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You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Lot 04B & Block 83 Townsite v. Fairbanks North Star Borough (10/7/2011) sp-6607

Lot 04B & Block 83 Townsite v. Fairbanks North Star Borough (10/7/2011) sp-6607, 261 P3d 422

        Notice: This opinion is subject to correction before publication in the PACIFIC  REPORTER. 
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                                                   )    Supreme Court No. S-13654 
                        Appellant,                 ) 
                                                   )    Superior Court No. 4FA-08-01704 CI 
        v.                                         ) 
                                                   )    O P I N I O N 
FAIRBANKS NORTH STAR                               ) 
BOROUGH,                                           )   No. 6607 - October 7, 2011 
                        Appellee.                  ) 

                Appeal   from     the  Superior    Court   of   the  State  of   Alaska, 
                Fourth Judicial District, Fairbanks, Paul R. Lyle, Judge. 

                Appearances: Wolfgang Falke, pro se, Fairbanks, Appellant. 
                Cynthia M. Klepaski, Assistant Borough Attorney, and A. 
                René Broker, Borough Attorney, Fairbanks, for Appellee. 

                Before:      Carpeneti,     Chief   Justice,   Fabe,   Winfree,     and 
                Stowers, Justices.     [Christen, Justice, not participating.] 

                WINFREE, Justice. 


                A property owner appeals from a judgment foreclosing a borough property 

tax lien, arguing that the borough's foreclosure was legally flawed and that the borough's 

attorney    should    have   been   sanctioned    for  maintaining     the  foreclosure    against   his 

property.  Because the superior court did not err in concluding there were no legal flaws 

----------------------- Page 2-----------------------

in the foreclosure, and because therefore there was no basis to sanction the borough's 

attorney, we affirm the judgment in all respects. 


                Wolfgang and Erika Falke (Falke) own a residential property in Fairbanks. 
Falke became delinquent on his 2003, 2004, and 2005 property taxes.1                 The Fairbanks 

North Star Borough (Borough) initiated foreclosure proceedings against the property 

each year from 2005 through 2008. 

                Falke unsuccessfully contested the 2005 foreclosure, and the superior court 
entered a corrected judgment and decree of foreclosure in April 2007.2                 The superior 

court dismissed the 2006 foreclosure action with the parties' consent after our decision 

in  Lot   04B   &   5C   I,   and   dismissed   the   2007   foreclosure   action   after   the   Borough 
withdrew its request for judgment and decree of foreclosure.3             Falke also contested the 

2008 foreclosure. The superior court stayed the 2008 foreclosure action pending Falke's 

appeal of the 2005 foreclosure action, but lifted the stay in June 2009 after we affirmed 

        1       Falke has not owed new   property taxes after 2005 because   of   a   senior 

citizen exemption.     See AS 29.45.030(e). 

        2       See Lot 04B & 5C, Block 83 Townsite v. Fairbanks N. Star Borough (Lot 

04B & 5C I), 208 P.3d 188, 190 (Alaska 2009).   This corrected judgment and decree of 
foreclosure led to a subsequent appeal, but we ultimately affirmed the judgment.  Id. at 
194;see Lot 04B & 5C Block 83 Townsite v. Fairbanks N. Star Borough (Lot 04B & 5C 
II), Mem. Op. & J. No. 13190, 2010 WL 3447871, at *1 (Alaska, Sept. 1, 2010).  After 
our decision the Borough requested, and the superior court granted, dismissal of the 2005 
foreclosure because Falke had paid all but $13; the Borough represented it had "rolled 
over" the $13 for collection in a subsequent foreclosure proceeding. 

        3       We assume the Borough has continued to roll over any unpaid taxes into 

the present action.  At oral argument before us, Falke stated that in order to maintain his 
standing to present this appeal, he had not paid the amount owed. 

