Supreme Court says Michigan family may continue challenge after county took home over disputed tax debt

Washington, D.C.; June 23, 2026: Today, the U.S. Supreme Court vacated a Sixth Circuit ruling against a Michigan family and sent their home equity theft case back to the lower court, holding that surplus proceeds from a tax sale satisfy the Constitution when the sale is fairly conducted. Although the Court rejected the family’s argument that the Constitution requires fair market value compensation in some cases, it declined to address Isabella County’s sales process, leaving that for the lower courts to determine.

“The Court held that an auction price that results from a fairly conducted auction is enough to meet the Constitution’s standard of just compensation. It rejected our argument that fair market value is sometimes required,” said Larry Salzman, Vice President for Litigation and Strategy at Pacific Legal Foundation. “At the same time, the Court vacated the Sixth Circuit’s decision and sent the case back to decide whether the auction of the Pungs’ home was fairly conducted. Justices Thomas and Gorsuch noted that they find it ‘likely’ that the County’s process violated the Constitution and urged the Sixth Circuit to address that carefully on remand.”

The Pung family’s legal saga began when Mike Pung’s nephew Marc lost his father in 2005. Mike stepped up to administer the family estate — including an Isabella County home where Marc would one day raise a family of his own. But the county tax assessor denied the family a property tax exemption they were entitled to by law, reporting the estate delinquent over $2,242 in taxes the family never owed. The county foreclosed, seized the home assessed at nearly $200,000, and sold it at auction for just $76,000, evicting Marc, his wife, and their young child. Mike sued on behalf of the estate, arguing the family was owed the fair market value of the home.

The Supreme Court held, “The proper baseline for measuring ‘just compensation’ following a tax sale is the auction sale price, not the property’s hypothetical fair market value, at least when the sale is fairly conducted in light of the country’s history of tax sales.”

However, the Court vacated the lower court ruling against the Pungs, allowing the family the opportunity to prove the county’s sale of their home wasn’t fairly conducted. In a concurring opinion, Justice Thomas wrote, “What Isabella County did to the Pungs was wrong, and, on my initial view, likely unconstitutional.” Justice Gorsuch agreed.

Philip L. Ellison of Outside Legal Counsel, PLC in Hemlock, Michigan, has represented the Pungs since the lawsuit began and argued the case at the U.S. Supreme Court. Outside Legal Counsel has challenged home equity theft in Michigan for more than a decade.

The case is Pung v. Isabella County.