In 2017, officials in Gratiot County, Michigan, seized Donald Freed’s $97,000 home to pay an overdue tax debt of $1,100. The county sold his property at auction for $42,000 and kept all of the proceeds from the sale. Shockingly Michigan’s property tax law requires this all-too-common practice.
It’s a nice racket for the county, which gets a windfall of tens of thousands of dollars over the unpaid tax debt. But for the property owner like Donald Freed who loses his home without compensation, not so much.
Understandably, Freed objected to this abuse of his property rights and filed suit, seeking a refund of the surplus profits from the sale of his home. Knowing that Michigan state courts have (so far) rejected similar claims, Freed filed his constitutional lawsuit in federal court.
But the federal trial court dismissed Freed’s case, citing the Sixth Circuit’s 2017 decision in the case of Wayside Church v. Van Buren County. In that case, the Sixth Circuit held that under the Tax Injunction Act and the 1985 Supreme Court case Williamson County Regional Planning Commission v. Hamilton Bank of Johnson City, federal courts lack jurisdiction over these types of property rights claims.
So not only does Donald Freed lose his home without compensation—he can’t get a federal court to hear his valid takings claim. But there are multiple reasons why the Wayside Church decision should not bar Freed’s claim, as we explain in this proposed friend-of-the-court brief, filed earlier this week in Freed v. Thomas.
First, the Supreme Court may soon overturn the jurisdictional hurdle raised by the 1985 Williamson County decision, in a case PLF attorney Dave Breemer will reargue in the Supreme Court on January 16.
As for the Tax Injunction Act, Congress never intended for the law to bar jurisdiction over cases where the plaintiff concedes the taxes owed, and instead only seeks a refund of money that exceeds the underlying tax debt, as in Freed’s case.
Our brief also explains why the 2017 Wayside Church decision quickly became outdated, and does not prevent federal courts from hearing cases like Freed’s. The Sixth Circuit had assumed Michigan courts would provide a remedy for plaintiffs like Freed, and thus held that such claims would have to be raised in state court. But a few months after the Wayside Church decision, the Michigan Court of Appeals proved that the Sixth Circuit’s assumption was wrong.
Although PLF recently convinced the Michigan Supreme Court to decide whether the Fifth Amendment’s Takings Clause protects people who lose property to pay late property taxes, like Freed, it is not yet clear whether state courts will offer a remedy. Until they do, property owners must be able to pursue their federal constitutional claims in federal court.
The Constitution protects homeowners’ equity in their property. The government cannot ignore that protection by seizing more than it is owed. We hope the Sixth Circuit will recognize that federal courts should protect constitutional rights by hearing valid constitutional claims like Freed’s.