2 months ago

PLF asks Supreme Court to stop Michigan from stealing

By Christina M. Martin Attorney

When Wayside Church fell behind on its 2011 property taxes on a parcel that the church had used as a youth camp, Van Buren County took the youth camp property and sold it for $206,000 to pay the church’s $16,750 in taxes, penalties, interest, and fees. The County kept the surplus proceeds—$189,250 more than the debt—as a windfall. Similarly, the County sold Myron Stahl’s property, where he was building his retirement home, for $68,750 to pay a $25,000 debt. It also sold Henderson Hodgens’s farm and home for $47,750 to pay a $5,900 debt. The County kept the surplus from these each of these sales.

Today, PLF petitioned the United States Supreme Court on behalf of Wayside Church, Myron Stahl, and Henderson Hodgens, asking the Court to review their case and hold that local governments violate the Takings Clause of the Constitution when they keep the surplus proceeds from tax sales.

Because there is no clear remedy under Michigan law, Wayside Church, Stahl, and Hodgens filed a lawsuit in federal court, alleging that the County violated the Takings Clause of the Fifth Amendment when it kept the surplus proceeds from the sales of their foreclosed properties. The district court dismissed the suit, holding the Takings Clause does not protect delinquent taxpayers’ right to the surplus proceeds from tax sales, because Michigan’s tax law does not recognize that right.

On appeal, a divided panel in the Sixth Circuit Court of Appeals dismissed the case for lack of jurisdiction. It held that the requirement that takings plaintiffs first seek relief in state court, created in Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City (1985) barred federal jurisdiction. Regular Liberty Blog readers know how much we at PLF hate Williamson County, because it so frequently robs property owners of any relief. It encourages gamesmanship by clever government attorneys and too long prolongs litigation until the property owner cannot afford to proceed.

Judge Kethledge (who, incidentally, was on President Trump’s potential Supreme Court list) dissented from the Sixth Circuit opinion, explaining that “Congress has granted us jurisdiction over th[e takings] claim. We have a strict duty to exercise that jurisdiction. Meanwhile, the state jurisdictional statute . . . expresses an affirmative preference that we adjudicate the claim.” He also likened the County’s confiscation of tax sale profits to theft.

In the petition filed today, we asked the Supreme Court to protect property owners’ rights by recognizing federal jurisdiction and holding that Van Buren County violated the Takings Clause. We also asked the Court to fix the problems caused by Williamson County‘s problematic and pointless state litigation rule. Last year, in a dissent to the Court denying a petition in a different PLF case, Justices Thomas and Kennedy said that the Supreme Court should reconsider that rule, because it too often leaves takings plaintiffs subject to gamesmanship, procedural tricks, and without any place to vindicate their property rights at all. The federal courthouse doors should be open to anyone who seeks to enforce the Fifth Amendment’s right to just compensation. We hope the Court takes this case and brings justice to our clients and the others like them.

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Wayside Church v. Van Buren County, Michigan

The state of Michigan allows counties to take and sell tax-delinquent properties and keep all the profits from the sale – no matter how small the tax debt or how valuable the property. Three Van Buren County property owners lost their properties over relatively small tax debts, resulting in major windfalls for the county when it sold their properties at a foreclosure auction. The taxpayers sued on the grounds that the county’s uncompensated taking of their property beyond what was needed to square the tax debt violates the constitution. The district court ruled against them on the merits and the Sixth Circuit held that their claim was not even eligible to be considered. PLF took over the case to ask for Supreme Court review.

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