County seizes family home over tax bill that was never owed

Thirty-five years ago, Scott Pung purchased a 3,000-square-foot house in Isabella County, Michigan. Turning the three-bedroom house into a home was Scott’s shot at the American Dream for himself and his wife and two children. Shortly after purchasing the home, Scott secured a tax exemption for a supplemental property tax. He could have never guessed that filing the paperwork for a tax exemption would start a chain of events that would put his family before the nine justices of the Supreme Court.

After Scott’s unexpected death in 2004 and the death of his wife in 2008, Scott’s son Marc took control of the house. Under Michigan law, the tax exemption continued automatically as long as family members lived in the home. Marc lived there with his wife and young child. No additional paperwork was required.

But local tax assessor Patricia DePriest saw things differently. Despite clear statutory language protecting the Pungs, she retroactively denied the exemption for several previous years, arguing that Scott’s heirs should have resubmitted paperwork.

The Pung family took their case to the Michigan Tax Tribunal, where an administrative law judge ruled in their favor. But DePriest wasn’t deterred and again denied the exemption. When asked during a subsequent hearing about the administrative law judge’s ruling that the family didn’t need to file additional paperwork, she replied defiantly: “I don’t care what he says; the law says that you do.”

DePriest reported the Pung home as delinquent over approximately $2,000 in taxes, penalties, and costs that the family never owed. Even though the County knew about the tax tribunal and a Michigan court case involving the exemption, the County began foreclosure proceedings to take the Pung home. In 2015, Isabella County seized the home—which it had assessed at nearly $200,000—and later sold it in a fire sale auction for only $76,000.

The County kept all the money and evicted Marc, his wife, and their young child from the family home.

When government takes more than it is owed to settle back taxes, it’s home equity theft. In 2023, the Supreme Court deemed the practice unconstitutional in Tyler v. Hennepin County, which PLF brought to the Court.

When the Pungs sued, the trial court held that the government violated the Constitution by taking more than it was owed. But rather than pay the Pungs for what had been wrongly taken, the court held that the County only had to hand over the windfall the government had taken at the Pungs’ expense—the surplus proceeds from a poorly run auction. The government should never have foreclosed on the Pungs to collect a debt that was improperly imposed. The Pungs deserve payment for what was taken—a $200,000 home minus any “debt.”

The Eighth Amendment also prohibits excessive fines, including destroying $118,000 in equity to collect $2,242 that was never owed in the first place. The penalty far outweighs any alleged wrongdoing.

Throughout this process, the estate of Scott Pung—administered by Marc’s uncle Michael—fought the County’s actions. First, they challenged them in the County’s tax tribunal, then in the state and federal courts.

Now the Supreme Court will decide whether Scott Pung’s heirs are entitled to the equity they had in their longtime family home.

Pung v. Isabella County was originally litigated and brought to the court by Phil Ellison, who has fought home equity theft in Michigan for more than a decade. PLF’s litigation team is working with Ellison and the Pungs in their fight for justice at the Supreme Court.