                                                 -2-                                            6607

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the superior court's judgment in the 2005 action.4 

                The Borough then moved for summary judgment in the 2008 action.  The 

Borough attached as an exhibit a tax bill history including amounts due for the 2003 

through 2005 tax years, but omitting any reference to tax years 2006 and beyond.  Falke 

opposed   the   motion,   alleging   the   Borough   attorney   should   not   have   filed   the   2008 

foreclosure action because (1) the Borough's claims were legally erroneous; and (2) the 

Borough had already successfully foreclosed on the property in the 2005 action.  Falke 

also moved for sanctions against the Borough's attorney "pursuant to [Alaska Civil] 

Rule 11." 

                The superior court granted summary judgment for the Borough.  Although 

the order's caption correctly indicated the foreclosure action was against the property 

itself, the summary judgment order's first sentence stated:  "In 2008, the Borough filed 

a tax foreclosure action against Mr. Falke for failure to pay his property taxes."  The 

superior     court   concurrently    entered   a  judgment   and     decree   of   foreclosure,   stating 

"[p]ursuant to the summary judgment, there is no reason to delay entering judgment" 

against Falke's property.   The court awarded the Borough "judgment for the delinquent 

taxes, penalties, interest, advertising and costs . . . , plus legal fees, if any" and decreed 

Falke's   property   "sold   and   transferred   to   the   [Borough]   for   the   amounts   of   taxes, 

penalties, interest, advertising and legal costs for which the property is liable."               Falke 

moved   for   reconsideration       and   submitted   proposed   orders   stating     foreclosure   was 

improper because "one against the same lot [was] still in force and in effect" and because 

the decision granting summary judgment was "otherwise flawed."                    The superior court 

denied Falke's reconsideration and sanctions motions. 

        4       See Lot 04B & 5C I, 208 P.3d at 190. 

                                                   -3-                                               6607 

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                Falke    appeals   the   orders   granting   summary      judgment     and   denying 

sanctions, arguing:     (1) the property should not have appeared on the 2008 foreclosure 

list because AS 29.45.330(a)(1) allows a property's inclusion only if the record owner 

owes taxes for the year immediately preceding the list year; (2) it was error to state that 

the 2008 action was brought against Falke rather than against the property itself; (3) it 

was error to allow new foreclosure proceedings because the foreclosure resulting from 

the 2005 action was "still current and in effect"; and (4) sanctions should have been 

imposed on the Borough's attorney. 


                We review summary judgment grants "de novo, affirming if the record 

presents no genuine issue of material fact and if the movant is entitled to judgment as a 
matter of law."5     In   making that determination, we view "the facts in the light most 

favorable     to  the  non-moving     party."6   We    use   our  "independent     judgment     when 

reviewing   issues   of   statutory   interpretation,   adopting   'the   rule   of   law   that   is   most 
persuasive in light of precedent, reason, and policy.' "7  "Decisions on Rule 11 motions 

are reviewed for abuse of discretion."8 

        5      Id. at 191 (quoting Beegan v. State, Dep't of Transp. & Pub. Facilities, 195 

P.3d 134, 138 (Alaska 2008)). 

        6      Id. (quoting McCormick v. Reliance Ins. Co., 46 P.3d 1009, 1011 (Alaska 


        7       Krone v. State, Dep't of Health & Soc. Servs., 222 P.3d 250, 252 (Alaska 

2009) (quoting Glamann v. Kirk, 29 P.3d 255, 259 (Alaska 2001)). 

        8       State, Dep't of Fish & Game v. Manning, 161 P.3d 1215, 1225 (Alaska 

2007) (citing Keen v. Ruddy, 784 P.2d 653, 658 (Alaska 1989)). 

                                                 -4-                                           6607

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        A.      The Statutory Tax Foreclosure Framework 

                Alaska Statute 29.45.295 provides that landowners are "personally liable" 

for property taxes, but that the taxes themselves "are a lien upon the property assessed." 

Alaska Statute 29.45.310 authorizes seizure and sale of the property to enforce tax liens. 

