Wayside Church v. Van Buren Cnty.

Decision Date10 February 2017
Docket NumberNos. 15-2463/2525,s. 15-2463/2525
Citation847 F.3d 812
Parties WAYSIDE CHURCH, an Illinois Not-For-Profit (Ecclesiastical) Corporation; Myron W. Stahl; Henderson Hodgens, individually and on behalf of a class of all others similarly situated, Plaintiffs–Appellants/Cross–Appellees, v. VAN BUREN COUNTY, in its individual Michigan municipal capacity and on behalf of a class of all other Michigan counties similarly situated; Karen Makay, in her individual official capacity as Treasurer of Van Buren County and on behalf of a class of all other Treasurers of Michigan counties similarly situated, Defendants–Appellees/Cross–Appellants.
CourtU.S. Court of Appeals — Sixth Circuit

ARGUED: Owen Dennis Ramey, LEWIS, REED & ALLEN PC, Kalamazoo, Michigan, for Appellants/Cross-Appellees. Thomas G. King, KREIS, ENDERLE, HUDGINS & BORSOS, P.C., Kalamazoo, Michigan, for Appellees/Cross-Appellants. ON BRIEF: Owen Dennis Ramey, Ronald W. Ryan, LEWIS, REED & ALLEN PC, Kalamazoo, Michigan, James Shek, Allegan, Michigan, for Appellants/Cross-Appellees. Thomas G. King, KREIS, ENDERLE, HUDGINS & BORSOS, P.C., Kalamazoo, Michigan, for Appellees/Cross-Appellants. Christina M. Martin, PACIFIC LEGAL FOUNDATION, Palm Beach Gardens, Florida, Steven C. Liedel, Ted Seitz, DYKEMA GOSSETT PLLC, Lansing, Michigan, William H. Horton, GIARMARCO MULLINS & HORTON P.C., Troy, Michigan, Daniel B. Kohrman, AARP FOUNDATION LITIGATION, Washington, D.C., for Amici Curiae.

Before: CLAY, KETHLEDGE, and DONALD, Circuit Judges.

CLAY, J., delivered the opinion of the court in which DONALD, J., joined. KETHLEDGE, J. (pp. 823–25), delivered a separate dissenting opinion.

OPINION

CLAY, Circuit Judge.

Plaintiffs Wayside Church, Myron Stahl, and Henderson Hodgens (collectively "Plaintiffs") appeal the district court's order granting Defendants' motion to dismiss the complaint, which asserted that Defendant Van Buren County and its Treasurer, Defendant Karen Makay (collectively "Defendants"), violated Plaintiffs' Fifth Amendment rights by taking their property without just compensation. Defendants filed a cross-appeal arguing that the district court erred in determining that it could exercise jurisdiction over this case. For the reasons set forth below, we VACATE the judgment of the district court and REMAND with instructions to DISMISS the case for lack of subject matter jurisdiction.

BACKGROUND

Plaintiffs each owned real property in Van Buren County, Michigan in 2011 but failed to pay property taxes for that year. On March 1, 2012, pursuant to the General Property Tax Act (the "GPTA"), Mich. Comp. Laws § 211.1 et seq. , these properties became subject to forfeiture and foreclosure. On April 24, 2014, the Van Buren County Circuit Court issued a foreclosure judgment, and title to these properties passed in fee simple absolute to the Defendant County.1 A few months later, Defendant Makay, the treasurer for the Defendant County, sold these properties at an auction, pursuant to Michigan Compiled Laws § 211.78m. The minimum bid for each of the properties was calculated by totaling "[a]ll delinquent taxes, interest, penalties, and fees due on the property" plus the "expenses of administering the sale, including all preparations for the sale." Mich. Comp. Laws § 211.78m(16)(a). Plaintiff Wayside Church's former property had a minimum bid of $16,750, but at the public auction held on August 5, 2014, the property was sold for $206,000, meaning Defendant Van Buren County received surplus proceeds of $189,250. The minimum bid for the property formerly owned by Plaintiff Stahl was $25,000, but the property was sold at the same auction for $68,750, resulting in a surplus of $43,750. Finally, the property that had once been owned by Plaintiff Hodgens required a minimum bid of $5,900, but was sold for $47,750 at the same auction, meaning the Defendant County received $41,850 in surplus proceeds.

In this suit, Plaintiffs seek return of the surplus funds because they allegedly possessed a cognizable property interest in each of their foreclosed properties and in the surplus proceeds generated by the sales, in connection with which Defendants were required to pay just compensation pursuant to the Fifth Amendment. Plaintiffs did not seek to challenge the process by which these asserted interests were taken; instead, Plaintiffs sought a declaratory judgment from the district court that, by not returning the surplus funds to the former owner-Plaintiffs, Defendants effectuated a taking without just compensation in violation of the Fifth Amendment.

