Sinclair v. Meisner

• Decision Date: 28 February 2022
• Docket Number: 2:18-CV-14042-TGB-MJH
• Citation: 587 F.Supp.3d 597
• Parties: Marion SINCLAIR, Plaintiff, v. Andy MEISNER, et al., Defendants.
• Court: U.S. District Court — Eastern District of Michigan

587 F.Supp.3d 597

Marion SINCLAIR, Plaintiff,
v.
Andy MEISNER, et al., Defendants.

2:18-CV-14042-TGB-MJH

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

Signed February 28, 2022

587 F.Supp.3d 599

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

Brandon K. Buck, David N. Asmar, Oakland County Corporation Counsel, Pontiac, MI, for Defendants Andy Meisner, County of Oakland, Oakland County Tax Tribunal.

Michael A. Knoblock, T. Joseph Seward, Seward Peck & Henderson PLLC, Royal Oak, MI, for Defendants City of Southfield, Kenson Siver, Frederick Zorn, Gerald Witkowski, Sue Ward-Witkowski, Irv Lowenberg, Michael Mandlebaum, Donald Fracassi, Daniel Brightwell, Myron Frasier, Lloyd Crews, Nancy Banks.

Joseph G. Couvreur, Matthew T. Nicols, Pentiuk, Couvreur & Kobiljak, P.C., Wyandotte, MI, for Defendants Southfield Non Profit Housing Coporation, Mitchell Simon, Rita Fulgiam-Hillman, Lora Brantley-Gilbert, Earlene Trayler-Neal, Southfield Neighborhood Revitalization Initiative, LLC, Etoile Libbett.

Jason R. Abel, Honigman LLP, Detroit, MI, for Defendant GTJ Consulting, LLC.

ORDER DENYING MOTION TO FILE SECOND AMENDED CLASS ACTION COMPLAINT

TERRENCE G. BERG, United States District Judge

587 F.Supp.3d 600

Michigan resident Marion Sinclair, plaintiff in this case, alleges that the Defendants, various local government units, private entities, and public officials, have conspired to unconstitutionally deprive Plaintiff and others of their equity in their homes by taking them in tax foreclosure proceedings. Plaintiff's original complaint was dismissed without prejudice, but the case was stayed because parties and the Court believed that the Sixth Circuit's pending ruling in Freed v. Thomas , 976 F.3d 729 (6th Cir. 2020), would have some bearing on the merits of any amended complaint. ECF No. 39. It did not, so following the decision by the Court of Appeals in Freed , Plaintiff timely filed a motion to amend with a proposed amended complaint attached. Defendants respond in opposition, arguing the law does not recognize the property right of which Plaintiff claims to be deprived, and that any amendment would be futile. For the reasons that follow, the Motion to Amend the Complaint is DENIED .

I. BACKGROUND

Marion Sinclair seeks to represent a proposed class of former property owners in Southfield who claim to have been unconstitutionally deprived of property interests when their homes were lost through tax foreclosure proceedings. Proposed Am. Compl. ¶ 61, ECF No. 51-1, PageID.825.

Understanding Plaintiff's legal claims requires a preliminary discussion of the Michigan General Property Tax Act ("GPTA"). MCL §§ 211.1 - 211.157. The GPTA's purpose is to facilitate the efficient payment of property taxes and the efficient return of delinquent properties back to the tax rolls. When relevant municipal authorities determine that taxes are past due on a property, the owner of the property faces one of two scenarios: (1) the owner is able, within the statutory time limits, to pay their back taxes and redeem their property, or (2) the property is foreclosed on and sold, and the property is returned to the tax rolls after the municipality recovers as much as it can in owed taxes and fees.

The treasurer of a county can elect to act as the "foreclosing government unit" or "FGU" who facilitates the resolution of any delinquent tax payments and administers notification regarding redemption opportunities and eventual foreclosure and sale. If the county treasurer does not elect to act as the FGU, the state will. However, most counties in Michigan (including Oakland County, where Southfield is located) have elected to have their treasurer perform this function. MCL 211.78.

The GPTA sets out the procedures and timelines that govern this process. Each year, property taxes unpaid as of March 1 are identified to the treasurer as delinquent. Once a property becomes delinquent, the treasurer initiates a prescribed schedule of notice and hearing opportunities over the course of twelve months, giving owners a chance to redeem their property. MCL 211.78b -g. If the property is not redeemed in that time, it is "forfeited"

587 F.Supp.3d 601

to the treasurer. This does not affect title, but allows the treasurer to list the property on the tax rolls as forfeited and file a petition in circuit court seeking foreclosure. The GPTA also includes notice procedures and requirements regarding this foreclosure hearing in circuit court, creating continuing opportunities for redemption by the owner. MCL 211.78h. The taxpayer's right to redeem the property expires on the March 31 immediately following entry of judgment on the foreclosure petition (generally falling about two years after the initial delinquency finding). If delinquent taxes are not paid by that date, title transfers to the treasurer. MCL 211.78k(5) - (6).

During the time frame when the events at issue in this lawsuit occurred, the statute required that after title transferred to the treasurer, the municipality where the property was located had a right of first refusal ("ROFR") to buy the property for a "minimum bid" equal to the delinquent taxes and any fees owed. See ECF No. 51-1, PageID.819. If the relevant municipality did not exercise its ROFR, the property would usually be put up for auction by the treasurer to attempt to recover what was owed. Any monies obtained by the treasurer, either through a ROFR sale or through auction, went towards a general fund used to pay off delinquent taxes to municipalities. See generally Rafaeli, LLC v. Oakland Cty. , 505 Mich. 429, 952 N.W.2d 434, 443-49 (2020) (providing an overview of the GPTA framework).¹

In Plaintiff's case, she fell behind on the property taxes for her home in Southfield sometime between 2013-14. Her property forfeited to the Oakland County Treasurer around June 12, 2015. Proposed Am. Compl. ¶ 56, ECF No. 51-1. A judgment of foreclosure was entered in Oakland County Circuit Court on February 2, 2016. Id. at ¶ 57. Plaintiff was not able to redeem her property before March 31, 2016, so title vested in the Oakland County Treasurer. Id. The delinquency on her property was reported on the judgment of foreclosure as $22,047.46. Id. at ¶ 58. On July 7, 2016, the City of Southfield exercised its ROFR and purchased the property for $28,424.84...