Michigan family fights for just compensation at the Supreme Court
Mike Pung’s life has been shaped by two driving forces: devotion to family and a refusal to back down from bullies. For over 15 years, those guiding principles have carried him through a drawn-out legal battle with Isabella County, Michigan.
What began as a dispute over a legitimate tax exemption on Mike’s late nephew’s property ended with the County seizing the home in question and selling it for a fraction of its worth. In a few weeks, Mike brings his fight to the Supreme Court to protect his family’s property and put an end to the County’s abuse.
The family anchor
Mike Pung was born and bred in the Wolverine State. It’s also where he and his wife raised their two children. Mike has always been the anchor of the extended Pung family, whether that meant hosting all the holiday celebrations at his home or going above and beyond when help was needed.
When tragedy struck, and Mike’s brother died unexpectedly in 1971, Mike stepped up to be a father figure to the four children he left behind. Mike adored his nieces and nephews. “They were almost like my kids,” he says. In 2005, devastation hit the Pungs once more when one of the nephews, Timothy “Scott” Pung, passed away suddenly, survived by his wife and two grown children, Katie and Marc.
Katie and Marc, who were just barely adults at the time, were now left trying to manage their grief and their late father’s estate, which included the home Scott had purchased in 1991. Mike volunteered to take over as administrator of the estate while Scott’s widow continued to live in the home until she passed in 2008. Marc then moved into the home and retained physical control of the property while Mike continued to manage the business side of the estate.
Mike is a serial entrepreneur, and over the years he’s owned all sorts of businesses, from a waterpark to a hotel, and everything in between. At 84, he still works every single day. He’s done well for himself, and his business skills have made him more than qualified and responsible enough to manage Scott’s estate. No tax bill ever went unpaid, which makes what happened next so surprising.
Nothing could have prepared him for the storm that was about to erupt with the County. And he most certainly never imagined that the conflict would end up at the Supreme Court.
The nightmare begins
In Michigan, homeowners can obtain an exemption from a supplementary property tax if they or their beneficiaries live on the property. Scott had secured the exemption long before his death, and with his widow and then his son continuously residing in the home, the law did not require any further action to maintain the exemption.
Despite the law being clear, in 2010, County tax assessor Patricia DePriest acted on her own interpretation and retroactively denied the exemption on Scott’s property for 2007, 2008, and 2009.
Mike was informed via letter and called DePriest immediately. The conversation was fruitless. “All she wanted to do was argue,” he recalls. They spent years debating the tax exemption in the Michigan Tax Tribunal where, on multiple occasions, the administrative law judge (ALJ) rejected DePriest’s reading of the law.
But DePriest was relentless. After the ALJ reversed the exemption denials for 2007-2009, DePriest proceeded to deny the exemptions for 2010 and 2011. When she was asked in a subsequent hearing why she didn’t adhere to the ALJ’s ruling that the Pung’s exemption was valid and did not require new paperwork, she doubled down, saying, “I don’t care what he says; the law says that you do.”
Unwilling to let it go, the County appealed the ALJ’s ruling on the 2007-2011 exemptions to the Michigan Court of Appeals.
While the court was in the middle of reviewing the 2007-2011 exemptions, DePriest continued her antics, denying the 2012 exemption as well. But her denial came after the 2012 tax bill had been sent to Mike. Mike wrote a check for the amount listed on his bill and went to drop it off with the County, where he was told that the amount was incorrect because he now owed the supplementary tax as well.
Mike was taken aback and handed in the check as-is. It was, after all, the correct amount, and he waited for the Michigan Court of Appeals to reach its decision. DePriest, on the other hand, wasted no time. She immediately reported the property delinquent over the alleged unpaid taxes, which at this time had risen to about $2,200 with interest and fees
The County treasurer promptly began the foreclosure proceedings. Despite the active lawsuit, the County never mentioned the foreclosure to Mike or his lawyer. Even more egregious, the County never bothered to tell the Michigan Court of Appeals either.
Finally, in February 2015, the Court of Appeals affirmed that the Pung property was always entitled to the exemption. The court was only addressing 2007-2011, but because Marc still lived in the home, it would logically follow, to any reasonable person, that the Pung property would also have been exempt in 2012 and onward.
But it didn’t matter at that point. The County had already foreclosed on the nearly $200,000 home. The home was then sold at auction for the abysmally low price of $76,000.
