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Freed v. Thomas

United States District Court, E.D. Michigan, Southern Division

April 26, 2018

DONALD FREED, Plaintiff,
MICHELLE THOMAS, et al., Defendants.



         This matter is before the Court on defendants' motion to dismiss for lack of subject-matter jurisdiction [docket entry 6]. This motion is fully briefed. Pursuant to E.D. Mich. LR 7.1(f)(2), the Court shall decide this motion without a hearing.

         The following facts are summarized from the complaint and briefing: For several decades, plaintiff owned and lived on a thirty-five acre parcel in Gratiot County, Michigan. This land is worth approximately $100, 000. From 2014 to 2015, plaintiff failed to pay almost $2, 000 in property taxes, costs, and interest. In June 2016, the Gratiot County treasurer, defendant Michelle Thomas, filed a petition in Gratiot County Circuit Court under the General Property Tax Act (“GPTA”), Mich. Comp. Laws § 211.78, to foreclose on plaintiff's property. In February 2017, the circuit court granted the petition and foreclosure, and title transferred to Gratiot County. In August 2017, defendants sold plaintiff's land for $42, 000 to cover his $2, 000 tax bill and kept the balance (“surplus equity”). In October 2017, plaintiff filed this complaint, asserting violations of the Fifth Amendment's takings clause and Eighth Amendment's excessive-fines clause.

         In November 2017, defendants filed the instant motion to dismiss under Fed.R.Civ.P. 12(b)(1) for lack of subject-matter jurisdiction. Defendants raise three jurisdictional challenges to plaintiff's Fifth Amendment eminent domain claim: Ripeness, The Tax Anti-Injunction Act, and Comity.[1]


         The Court has jurisdiction over eminent domain claims only if they are ripe. Bigelow v. Michigan Dep't of Nat. Res., 970 F.2d 154, 157 (6th Cir. 1992). For a claim challenging a state action to be ripe, plaintiff must show both that the state government decision was final and that there are no available state court remedies. Williamson Cty. Reg'l Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172, 186, 194 (1985). Here, plaintiff adequately shows both.

         A state government decision is final when “the government entity charged with implementing the regulations has reached a final decision regarding the application of the regulations to the property at issue.” Id. at 186. Here, Gratiot County implements the GPTA, has already sold plaintiff's property to cover his back taxes, and refuses to remit the surplus equity. This appears to be a final decision under Williamson.

         In addition to showing finality, a plaintiff must first “seek compensation through the procedures the State has provided for doing so.” Williamson, 473 U.S. at 194. This analysis looks to potential “remedies under state substantive law.” 13B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 3532.1 n.43 (3d ed. 2014). But critically, plaintiff must adhere to this requirement only if the potential remedies are “reasonable, certain, and adequate.” Williamson, 473 U.S. at 194. Merriam-Webster's Dictionary 367 (3d ed. 1986) defines the word certain as “fixed, ” “settled, ” or “sure.”

         Here, defendants believe that inverse condemnation is a sufficient state law remedy. Plaintiff conversely argues that the doctrine of inverse condemnation does not apply here, or, at the very least, it is not certain that it does. The Court agrees with plaintiff. Were he to file this suit in state court, he would face significant substantive and jurisdictional problems.

         Turning first to the substantive problems: Michigan has long recognized the right of inverse condemnation. Hart v. City of Detroit, 331 N.W.2d 438, 441 (Mich. 1982). As a general rule, though, inverse condemnation claims recover property that the government has taken under its taxing power, not its eminent domain power. See Merkur Steel Supply, Inc. v. City of Detroit, 680 N.W.2d 485, 494 (Mich. Ct. App. 2004) (“An inverse condemnation suit is one instituted by a private property owner whose property, while not formally taken for public use, has been damaged by a public improvement undertaking or other public activity.”). Consequently, Michigan courts rarely countenance inverse condemnation claims to remedy an abuse of the taxing power, which is the kind of claim at issue here. And when they do, it is only in the context of general taxing power excesses, not of GPTA foreclosure sales. Wayside Church v. Van Buren Cty., 847 F.3d 812, 823 (6th Cir. 2017) (Kethledge, J., dissenting) (stating that no Michigan court has “determined, as a matter of state law, whether a local government's appropriation of property pursuant to the taxing power generally, or to the [GPTA] in particular, is a taking to the extent the government takes property worth more than the amount of taxes owed”).

         The Michigan Court of Appeals further solidified these points in Rafaeli, LLC v. Oakland Cty., No. 330696, 2017 WL 4803570 (Mich. Ct. App. Oct. 24, 2017) [hereinafter Rafaeli I]. Just like here, the plaintiff in Rafaeli I brought an eminent domain challenge to a county's taking of the tax foreclosure sale's surplus equity. 2017 WL 4803570, at *1-2. In denying his claim, the court stated:

The government may not be required to compensate an owner for property which it has already lawfully acquired under the exercise of governmental authority other than the power of eminent domain. Defendants obtained the property by way of a statutory scheme that did not violate due process. The constitution does not require them to compensate plaintiffs for the lawfully-obtained property.

Id. at *4 (internal quotation marks and citations omitted). In other words, because the county took the plaintiff's property via the GPTA and did not violate due process, the plaintiff had no claim under either eminent domain or inverse condemnation.

         Here, like Rafaeli I, the statutory scheme defendants used is the GPTA and there is no serious due process claim. If the Michigan Court of Appeals would not recognize the Rafaeli I plaintiff's claim, is it really settled or sure that Michigan would recognize the instant plaintiff's identical claim? The Court believes not. Rafaeli I casts serious doubt on ...

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