Hall v. Meisner

• Decision Date: 04 October 2021
• Docket Number: Case No. 20-12230
• Citation: 565 F.Supp.3d 928
• Parties: Tawanda HALL, et al., Plaintiffs, v. Oakland County Treasurer Andrew MEISNER, Oakland County, Southfield Non-Profit Housing Corporation, and City of Southfield, et al., Defendants
• Court: U.S. District Court — Eastern District of Michigan

565 F.Supp.3d 928

Tawanda HALL, et al., Plaintiffs,

v.Oakland County Treasurer Andrew MEISNER, Oakland County, Southfield Non-Profit Housing Corporation, and City of Southfield, et al., Defendants,

Case No. 20-12230

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

Signed October 4, 2021

Scott F. Smith, Smith Law Group, Farmington Hills, MI, Adam T. Schnatz, Jayson E. Blake, McAlpine PC, Mark L. McAlpine, McAlpine & McAlpine, Auburn Hills, MI, for Plaintiffs.

Michael A. Knoblock, T. Joseph Seward, Seward Henderson PLLC, Royal Oak, MI, for DefendantFrederick Zorn.

OPINION AND ORDER GRANTING DEFENDANTSSOUTHFIELD NON-PROFIT HOUSING CORPORATION, SOUTHFIELD NEIGHBORHOOD REVITALIZATION INITIATIVE, LLC, MITCHELL SIMON, AND E'TOILE LIBBETT'S MOTION TO DISMISS(ECF NO. 31)

Paul D. Borman, United States District Judge

On August 18, 2020, Plaintiffs, former real property owners in the City of Southfield, Michigan, filed a proposed class action complaint against 13 defendants.The defendants can be separated into four groups: (1)Oakland County TreasurerAndrew Meisner("Treasurer") and Oakland County(collectively, the "Oakland County Defendants"); (2)City of Southfield("Southfield"), City ManagerFrederick Zorn, Mayor Kenson Siver, Former City AttorneySusan Ward-Witkowski, Gerald Witkowski(Code Enforcement and Eviction Administrator for SNRI), and Treasurer Irvin Lowenberg(collectively, the "Southfield Defendants"); (3) Southfield Neighborhood Revitalization Initiative ("SNRI"), Southfield Nonprofit Housing Corporation("SNPHC"), Director E’ Toile Libbett("Director SNRI"), and Mitchel Simon("Treasurer SNPHC")(collectively, the "SNRI Defendants"); and (4) Habitat for Humanity of Oakland County, Inc.("Habitat").(ECF No. 1, Complaint.)

The Complaint contains seven counts: Count I – Taking Without Just Compensation – Fifth Amendment, under 42 U.S.C. § 1983, against the Oakland County Defendants and Southfield Defendants only; Count II – Inverse Condemnation – Fifth Amendment; Count III – Violation of the Takings Clause of the Michigan Constitution; Count IV – Eighth Amendment Violation – Excessive Fine Forfeiture, against Oakland County only; Count V – Procedural Due Process, against Southfield and Oakland County Treasurer only; Count VI – Substantive Due Process, against Southfield and Oakland County Treasurer only; and Count VII (mislabeled "Count VI") – Unjust Enrichment, against all Defendants except Oakland County.(Compl.)Plaintiffs ask the Court to award them the "taken and/or forfeited equity" in their foreclosed properties along with money damages for the alleged constitutional violations and claim of unjust enrichment.(Id. , Relief Requested, PageID.30-31.)

Now before the Court is DefendantsSouthfield Non-Profit Housing Corporation, Southfield Neighborhood Revitalization Initiative, LLC, Mitchell Simon, and E'Toile Libbett's (the "SNRI Defendants")Motion to Dismiss Complaint.(ECF No. 31.)¹The Court held a hearing using Zoom videoconference technology on Tuesday, September 28, 2021, at which counsel for Plaintiffs and Defendants appeared.For the reasons that follow, the Court GRANTS the SNRI Defendants’ Motion to Dismiss Complaint.

I.FACTUAL AND PROCEDURAL BACKGROUND

A.Factual Background

The eight named Plaintiffs in this action allege that they previously owned real property located in the City of Southfield, Michigan.All named Plaintiffs failed to pay property taxes and their properties were foreclosed by Defendant Oakland County Treasurer on the basis of non-payment of taxes pursuant to Michigan's General Property Tax Act ("GPTA"), Mich. Comp. Laws § 211.1 et seq.(Compl. ¶ 1, PageID.2.)

The GPTA permits the recovery of unpaid real-property taxes, penalties, interest, and fees through the foreclosure and sale of the property on which there is a tax delinquency.SeeMich. Comp. Laws § 211.1 et seq.Under the Act, the county treasurer may elect to act as the collection agent for the municipality where the property is located when taxpayers become delinquent on their property taxes.Mich. Comp. Laws § 211.78(8).After three years of delinquency, multiple notices and various hearings, tax-delinquent properties are forfeited to the county treasurer; foreclosed on after a judicial foreclosure hearing by the circuit court and title to the forfeited property is transferred to the county treasurer; and, if the property is not timely redeemed by March 31 of that year, fee simple title is vested absolutely in the county treasurer, without any further redemption rights available to the delinquent taxpayer.Mich. Comp. Laws § 211.78 et seq.As the Act applied during the time periods relevant to this action, after foreclosure, the property is then disposed of as follows:

(1)The state or municipality where the property is located has the right to claim the property in exchange for the payment to the county of unpaid taxes, interest and other costs (the "minimum bid");² or

(2) If the state or municipality does not exercise their right of first refusal, the property is put up for sale at a public auction in July and, if not sold, again in October.

