Taylor v. Jackson
| Decision Date | 23 January 2023 |
| Docket Number | Civil Action 19-12548 |
| Parties | KENNETH TAYLOR, Plaintiff, v. JANET JACKSON, ANDY MEISER, COUNTY OF OAKLAND, CITY OF SOUTHFIELD, FREDERICK ZORN, GERALD WITKOWSKI, SUE WARD-WITKOWSKI, IRV LOWENBERG, MICHAEL MANDLEBAUM, DONALD FRACASSI, DANIEL BRIGHTWELL, MYRON FRASIER, LLOYD CREWS, NANCY BANKS, SOUTHFIELD NONPROFIT HOUSING CORP., MITCHELL SIMON, RITA FULGIAM-HILLMAN, LORA BRANTLEY-GILBERT, EARLENE TRAYLER-NEAL, SOUTHFIELD NEIGHBORHOOD REVITALIZATION INITIATIVE, LLC, ETOILE LIBBETT, HABITAT FOR HUMANITY, M.S. TITLE AGENCY, LLC, and KENSON SIVER, Defendants. |
| Court | U.S. District Court — Eastern District of Michigan |
REPORT AND RECOMMENDATION ON PLAINTIFF'S MOTION TO REOPEN CASE AND MOTION FOR LEAVE TO FILE AN AMENDED COMPLAINT (ECF NO. 46)
When a taxpayer fails to pay his property taxes, the taxing authority typically collects the unpaid taxes through a foreclosure process. This case involves a recent and monumental sea-change in the law in the Sixth Circuit with respect to the taxpayer's rights to receive the equity in his home following such a foreclosure when the home's value exceeds the amount of the unpaid property taxes. In short, numerous courts in this Circuit had previously held that, under the Tax Injunction Act (“TIA”) and principles of comity, they lacked subject matter jurisdiction over a taxpayer's challenge to a local taxing authority's right to retain tax foreclosure proceeds in excess of the unpaid tax liability. Recently, however, the Sixth Circuit overruled that precedent and recognized that “neither the TIA nor comity bar federal jurisdiction” over such claims. Freed v Thomas, 976 F.3d 729, 741 (6th Cir. 2020). Even more recently, the Sixth Circuit went further and explained that where a taxing authority “[takes] property worth vastly more than the debts [the taxpayer] owed, and fails[] to refund any of the difference[,] [i]n some legal precincts that sort of behavior is called theft.” See Hall v Meisner, 51 F.4th 185, 196 (6th Cir. 2022) (internal quotations omitted). And, from a civil litigation perspective, the Sixth Circuit held that “the County [taxing authority] took the plaintiffs' property without just compensation, in violation of the Takings Clause.” Id.
The plaintiff in this case, Kenneth Taylor (“Taylor”), alleges that he is a victim of such a “theft” and unlawful taking. Representing himself pro se, he commenced this action to challenge a foreclosure process that resulted in the foreclosure of his home over an unpaid property tax liability. The foreclosure resulted in Taylor losing his entire interest in his house even though that value allegedly far exceeded his tax liability. Taylor asserted that he had a “liberty interest in his [] equity built up over time in his home,” and that the foreclosure procedures violated his rights under the Fifth Amendment (due process), Eighth Amendment (excessive fines), and Fourteenth Amendment (equal protection), in addition to violating various other federal and state laws. (ECF No. 1, PageID.2, 4).
The Court dismissed Taylor's case, concluding, based on pre-Freed caselaw, that it lacked subject matter jurisdiction over his claims. Although Taylor did not appeal that dismissal, in light of the timing of the Sixth Circuit's Freed decision, which found federal district courts do have jurisdiction to hear such claims, Taylor filed the instant motion to reopen his case so he could amend his complaint and seek redress for the alleged unconstitutional taking and violation of his rights under federal and state law. (ECF No. 46, 46-1). For the reasons explained below, Taylor's motion presents exceptional circumstances, and the case should be reopened to allow him an opportunity to address what may otherwise be a manifest injustice.
Taylor owned a house in Southfield, Michigan (the “Property”). When he failed to pay the real estate taxes due on the Property in 2014 and other prior years, the Oakland County Treasurer foreclosed on the Property pursuant to the Michigan General Property Tax Act (“GPTA”), M.C.L. § 211.1, et seq..[1] On February 8, 2017, a Judgment of Foreclosure was entered in favor of the Oakland County Treasurer. Taylor did not redeem the Property by paying the outstanding tax liability, nor did he appeal the Judgment of Foreclosure. Pursuant to the then-applicable provision of the GPTA, the Oakland County Treasurer did not put the Property up for auction, but instead offered it to the City of Southfield, who then conveyed it to the Southfield Neighborhood Revitalization Initiative, LLC (“SNR”), which works with Habitat for Humanity to rehabilitate tax-foreclosed properties. Despite allegedly having equity in the home that far exceeded the amount of his unpaid property taxes, Taylor received nothing. Ultimately, when Taylor refused to vacate the Property, SNR evicted him.