The County’s actions felt punitive, if not downright vindictive. Mike had never once missed a tax payment. To him, it felt like the County was penalizing him for daring to question their authority.
To Mike, this was much bigger than the $2,200 debt, which he could have easily afforded and would have paid had it been legitimate. His late nephew had been proud to buy his family a home and that legacy was now being desecrated by a tax assessor on a power trip.
Mike wasn’t ready to throw in the towel. As Marc—now married and raising a son of his own in his childhood home—packed up decades of memories and looked for a new place to live, Great-Uncle Mike was preparing for the next fight.
The fight continues
Under Michigan law, after the foreclosure judgment was entered, the County was supposed to send notice to Mike that he had until March 31 to redeem the property. But the County waited until after the redemption deadline to mail the foreclosure notice.
Given the insufficient notice, Mike asked the state court to nullify the foreclosure. The trial court agreed. True to form, the County appealed and the Michigan Court of Appeals reversed, ruling that the notice had been sufficient, even if the circumstances were unfortunate.
The decision was a setback for Mike, but across the state in Oakland County, a similar case was unfolding that would give him another arrow in his quill to continue the fight.
In 2011, Uri Rafaeli unwittingly underpaid his property taxes by $8.41. The meager amount wasn’t even enough to buy a movie ticket, yet the County foreclosed on the property to satisfy the debt. The County sold the property and pocketed the surplus without giving Uri a cent.
The government is allowed to take your home to collect unpaid taxes, but the Fifth Amendment’s Takings Clause requires them to return the surplus as just compensation. Failing to do so is called home equity theft.
Uri fought back, but the Michigan Court of Appeals ruled against him. Pacific Legal Foundation then took his case to the Michigan Supreme Court. In 2020, the court ruled that Oakland County’s seizure had indeed violated the Michigan Constitution’s Takings Clause.
Armed with the court’s new ruling, Mike took Isabella County to federal district court, raising Fifth Amendment Takings and Eighth Amendment Excessive Fines claims. The court dismissed the Eighth Amendment claims, but thanks to the Rafaeli precedent, could not ignore the unconstitutional takings. The County was ordered to return $73,766.07 to Mike as just compensation.
But this is where the court’s ruling fell short.
What is just compensation?
Just compensation has always been understood to mean fair market value. But the court’s calculation—subtracting the disputed $2,241.93 tax debt from the $76,008 auction price—was based on a fire-sale value, not the home’s actual worth.
The Pung home was worth $194,400, a figure no one disputes. To satisfy the Constitution’s just compensation requirement, the County owes Mike $192,158.07. Instead, the court awarded only $73,766.07, leaving $118,392.00 in uncompensated equity that effectively vanished at auction.
While Mike was dealing with the district court, PLF was busy at the Supreme Court with another home equity theft case, Tyler v. Hennepin County. In a unanimous opinion, the justices affirmed that home equity theft—taking more than the government is owed—violates the Fifth Amendment.
With two groundbreaking rulings to strengthen his claims, Mike is now taking his case to the Supreme Court, where he is asking the justices to add an extra layer of protection and clarity to the Tyler ruling.
If counties can evade the Fifth Amendment just by undervaluing the property at auction, like they did to Mike, then Tyler’s protections—that individuals are guaranteed the right to just compensation if governments take property to satisfy a debt—evaporate.
When the government takes title in a tax foreclosure, the owner is still owed the surplus value of their property—measured by fair market value at the time the government takes title, not a distressed auction price that leaves lots of equity on the table.
Beyond the Fifth Amendment, wasting equity worth more than 50 times the amount owed is both punitive and grossly disproportionate to the offense committed, thus violating the Eighth Amendment’s Excessive Fines Clause.
Ending the nightmare for good
For the Pungs, this fight is personal. “My dad would be turning over in his grave if he knew this was happening,” Marc says. “I just want it to be made right and not have anybody else go through this.”
As for Mike, while most of his peers are enjoying retirement, he is in the midst of a landmark Supreme Court case. This would be a daunting task for most, but Mike isn’t most people. He is tough as nails and cowering is not an option when his family is threatened. “Right is right, wrong is wrong,” he says. “And there is no such thing as a price tag. I don’t back down from anybody.”
On a broader scale, a win in Pung would help tie up loose ends left by Tyler and further Pacific Legal Foundation’s mission to end home equity theft for good.