Mich. Comp. Laws § 211.78m.

Plaintiffs in this case allege that a judgment of foreclosure was entered against each of them and pertaining to each Plaintiff's property, by the Oakland County Circuit Court.(Compl. ¶¶ 21-28, PageID.5-7.)Specifically, Plaintiffs allege:

• PlaintiffTawanda Hall owed $22,642.00 in delinquent property taxes.³The Oakland County Treasurer foreclosed, issued a tax deed in favor of the City of Southfield for the minimum amount due under the GPTA, and the City quit claimed the property to SNRI for $1.00.The property was subsequently sold for $308,000.00.

• PlaintiffCarolyn Miller owed $29,759.00 in delinquent property taxes.The Oakland County Treasurer foreclosed, issued a tax deed in favor of the City of Southfield for the minimum amount due under the GPTA, and the City quit claimed the property to SNRI for $1.00.The property was subsequently sold for $120,000.00.

• PlaintiffAmerican Internet Group, LLC owed $9,974.00 in delinquent property taxes.The Oakland County Treasurer foreclosed, issued a tax deed in favor of the City of Southfield for the minimum amount due under the GPTA, and the City quit claimed the property to SNRI for $1.00.The property was subsequently sold for $149,900.00.

• PlaintiffAnthony Akande owed $2,415.00 in delinquent property taxes.

The Oakland County Treasurer foreclosed, issued a tax deed in favor of the City of Southfield for the minimum amount due under the GPTA, and the City quit claimed the property to SNRI for $1.00.The property was subsequently sold for $152,500.00.

• PlaintiffsCurtis Lee and Coretha Lee owed $30,547.00 in delinquent property taxes.The Oakland County Treasurer foreclosed, issued a tax deed in favor of the City of Southfield for the minimum amount due under the GPTA, and the City quit claimed the property to SNRI for $1.00.The property was subsequently sold for $155,000.00.

• PlaintiffMarcus Byers alleges he had "equitable title with his court appointed guardian" in the subject property and owed $4,113.00 in delinquent property taxes.The Oakland County Treasurer foreclosed, issued a tax deed in favor of the City of Southfield for the minimum amount due under the GPTA, and the City quit claimed the property to SNRI for $1.00, which still holds title to the property.Plaintiffs allege the property has a fair market value of $90,000.00.

• PlaintiffKristina Govan owed $45,350.00 in delinquent property taxes.The Oakland County Treasurer foreclosed, issued a tax deed in favor of the City of Southfield for the minimum amount due under the GPTA, and the City quit claimed the property to SNRI for $1.00, which still holds title to the property.Plaintiffs allege the property "is worth in excess of the amount owed in taxes."

(Compl. ¶¶ 21-27, PageID.5-7.)

Plaintiffs assert that "[m]ost of the Plaintiffs had entered into delinquent property installment agreements [with the County]," even though "[t]he Treasurer knew the Circuit Court had already entered a Judgment of foreclosure prior to entering the delinquent property tax payment plans with Plaintiffs ... which purportedly prevented foreclosure."(Id.¶¶ 31-32, PageID.7.)Plaintiffs claim that they"made a payment to the Treasurer with the promise that such payment would prevent tax foreclosure," and "in many instances ... made substantial payments of 1-2 years of property taxes prior to March 31st of the year of foreclosure," but that the County still foreclosed on their properties.(Id.¶¶ 31, 33-34, PageID.7.)

As a result of the foreclosures, Plaintiffs lost all title and interest in their properties, and title in fee vested in the foreclosing government unit ("FGU"), in this case, the Oakland County Treasurer.(Id.¶¶ 21-28, PageID.5-7.)SeeMich. Comp. Laws § 211.78k(6).Pursuant to Mich. Comp. Laws § 211.78m(1)(as it existed at that time), the Oakland County Treasurer offered the properties to the City of Southfield under the City's right of first refusal.(Id.¶ 29, PageID.7.)In each case, the City paid the Treasurer the minimum amount due under the statute – the delinquent tax amount – with funds provided by DefendantSouthfield Nonprofit Housing Corporation("SNPHC").(Id.¶¶ 21-27, 83(e), PageID.5-7, 16.)The City in turn conveyed each of the properties to DefendantSouthfield Neighborhood Revitalization Initiative, LLC("SNRI") for $1.00.(Id. )

SNRI was created by Defendant SNPHC, and the SNPHC is the sole member of SNRI.(ECF No. 31, SNRI Defs.’ Mot.at p. 3, PageID.182.)SNRI was formed for the purpose of purchasing tax foreclosed and other properties, improving such properties, selling such properties to persons of low to moderate income when possible, and improving housing and homeownership opportunities in the City of Southfield, and to otherwise restore tax-foreclosed properties on the tax-roll.(Id. , citingECF...