On August 29, 2019, Taylor, then proceeding pro se, filed his complaint in this case against twenty-four defendants, including Oakland County, the City of Southfield, and SNR, asserting claims for race discrimination in violation of the Fair Housing Act, conspiracy and fraud in violation of RICO, and conversion under state law. (ECF No. 1, PageID.20-27). However, Taylor's complaint also alleged that the defendants' foreclosure scheme violated his rights under the Fifth Amendment (due process), Eighth Amendment (excessive fines), and Fourteenth Amendment (equal protection) to the United States Constitution. (Id., PageID.2). Taylor's claims stemmed from both the tax foreclosure of the Property and the post-foreclosure taking and retaining of the equity he had in the Property.
Various groups of defendants filed motions to dismiss, and this Court issued a Report and Recommendation (the “R&R”), finding, based on pre-Freed precedent, that the TIA and principles of comity barred Taylor's claims. (ECF No. 40). Thus, the Court recommended that Taylor's complaint be dismissed for lack of subject matter jurisdiction. (Id.). No objections were filed to the R&R, and it was adopted by the District Court on November 12, 2020. (ECF No. 41). Judgment was entered on November 16, 2020, dismissing Taylor's complaint without prejudice. (ECF No. 42).
Taylor did not file an appeal with the Sixth Circuit.
In between issuance of the R&R and its adoption, the Sixth Circuit issued its decision in Freed, holding that: (1) the TIA does not bar federal jurisdiction over claims against a governmental unit for taking property after collecting a tax debt without providing just compensation; and (2) principles of comity do not prevent a lawsuit from proceeding in federal court when that lawsuit is not challenging the validity of Michigan's tax procedures but, rather, is challenging an alleged unconstitutional taking and excessive fine. See Freed, 976 F.3d at 734. In other words, the R&R's ultimate conclusion, and the District Court's order adopting it, were contrary to the holdings in Freed.
Taylor, now with the assistance of counsel, seeks to reopen the case to pursue certain claims which he argues are permissible under Freed. (ECF No. 46). Specifically, Taylor seeks permission to file an amended complaint that “will cure any existing defects, limiting the claims to post-foreclosure claims, against a limited number of defendants, relating solely to the illegal taking of the equity of his real property above and beyond the amount of past due property taxes.” (Id., PageID.849-50).
Taylor first moves to reopen this case pursuant to Federal Rule of Civil Procedure 60(b)(6).[2] (ECF No. 46). Rule 60(b)(6) provides that, on motion and just terms, “the court may relieve a party or its legal representative from a final judgment, order, or proceeding for ... any other reason that justifies relief.” Fed.R.Civ.P. 60(b)(6). Courts have recognized that “Rule 60(b)(6) serves as a ‘catchall' provision to provide relief from judgment for reasons that are not explicitly enumerated by Rules 60(b)(1)-(5).” Billops v. Target Corp., No. 12-15395, 2022 WL 16950260, at *2 (E.D. Mich. Nov. 15, 2022) (citing Kemp v. United States, 142 S.Ct. 1856, 1861 (2022)). A party must seek relief under Rule 60(b)(6) within a “reasonable time.” Fed.R.Civ.P. 60(c)(1). “Importantly, courts must apply Rule 60(b)(6) relief only in unusual and extreme situations where principles of equity mandate relief.” Billops, 2022 WL 16950260, at *2 (internal quotations omitted) (citing Blue Diamond Coal Co. v. Trustees of UMWA Combined Ben. Fund, 249 F.3d 519, 524 (6th Cir. 2001)). The particular facts of this case, the issues at stake, and the way in which the law has evolved since the Court issued its R&R make clear that this is such a situation.
Some of the defendants argue that Taylor did not file the instant motion within a “reasonable time.” (E.g., ECF No. 49, PageID.1126-29). For Rule 60(b)(6) motions, “the ‘reasonable time' clock begins ticking when the movant is or should be aware of the factual basis for the motion.” Ghaleb v. Am. Steamship Co., 770 Fed.Appx. 249, 249 (6th Cir. 2019). Whether the motion was filed within a reasonable time “ordinarily depends on the facts of a given case including the length and circumstances of the delay, the prejudice to the opposing party by reason of the delay, and the circumstances compelling equitable relief.” Olle v. Henry & Wright Corp., 910 F.2d 357, 365 (6th Cir. 1990).
The Sixth Circuit's decision in Freed was issued on September 30, 2020, and the District Court entered judgment in favor of the defendants in this case about six...
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