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Arkona, LLC v. County of Cheboygan

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

January 10, 2020

ARKONA, LLC, DIANNE KASBOB, Plaintiffs,
v.
COUNTY OF CHEBOYGAN, BUFFY JO WELDON, LINDA A. CRONAN, COUNTY OF MONROE, KAY SISUNG, Defendants.

          Magistrate Patricia T. Morris

          ORDER STAYING CASE

          THOMAS L. LUDINGTON UNITED STATES DISTRICT JUDGE

         Plaintiffs Arkona, LLC (“Arkona”) and Dianne Kasbob have filed a complaint against Defendants Cheboygan County, Buffy Jo Weldon, Linda A. Cronan, Monroe County, and Kay Sisung.

         Plaintiff Arkona claims that it owned real property in Cheboygan County with a fair market value of at least $505, 000. ECF No. 8 at PageID.57. Arkona had a tax delinquency of approximately $39, 750. Cronan, as Cheboygan County Treasurer, subsequently sold the property for $307, 000.[1] ECF No. 8 at PageID.56; ECF No. 8-2 at PageID.79. Arkona claims that Cronan and Cheboygan County took or destroyed $465, 250 of the property's equity. ECF no. 8 at PageID.57.

         Plaintiff Kosbab claims that she owned real property in Monroe County with a fair market value of at least $22, 000. ECF No. 8 at PageID.59. The property had a tax delinquency of approximately $2, 500. Id. at PageID.59. Sisung, as the Monroe County Treasurer, subsequently sold the property for $28, 250. Kosbab claims that Sisung and Monroe County took or destroyed $25, 750 of the property's equity.

         On October 7, 2019, Defendants filed a motion to dismiss Plaintiffs' complaint. ECF No. 11. The next month, Plaintiff filed a motion for class certification. ECF No. 19. The parties were then ordered to show cause why the case should not be stayed pending the Sixth Circuit's resolution of the case Freed v. Thomas, No. 18-2312 (6th Cir.). For the following reasons, the case will be stayed pending the Sixth Circuit's resolution of Freed.

         I.

         Plaintiffs argue that Defendants are seizing property and maintaining the equity pursuant to Michigan's General Property Tax Act (“GPTA”), MCL. §211.78m(8) which provides:

(8) A foreclosing governmental unit shall deposit the proceeds from the sale of property under this section into a restricted account designated as the “delinquent tax property sales proceeds for the year ___”. The foreclosing governmental unit shall direct the investment of the account. The foreclosing governmental unit shall credit to the account interest and earnings from account investments. Proceeds in that account shall only be used by the foreclosing governmental unit for the following purposes in the following order of priority:
(a) The delinquent tax revolving fund shall be reimbursed for all taxes, interest, and fees on all of the property, whether or not all of the property was sold.
(b) All costs of the sale of property for the year shall be paid…

MCL §211.78m(8); see also ECF No. 8 at PageID.62.

         Plaintiff contends that:

Defendants COUNTY OF CHEBOYGAN and COUNTY OF MONROE and their respective treasurers are and have been acting to voluntarily enforce an unconstitutional statute which each has willingly assumed to undertake pursuant to ...

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