Lance R. Pomerantz
Attorney at Law

Land     Title     Law

“Constructive Notice”  The  Newsletter

Excerpted from the September 19, 2012 mailing of "Constructive Notice":

The Frugal Sheriff's Folly

Government agencies at every level face budget shortfalls and cost-cutting pressures. One Ohio sheriff’s office tried to save on paper and postage by using the internet. Of course, it wound up being roundly criticized for its efforts.

In PHH Mortgage Corp. v. Prater, Slip Opinion No. 2012-Ohio-3931 (Supreme Court of Ohio, Sept., 6,2012), PHH Mortgage had obtained a judgment of foreclosure and the property was scheduled for sale by the Clermont County Sheriff’s Office. The sale was postponed. The notice of postponement was mailed to PHH’s attorney informing him that in an effort to rein in costs, the Sheriff’s office would be discontinuing the practice of mailing notices of sheriff’s sales to attorneys. The notice went on to state that, henceforth, information about scheduled sales would be available on a website maintained by the Sheriff’s office.

Eventually, the sale was held and PHH did not attend. The property was sold to a third party. PHH commenced an action to overturn the sale on the ground that it did not receive notice of the rescheduled sale, depriving it of due process. Relying on the U. S. Supreme Court’s Mullane and Mennonite decisions, as well as an Ohio state court decision that held that foreclosing lenders have constitutionally protected interests, the Court determined that due process minimums were violated because “the new Internet procedure shifts the burden of notification from the sheriff’s office to the persons to whom the notice is directed.” Such notice, “more akin to notice by publication in a newspaper, is simply not sufficient or reasonably calculated to provide actual notice to all nondefaulting parties.”

The lender’s position was supported by nearly a half-dozen amicus briefs from organizations representing the indigent and elderly. The Court clearly relied on these, because it recited several statistics illustrating lack of access to the internet and/or skill in using it among those constituencies. Indeed, the Court found that “notice that misses 30 to 40 percent of its intended audience does not constitute the notice our Constitution demands when property is in jeopardy.” The Court did note in its opinion that “the policy in question ... applied only to attorneys ...” but went on to say that the Court “consider[ed] notice to an attorney as notice to a party and we use the same interchangeably.” 

In an apparent attempt to illustrate that traditional mail is not necessarily the only acceptable method, the Court quoted at length from the dissent in the intermediate appellate court, which endorsed the use of email notice only to attorneys.  Such an approach would require rule changes at the local level and possibly the state level, as well. The Supreme Court neither added its own endorsement, nor affirmatively declined to do so.