Show Me State Premium Homes, LLC v. George L. McDonnell

United States Court of Appeals
For the Eighth Circuit
___________________________
No. 22-1894
___________________________
Show Me State Premium Homes, LLC
lllllllllllllllllllllPlaintiff - Appellant
v.
George L. McDonnell; Doris M. McDonnell; Alan South, as Trustee under a
Certain Deed of Trust; Kratky Road, Inc., a Trustee under a Certain Deed of Trust;
United States of America, on behalf of Department of Housing and Urban
Development; National City Bank; PNC Financial Services Group, Inc., as
possible successor to National City Bank
lllllllllllllllllllllDefendants - Appellees
Metropolitan St. Louis Sewer District
lllllllllllllllllllllDefendant
City of Florissant, Missouri
lllllllllllllllllllllDefendant - Appellee
____________
Appeal from United States District Court
for the Eastern District of Missouri - St. Louis
____________
Submitted: April 11, 2023
Filed: July 20, 2023
[Published]
____________

-- 1 of 5 --

-2-
Before SHEPHERD, ERICKSON, and STRAS, Circuit Judges.
____________
PER CURIAM.
Show Me State Premium Homes wants its purchase of a foreclosed property
to be free and clear of all other interests, including those belonging to the United
States. Getting what it wants would require a “judicial sale.” 28 U.S.C. § 2410(c).
We agree with the district court1 that none took place, and it is too late to hold one
now.
I.
The United States Department of Housing and Urban Development has two
deeds of trust on a Missouri home. They were security for home-equity loans taken
out by a couple that previously owned it. See Bob DeGeorge Assocs. v. Hawthorn
Bank, 377 S.W.3d 592, 597 (Mo. banc 2012) (explaining that “[a] deed of trust is a
form of mortgage . . . that uses an interest in real property as security for
performance of an obligation”). When the couple fell behind on their property taxes,
the county tax collector put the house up for auction. See Mo. Rev. Stat.
§ 140.150(1) (authorizing the sale of real property to cover unpaid taxes). A bond
company bought it, received a deed, and then sold it to Show Me. See id. § 140.420.
Worried about the marketability of its title, Show Me went to Missouri state
court to request an order declaring that all other interests in the home, including those
1 The Honorable Sarah E. Pitlyk, United States District Judge for the Eastern
District of Missouri.

-- 2 of 5 --

-3-
belonging to the United States, had been extinguished through foreclosure.2 After
removing the case, see 28 U.S.C. § 1442(a)(1), the United States filed a motion to
dismiss, see Fed. R. Civ. P. 12(b)(6). Its position was that there could be no
foreclosure without a judicial sale. See 28 U.S.C. § 2410(c). The district court
agreed, declined to exercise supplemental jurisdiction over what remained, and
remanded to state court. See id. § 1367(c)(3).
II.
The key to this case is 28 U.S.C. § 2410. It waives sovereign immunity for,
among other things, “civil action[s] . . . to foreclose a mortgage or other lien.” Id.
§ 2410(a)(2). But, according to the statute, there must be a “judicial sale” first.3 Id.
2 The district court dismissed Show Me’s request for ejectment and an award
of costs and damages on sovereign-immunity grounds. See FDIC v. Meyer, 510 U.S.
471, 475 (1994) (“Absent a waiver, sovereign immunity shields the Federal
Government and its agencies from suit.”); cf. 28 U.S.C. § 2410(a) (waiving
sovereign immunity for certain other actions involving property in which the United
States claims an interest). It should have specified, however, that the dismissal was
without prejudice—a modification we now make. See Murray v. United States, 686
F.2d 1320, 1327 n.14 (8th Cir. 1982) (explaining that a court is “without power to
render judgment on the merits” in these circumstances).
3 We do not address whether the judicial-sale requirement applies to other
types of actions listed in 28 U.S.C. § 2410(a). Show Me insisted throughout that it
sought title through foreclosure and, until oral argument, never argued otherwise.
Although Show Me’s state-court petition labeled its foreclosure request as a
quiet-title action, the substance of the petition—including the prayer for relief—
asked the court to foreclose the existing liens on the property. Cf. Raulerson v.
United States, 786 F.2d 1090, 1091 (11th Cir. 1986) (explaining that “section 2410
waives sovereign immunity only in actual quiet[-]title actions, not suits analogous
to quiet[-]title actions”). We will not consider its last-minute, unbriefed suggestion
that it only sued “to quiet title.” Id. § 2410(a)(1); see United States v. Larison, 432
F.3d 921, 923 n.3 (8th Cir. 2006) (“We do not consider arguments raised for the first
time at oral argument.”).