The process allows municipalities to handle delinquencies efficiently; they must: 

                (1) annually present a petition for judgment and a certified 
                copy of the foreclosure list for the previous year's delinquent 
                taxes in the superior court for judgment; 

                (2) publish the foreclosure list . . . in a newspaper of general 
                circulation distributed in the municipality . . . ; [and] 

                (3) within 10 days after the first publication or posting, mail 
                to   the  last   known   owner     of   each  property   .   .   .   a  notice 
                advising of the foreclosure proceeding.[9] 

Alaska Statute 29.45.330(b) imposes six requirements regarding the foreclosure list's 

format, including under (b)(3) that the list include "years and amounts of delinquency" 

for each parcel. 

                When      the  list  has  been   published     for  the  requisite   time   period,   the 

"municipality       shall  bring   one   general   foreclosure     proceeding     in  rem   against   the 

properties included in the foreclosure list."10        Anyone "having an interest in a lot on the 

foreclosure list may file an answer within 30 days" of the list's last publication.11              If an 

interest    holder   files  an  answer,    the  case   is  separated   and   the   court  "hear[s]    and 

determine[s] the issues raised by the complaint and answers in the same manner and 

        9       AS 29.45.330(a). 

        10      AS 29.45.360. 

        11      AS 29.45.370. 

                                                   -5-                                               6607 

----------------------- Page 6-----------------------

under the same rules as it hears and determines other actions."12            If the court finds for the 

municipality, the court enters "judgment and decree that the tax liens be foreclosed."13 

The property is then transferred to the municipality for the lien amount, but the owner 

may appeal the judgment and decree of foreclosure "in a manner provided for appeals 

in civil actions."14 

                Within one year of the property's   transfer to the municipality, "a party 

having   an   interest   in  the   property   may   redeem   it   by   paying   the   lien   amount   plus 

penalties, interest, and costs."15      "Foreclosure does not affect the former owner's right 

to possession during the redemption period" unless waste occurs on the property,16 and 

taxes   continue   to   accrue   as   if   the   property   remained   in   private   ownership.17 If   an 

interested party does not redeem the property, it is deeded to the municipality after notice 

of the redemption period's expiration is given.18 

        B.      Previous Year's Delinquent Taxes 

                Falke    interprets   the   phrase   "previous    year's   delinquent   taxes"    in  AS 

29.45.330(a)(1) to mean that the Borough can include a property on the foreclosure list 

only if taxes are delinquent from the year immediately preceding the list year.                   Falke 

claims   the   legislative   intent   to   that   effect   is   "crystal   clear"   because   of   the   statutory 

        12      AS 29.45.390(a). 

        13      AS 29.45.380. 

        14      AS 29.45.390(c). 

        15      AS 29.45.400. 

        16      AS 29.45.430. 

        17      AS 29.45.400. 

        18      AS 29.45.440 (notice); AS 29.45.450 (transfer). 

                                                   -6-                                             6607

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language, and "separation of power[s]" requires the court to follow that intent.19     Falke 

concludes that because he owed no new taxes for the 2007 tax year, the Borough could 

not place his property on the 2008 foreclosure list. 

              We agree with the Borough that the statutory language is not as narrow as 

Falke suggests.   As the Borough notes, AS 29.45.330(b)(3), requiring foreclosure lists 

to include the "years and amounts of delinquency," indicates the legislature's expectation 

that delinquencies from multiple years can be combined in a general foreclosure.  We 

therefore believe "previous year's delinquent taxes" contemplates that unpaid taxes from 

one year will roll over into the next year's tax liability.    Alaska Statute 29.45.330(a) 

requires a Borough to include property on its foreclosure list as long as previously due 

taxes have not been paid - the year in which the tax liabilities first arose is irrelevant. 

Because Falke owed back taxes in 2007 that had rolled over from previous tax years, the 

Borough correctly included Falke on the 2008 foreclosure list even though Falke owed 

no new taxes in 2007. 

