Check out the U.S. Court of Appeals for the Sixth Circuit's opinion in Howard v. Macomb County, No. 24-1655 (Mar. 28, 2025).
This is one of those post-Tyler cases asking whether the government satisfies the Fifth Amendment after it has taken someone's home equity by satisfying the owner's tax debt and then keeping the excess. Hold on, didn't the unanimous Supreme Court in Tyler say no, that violates the Takings Clause?
Well yes. You remember the "render unto Caesar" thing, and the "bank robber giving back the money" thing. So there's a taking without compensation -- and thus a violation of the Takings Clause -- the moment the government keeps what it is not supposed to keep. But Tyler also referred to an earlier case, Nelson v. City of New York, 352 U.S. 103 (1956), which has been read to get the government off the hook if it has made available a way for the owner to get their property back.
In Howard, the Sixth Circuit held that because Michigan has adopted a statute whereby owners whose equity has been taken may get that money back, there's no claim for a taking as a matter of law. That's good enough to avoid the violation of the Constitution. It doesn't matter whether the post-taking procedure is clear enough that owners can navigate it, or whether they do. It's there, owners, and it's up to you to go get your money back.
The Howard opinion doesn't use the word "exhaustion." Nor does it mention administrative remedies. So how can we write in this post's headline that the Sixth Circuit has required home equity theft takings plaintiffs to exhaust administrative remedies, and that they do not have a claim under the Takings Clause until they seek statutory relief, and are denied? In our view, that is exactly what the Sixth Circuit is requiring.
But didn't Knick v. Township of Scott, 588 U.S. 180 (2019) conclude that the cases which seem to say that the availability of post-taking compensation is "too broad" a reading, and that "[s]imply because the property owner was not entitled to injunctive relief at the time of the taking does not mean there was no violation of the Takings Clause at that time[?]" That's how we read Knick, as does the Tenth Circuit in this recent case.
The Sixth Circuit tried to distinguish Knick by concluding there's no taking if the state makes available a post-taking remedy:
Howard resists this conclusion, first by contending that precedent allows her to recover directly from the county under the Takings Clause as opposed to collecting it under the Michigan law. Under Knick v. Township of Scott, 588 U.S. 180 (2019), as Howard reads it, she has no obligation to satisfy the requirements of the Michigan procedure. Knick, it is true, held that, when a State takes a citizen’s property, she may file a claim for just compensation under 42 U.S.C. § 1983 without exhausting her right to seek compensation under state law. Id. at 191. But unlike the state laws at issue in Knick, Michigan’s procedures for collecting the surplus do not compensate the property owner for a taking. They prevent a taking from happening in the first place. A county that allows property owners to obtain any surplus after a foreclosure and keeps the residual only if the owners do not seek it does not commit a taking. See Nelson, 352 U.S. at 110; see also Tyler, 598 U.S. at 644. Had Howard followed the Act’s procedures for claiming the surplus, only to be denied it, then she could immediately bring a takings claim under § 1983. That is all that Knick guarantees.Howard separately claims that Knick cut back on Nelson. But, as shown, the two cases address distinct issues. Nelson addressed whether state action caused a taking. Knick addressed the available remedies after a taking occurs. That explains why Knick never mentions Nelson. And it explains why Tyler relied on Nelson in explaining how to determine the existence of a taking. See Tyler, 598 U.S. at 643–45.
Slip op. at 8.
We thought property owners could advance directly to "Go" and bring a federal compensation claim under section 1983 after Knick? That they didn't have to chase state law procedures for obtaining compensation. Or was that only for when there's a judicially-recognized remedy to obtain just compensation, as in Williamson County? Does it make a difference that here, the post-taking compensation state law remedy is statutory? No difference we can discern.
Williamson County is apparently alive and well in the Sixth Circuit. Stay tuned.
Howard v. Macomb County, No. 24-1655 (6th Cir. Mar. 28, 2025)
