VAN BUREN COUNTY, MI; July 13, 2017: Several small property owners are turning to the Supreme Court for help after they were victimized by Michigan’s abusive foreclosure law. Filed today, their appeal — a petition for certiorari — asks the justices to review and strike down the Michigan General Property Tax Act, which allows local government to sell people’s property for delinquent taxes, and hoard any extra profits for itself.
“In other words, this law transforms the foreclosure process into an engine of government sanctioned theft in order to line government coffers. That’s unjust and unconstitutional.”
Represented by PLF free of charge, the petitioners reflect a cross section of people owning property in Van Buren County, Michigan, during the last recession. Wayside Church (based in Chicago) owned and operated a parcel in Van Buren County as a youth camp. Myron Stahl owned a residential lot where he was building his retirement home. Henderson Hodgens owned a 20-acre farm with a home.
All fell on hard times and were unable to pay their 2011 property taxes. Van Buren County responded by invoking the Michigan General Property Tax Act to take and sell the properties.
In each case, the sale generated far more than the tax debt. But rather than simply keep the amount needed to satisfy the debt and refund the remainder to the owners, the county pocketed all the proceeds. All told, it garnered $274,850 in after-debt profits from the three sales.
Hodgens, a bus driver, owed $5,900 in back taxes, penalties, interest, and fees on his farm — the property where he grew up and which he always intended and hoped to keep. He fell behind on taxes because of an injury. He was shocked to learn not only that the county sold his property, but realized a windfall nearly eight times the amount of his tax debt, and didn’t refund him a penny of those excess proceeds. Now he can point only to his old, broken-down tractor as a legacy: “It’s something that reminds me of my dad, reminds me of my property,” he says. “At least they can’t take this from me, I don’t think.”
As another example of the hard times that have befallen the victims, Wayside Church’s youth camp parcel was sold by Van Buren County for more than 12 times the tax debt of $16,500. The church is struggling financially, and has desperate need of the more than $180,000 in excess profits that the county kept for itself. “This case is our last hope,” said Reginald Hill, a church deacon. “It is so good to know that PLF is looking out for us and fighting for us. PLF is a real guardian of the people’s rights, and we are thankful.”
The current case challenges this government self-enrichment as an unconstitutional taking. However, a three-judge panel of the 6th Circuit, on a 2-1 vote, declined even to consider this argument. Citing a controversial Supreme Court procedural precedent known as Williamson County, the majority held that such takings lawsuits must begin in state court, not federal courts.
“These plaintiffs have had their constitutional property rights denied, and they should not have the doors of the federal courts shut in their faces,” said Martin. “We are asking the Supreme Court to take this appeal, recognize that federal courts should be fully open to people seeking the protection of the Constitution, and issue a clear ruling that foreclosure cannot be abused to enrich government by impoverishing struggling property owners.”
“This case highlights PLF’s indispensable role in vindicating property rights and challenging bureaucratic injustice — especially when the victims lack the means to fight back on their own,” said PLF President and CEO Steven Anderson. “It presents an unsavory picture of government operating like Robin Hood in reverse, taking advantage of vulnerable people in their time of greatest hardship.”
The case is Wayside Church v. Van Buren County. Assisting PLF attorneys are three Michigan attorneys: James Shek, based in Allegan, Michigan, and Ronald W. Ryan and Owen D. Ramey of Lewis, Reed & Allen PC in Kalamazoo. More information, including the petition for certiorari, a case video, podcast, and photo gallery, is available at: www.pacificlegal.org/Wayside.
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Pacific Legal Foundation is a national nonprofit legal organization that defends Americans threatened by government overreach and abuse. Since our founding in 1973, we challenge the government when it violates individual liberty and constitutional rights. With active cases in 39 states plus Washington, D.C., PLF represents clients in state and federal courts, with 12 victories out of 14 cases heard by the U.S. Supreme Court.