       C.     In Rem Proceedings 

              The first sentence of the superior court's order granting summary judgment 

against Falke explains that "[i]n 2008, the Borough filed a tax foreclosure action against 

Mr. Falke for failure to pay his property taxes."  Falke argues this sentence was incorrect 

because the Borough's action was   against   the property, not against Falke.        Falke is 

       19     Falke cites two cases from other jurisdictions to support this claim.  But 

both cases hold that courts should not challenge the legislature's wisdom if a law is 
constitutionally valid.  See Harris v. Shanahan, 387 P.2d 771, 791 (Kan. 1982); Treffry 
v. Taylor, 408 P.2d 269, 273 (Wash. 1965).      We do not disagree with this general rule, 
but it provides little assistance with interpreting statutes. 

                                             -7-                                        6607

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correct; foreclosure actions are in rem proceedings.20 

                 However   we   agree   with   the   Borough   that   any   error   in   this   regard   was 

harmless and does not require changing the judgment.                   Rule 61 states "[n]o error or 

defect in any ruling or order . . . is ground for . . . disturbing a judgment or order, unless 

refusal to take such action appears to the court inconsistent with substantial justice."  As 

the Borough notes, the summary judgment order's caption correctly indicates that the 

action is against the property, not Falke personally.              And the judgment and decree of 

foreclosure   similarly   states   that   "[t]he   subject   real   property   described   above   against 

which   this   Judgment   and   Decree   is      entered    is   hereby  sold   and   transferred    to  the 

Fairbanks North Star Borough." 

                 Falke's contention that he was prejudiced because the misstatement allowed 

the Borough to garnish his Alaska Permanent Fund Dividend (PFD) and require a surety 

pending appeal is misplaced.           In Lot 04B & 5C II, the superior court signed writs of 

execution against Falke's 2007 and 2008 PFDs to recover the outstanding property taxes 

relating to the 2005 foreclosure.21  But Falke's PFDs were not applied to satisfy the writs 

because   they   had   already   been   garnished   for   other  reasons.22      Falke   moved   to   stay 

execution of the foreclosure and to extend the one-year redemption period pending his 

        20       AS    29.45.360     ("A    municipality     shall   bring   one   general    foreclosure 

proceeding in rem against the properties included in the foreclosure list."); see also AS 
29.45.300(b) ("Property taxes, together with penalty and interest, are a lien upon the 
property assessed . . . ."). 

        21      Lot 04B & 5C II, 2010 WL 3447871, at *1-2. 

        22      Id. 

                                                    -8-                                              6607

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appeal   of   the   superior   court's   summary   judgment   decision.23         After   a   hearing,   the 

superior court granted Falke a stay on the condition that Falke either pay the outstanding 

property   tax   debt   under   protest   or   deposit   a   supersedeas   bond   with   the   court   in   the 

amount due.24      On appeal we characterized the action as an in rem proceeding, noting 

that the Borough had filed "for foreclosure against Wolfgang Falke's property."  But we 

still upheld the supersedeas bond requirement.25             We further held that the issue of PFD 

garnishment       was    moot    because    his  PFD    had   already    been    otherwise    garnished.26 

Because Falke has not demonstrated any change of circumstances regarding his PFD or 

actual prejudice, the first sentence of the order granting summary judgment, although 

technically inaccurate, did not create an error requiring us to disturb the judgment. 

        D.       Prior Foreclosures 

                 Falke argues that at the time of the 2008 foreclosure action, the property 

"was already foreclosed and sold and transferred to the Borough" for the amount owed, 

and   the   Borough   cannot   "foreclose   on   a   lot   for   which   the   Borough   has   already   a 

certificate   of   sale."  According   to   Falke,   the   Borough   was   the   "owner   of   record," 

rendering the second foreclosure unnecessary.27             Falke cites AS 29.45.430 to support his 

        23       Id. 

        24       Id. at *2. 

        25       See id. at *1, *4 (affirming order requiring Falke to post supersedeas bond 

before granting stay of execution of Borough's foreclosure judgment on his property). 

