The Sixth Circuit's majority opinion in Wayside Church v. Van Buren County, No. 15-2463 (Feb. 10, 2017) isn't all that exciting -- after all, it was a takings case brought in federal court, and you know what that means: Williamson County -- but do give it a read. The facts are somewhat unusual, even if the court's ultimate conclusion is not.
It involved the intricacies of Michigan's General Property Tax Act, a statute which allows municipalities to the foreclose on properties that are delinquent in paying property taxes. The municipalities are allowed to auction off the properties and keep the money, even if the auction proceeds exceed the delinquent taxes. That's what happened here.
Wayside didn't pay its property taxes, the County foreclosed, obtained fee simple title, and auctioned the property. The sales price of $206,000 exceeded the minimum bid price, which had been calculated by adding up the back taxes, fees, and admin costs which Wayside owed. When the County kept the $189,250 difference, Wayside sued alleging a taking of its property without just compensation. In federal court.
As we noted above, you know what that means -- dismissal. The district court, however, didn't dismiss under Williamson County. Instead, it concluded that the complaint didn't state a claim.
On appeal, the Sixth Circuit affirmed, although for different reasons. It flipped the analysis, and held that the jurisdictional ripeness argument should have been dealt with first. The court concluded that Williamson County's "state procedures" requirement compelled Wayside to seek compensation from the County in Michigan state courts before running into federal court.
But wait, Wayside argued, we can't get just compensation in Michigan courts because the previously mentioned GPTA has a provision forbidding the former property owner from "bring[ing] an action for possession of the property against any subsequent owner, but may only bring an action to recover monetary damages as provided in this section." This action may only be instituted in Michigan's Court of Claims. Scratching your head yet because that provision seems to permit a claim for just compensation?
The rub was that another provision of the GPTA barred the Court of Claims from hearing cases "if the claimant 'has an adequate remedy upon his claim in the federal courts.'" That, argued Wayside, meant that it could not go to state court. Federal court, here we come.
The Sixth Circuit rejected that argument, holding that the plain language of yet another provision in the GPTA revealed that the limitation only applied to claims under certain sections of the statute, and not under the entire statute. Takings claims were not one of the excluded claims, and thus held the court, Wayside could have -- and thus should have -- brought its takings claim in Michigan's Court of Claims.
Like we said, nothing terribly exciting in the majority opinion unless statutory interpretation floats your boat.
But don't quit, because the dissenting opinion is well worth your time. You know we are going to like it when it begins like this:
In this case the defendant Van Buren County took property worth $206,000 to satisfy a $16,750 debt, and then refused to refund any of the difference. In some legal precincts that sort of behavior is called theft. But under the Michigan General Property Tax Act, apparently, that behavior is called tax collection.
Dissent at 14. The dissenting judge would have held that the federal courts have an obligation to hear federal claims -- "Williamson County singles out takings claims for disfavored treatment so far as the availability of a federal forum is concerned" -- and since the doctrine is prudential, he would have dispensed with it in the circumstances here.
We won't trouble you with further details, but urge you to read the entire dissent. It's not long (four pages), and a fun read.