-- 3 of 5 --

-4-
§ 2410(c). Determining what qualifies as one presents a question of statutory
interpretation that we review de novo. See United States v. Templeton, 378 F.3d
845, 849 (8th Cir. 2004).
The tax sale itself does not qualify because it was not “made under the process
of a court.” Williamson v. Berry, 49 U.S. (8 How.) 495, 547 (1850) (defining what
a judicial sale “definite[ly] and unmistakab[ly]” requires); see Weir v. United States,
339 F.2d 82, 85 (8th Cir. 1964) (explaining that judicial sales are “made under order
or decree of [a] court” (quoting Yazoo & Miss. Valley R.R. Co. v. City of Clarksdale,
257 U.S. 10, 19 (1921))). “It is an indispensable attribute of such a sale that it must
be made by authority of some court or judge that has jurisdiction to make or to direct
it.” Laurel Oil & Gas Co. v. Galbreath Oil & Gas Co., 165 F. 162, 165 (8th Cir.
1908). Here, however, there was no court involvement at all, much less a sale
conducted under court order or supervision. It was instead an online auction, held
under the direction of the county tax collector, which Missouri courts have described
as an “administrative” process that “substitute[s]” for a judicial foreclosure sale.
McMullin v. Carter, 639 S.W.2d 815, 817–18 (Mo. banc 1982) (citation omitted).
It is also too late at this point for the district court to order a judicial sale
because there is nothing for Show Me to buy. The tax collector gave the bond
company a deed, “vest[ing] . . . an absolute estate in fee simple,” Mo. Rev. Stat.
§ 140.420, which it then sold to Show Me. It cannot purchase an interest it already
owns. See Webster’s New International Dictionary of the English Language 2203
(2d ed. 1944) (defining a “sale” as a transaction transferring property “from one
person to another”).
Show Me views things differently. It claims that there is still something left
to buy because its interest is “inchoate.” And the way to perfect what it bought is to
have the district court confirm that it has title, which would also satisfy the judicial-
sale requirement.

-- 4 of 5 --

-5-
But that is not how tax sales work in Missouri. A buyer’s interest is only
“inchoate” before it gets a valid deed, not after. See State ex rel. Baumann v.
Marburger, 182 S.W.2d 163, 165 (Mo. 1944) (explaining that, by satisfying other
requirements and then “demanding a deed,” a tax-sale buyer “call[s] in the legal
title”); see also Mo. Rev. Stat. § 140.330(1) (providing that the buyer “may”—not
must—then go to court to quiet its title); cf. CedarBridge, LLC v. Eason, 293 S.W.3d
462, 467–69 (Mo. Ct. App. 2009) (explaining that a would-be buyer “never attained
the title” because the deeds it received were invalid), abrogated on other grounds by
Harpagon MO, LLC v. Bosch, 370 S.W.3d 579 (Mo. banc 2012). And here, title
vested once the bond company “exercised [its] right to have the legal title
transferred.” Marburger, 182 S.W.2d at 166. No “judicial sale” ever took place,
and it is too late to hold one now, meaning that the interests held by the United States
have never been foreclosed. 28 U.S.C. § 2410(c).
III.
We accordingly affirm the judgment of the district court but modify the
dismissal of the ejectment and damages claims to be without prejudice.
______________________________

-- 5 of 5 --