “simple things,” such as “describe that she needed to go to the bathroom, she was hungry, she was tired”;

“over time what you could see is that she became less capable”—there was a “fairly steady but gradual deterioration in how well she did,” which was “more mental than physical”; and

from 2009 onward to the time of her death:

–“her ability to understand business or financial matters” or to “organize information” was “very limited”—she was suffering from a “disorganization of the mind”;

–she could not “deal with anything that was beyond simple”—anything complicated “would be beyond what she would be able to manage”; and

–she suffered from a “mental disorder” characterized as “multi-infarct dementia” (i.e., “multiple small strokes which . . . progressively knock out sections of brain).”

Her obituary says this: “Gladys Pearl Wisner, 99, of North Platte, Nebraska, died Wednesday, Nov. 18, 2015, at Centennial Park Retirement Village in North Platte.”

The Litigation Process

When Gladys’s family learned of the problem and could not resolve it, they filed suit in Nebraska state court, proposing to redeem the property by paying delinquent taxes plus statutory interest and costs.

–Trial Court

The trial court ruled in favor of Vandelay, citing its compliance with technical statutory requirements. The family appealed.

–Nebraska Court of Appeals

A three-Judge panel of the Nebraska Court of Appeals reversed, in a unanimous opinion (the opinion is linked here). This is the panel’s rationale:

“Vandelay sent notice of its intent to apply for a treasurer’s tax deed to Gladys by certified mail,” which was returned as “unclaimed”;

“Vandelay then published notice of its intent to apply for a treasurer’s tax deed in the Sutherland, Nebraska, newspaper”

[Note: The town of Sutherland, Nebraska, is in the same County as North Platte, where Gladys lived, but is located 20 miles to the west];

However, “notice by publication is only allowed” if the owner [Gladys] “cannot, upon diligent inquiry, be found”;

“Since Vandelay knew Gladys’ address and where she could be found, they could not meet the requirements for notice by publication”; and

“Consequently, Vandelay . . . failed to comply with the notice requirements relating to treasurer’s tax deeds.”

Vandelay Investment appealed.

–Nebraska Supreme Court

The Nebraska Supreme Court reversed the Court of Appeals and affirmed the trial court’s decision, after engaging in a lengthy and technical analysis and parsing of statutory language.  It did so in a 4 to 1 majority opinion — 2 Justices did not participate in the ruling.

The Supreme Court’s opinion concludes with these surprising remarks:

Vandelay’s effort to mail the notice of the publication by first-class mail “was not statutorily required”; so,

Vandelay mailed the first class letter “out of an abundance of caution to ensure Gladys was not deprived of the due process rights in her property”; and

“Hence, the equities of this situation do not favor” Gladys’s family, and the family’s “equities” argument “is without merit.”

Obviously, the 4 majority Justices believe that predictability and certainty and finality are essential for Nebraska’s tax sale system.

Public Reactions

Reactions to the result in this case, that I’ve heard, are decidedly negative.  Reactions range from:

“How can that happen?”; to

“There’s a special place in hell . . . !“; to

“Can’t we protect our elderly from exploitation and predatory behavior?”

I perceive a sense, among the public, of grave injustice:

that a fraud has been perpetrated against the weakest and frailest among us;

that the State has sanctioned, supported and affirmed the fraud; and

that the result reveals something fundamentally wrong with our “system of justice.”



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