        26       Id. at *1. 

        27       Falke also suggests that because "Lot 04B&5C was sold and transferred to 

the Borough for the amount of taxes . . . the Lot was liable for, there can be no taxes 
owed to the Borough by said lot."            Falke neglects to recognize that if he redeems the 
property, he could owe taxes for the entire time of possession. AS 29.45.400 (subjecting 

                                                    -9-                                               6607

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argument - the section allowing for a "former owner's right to possession" during the 

redemption period.28      Falke contends the judgment and decree of foreclosure incorrectly 

stated that Falke was the "record owner" of the property because he was actually the 

"former owner."       We disagree. 

                First, even though the property had been transferred, the Borough had not 

yet received a tax deed and clear title pursuant to AS 29.45.450. The legislature used the 

term   "former   owner"   to   distinguish   the   taxpayer   from   the   Borough   -   we   see   no 

evidence     of  legislative   intent   for  the  phrase   to  effect   a  change    in  the  property's 

ownership.29       Second,     taxes   originating    in  2005    were   not   included    in  the   2005 

foreclosure action.      As the Borough notes, preventing a subsequent foreclosure action 

for taxes that became due after the original foreclosure action was filed would "greatly 

hinder[]" the tax collection process.  Third, AS 29.45.330 and .360, in conjunction with 

our conclusion above that unpaid taxes roll over   from one year to the next, require 

municipalities to initiate foreclosure proceedings annually against property with unpaid 

taxes until the taxes are paid.30     Preventing subsequent foreclosures would conflict with 

        27      (...continued) 

redeemed property to taxes "as though it had continued in private ownership."). 

        28      Falke notes that AS 29.45.450(d) - concerning transfers of tax deeds to 

the Borough - also includes "former owner" language and AS 29.45.330(b) requires 
the foreclosure list to include the "last known owner." 

        29      As the Borough notes, Falke's reliance on Municipality of Anchorage v. 

Wallace, 597 P.2d 148 (Alaska 1979), to support his argument that "foreclosure ends 
when   the   entering   of   a   Judgment   and   Decree   that   sells   and   transfers   the   lot   to   the 
Borough pursuant to AS 29.45.380 and .390" is misplaced.                  In  Wallace, unlike in this 
case, the tax deed had already been transferred to the municipality.  Id. at 150. 

        30      See AS 29.45.330(a) ("A municipality shall . . . annually present a petition 


                                                  -10-                                             6607

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these   provisions.     Therefore   the   Borough   correctly   initiated   subsequent   foreclosure 

proceedings even though the 2005 action was still pending. 

        E.       Sanctions 

                 Falke   asserts   that   the   superior   court   erred  in   denying  his   motion   for 

sanctions against the Borough attorney. In the superior court Falke claimed the Borough 

attorney     knowingly      adopted    legally    erroneous    positions    by   contesting    the   same 

arguments Falke has made before this court in the present case.  In addition Falke argued 

that the Borough attorney "willfully and deliberately tried to deceive and to mislead this 

[c]ourt" by attaching a tax bill history ending in 2005 to the 2008 proposed judgment and 

decree, when AS 29.45.330 required delinquencies from the "previous year," which was 

2007.     Falke    repeats   his  arguments      here,   claiming   the   Borough     "truly  warrant[s] 

sanctioning, in that it caused substantial unnecessary filing and resulted in waste of 

judicial time." 

                As discussed above, the Borough's positions are legally sound, including 

its   position   that   unpaid   taxes  roll   over   from   one   year   to   the   next. The   Borough 

appropriately attached a tax bill history ending in 2005 to the proposed judgment and 

decree in the 2008 foreclosure proceedings because no new taxes have become due since 

2005.    The tax bill history sufficiently and accurately set forth Falke's unpaid taxes. 

Thus declining to impose sanctions against the Borough was not an abuse of discretion. 


                 We AFFIRM the superior court's decision. 

        30       (...continued) 

for   judgment     and   a  certified   copy   of  the   foreclosure    list  for  the  previous   year's 
delinquent   taxes   .   .   .   .");   AS   29.45.360   ("A  municipality   shall   bring  one   general 
foreclosure proceeding in rem against the properties included in the foreclosure list."). 

                                                   -11-                                               6607 
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