On December 11, 2014, Plaintiffs initiated this suit in federal court by filing a complaint against Defendants asserting the following claims: Count I asserted that Defendants violated Plaintiffs' rights under the Fifth Amendment by taking their property without just compensation; Count II asserted that Plaintiffs were entitled to monetary damages, pursuant to 42 U.S.C. § 1983, for the violation of their Takings Clause rights alleged in Count I; and Count III sought a declaratory judgment that the Michigan Circuit Court failed to enter judgment in accordance with a state statute and, thus, that the redemption period should have been tolled. In addition to asserting these claims against Defendants on their own behalf, Plaintiffs also sought to represent a class of former Michigan property owners who had lost title to their property for non-payment of taxes but whose former properties were sold for significantly more than the taxes owed.

On January 7, 2016, Defendants filed a motion to dismiss the complaint for lack of jurisdiction and for failure to state a claim upon which relief can be granted, pursuant to Federal Rule of Civil Procedure 12(b)(1) and 12(b)(6), respectively. On November 9, 2015, the district court issued an opinion denying the motion to dismiss for lack of subject matter jurisdiction but granting the motion for failure to state a claim.2

Plaintiffs filed a timely appeal on November 30, 2015, arguing that the district court erred in dismissing its claims pursuant to Rule 12(b)(6). This appeal was docketed as No. 15-2463. On December 9, 2015, Defendants filed a cross-appeal, docketed as No. 15-2525, challenging the district court's order denying its motion to dismiss for lack of jurisdiction.

DISCUSSION

We are "bound to consider the 12(b)(1) motion first, since the Rule 12(b)(6) challenge becomes moot if this court lacks subject matter jurisdiction." Moir v. Greater Cleveland Reg'l Transit Auth. , 895 F.2d 266, 269 (6th Cir. 1990).

A. Standard of Review

"Article III of the Constitution confines the federal courts to adjudicating actual cases' and ‘controversies.’ " Nat'l Rifle Ass'n of Am. v. Magaw , 132 F.3d 272, 279 (6th Cir. 1997) (citing U.S. Const. art. III, § 2). This command requires us to dismiss cases that are not ripe for review. "Ripeness is more than a mere procedural question; it is determinative of jurisdiction. If a claim is unripe, federal courts lack subject matter jurisdiction and the complaint must be dismissed." Arnett v. Myers , 281 F.3d 552, 562 (6th Cir. 2002) (quoting Bigelow v. Mich. Dep't of Nat. Res. , 970 F.2d 154, 157 (6th Cir. 1992) ).

"Challenges to subject-matter jurisdiction under Federal Rule of Civil Procedure 12(b)(1) ‘come in two varieties: a facial attack or a factual attack.’ " Carrier Corp. v. Outokumpu Oyj , 673 F.3d 430, 440 (6th Cir. 2012) (quoting Gentek Bldg. Prods., Inc. v. Sherwin Williams Co. , 491 F.3d 320, 330 (6th Cir. 2007) ). "A facial attack on the subject-matter jurisdiction"—like the one Defendants make here—"questions merely the sufficiency of the pleading." Gentek Bldg. Prods., Inc. , 491 F.3d at 330 (citing Ohio Nat'l Life Ins. Co. v. United States , 922 F.2d 320, 325 (6th Cir. 1990) ). "When reviewing a facial attack, a district court takes the allegations in the complaint as true," just as in a Rule 12(b)(6) motion. Id. (citing Ohio Nat'l Life Ins. Co. , 922 F.2d at 325 ). This Court reviews facial challenges to subject matter jurisdiction de novo . DLX, Inc. v. Kentucky , 381 F.3d 511, 516 (6th Cir. 2004) (citing Cob Clearinghouse Corp. v. Aetna U.S. Healthcare, Inc. , 362 F.3d 877, 880 (6th Cir. 2004) ).

A factual attack, on the other hand, raises a factual controversy requiring the district court to "weigh the conflicting evidence to arrive at the factual predicate that subject-matter does or does not exist." Gentek Bldg. Prods., Inc. , 491 F.3d at 330 (citing Ohio Nat'l Life Ins. Co. , 922 F.2d at 325 ). "Where a trial court's ruling on jurisdiction is based in part on the resolution of factual disputes, a reviewing court must accept the district court's factual findings unless they are clearly erroneous." RMI Titanium Co. v. Westinghouse Elec. Corp. , 78 F.3d 1125, 1135 (6th Cir. 1996) (citing Ohio Nat'l Life Ins. Co. , 922 F.2d at 326 ) (additional citations omitted). "However, review of the district court's application of the law to the facts is de novo ." Id. (citing Ynclan v. Dep't of Air Force , 943 F.2d 1388, 1390 (5th Cir. 1991) ; Holt v. United States , 46 F.3d 1000, 1003 (10th Cir. 1995) ).

Because the district court treated the challenge as a facial attack and made no factual findings in reaching its decision, the appeal is treated the same way. See DLX, Inc. , 381 F.3d at 516. This Court thus reviews the judgment of the district court de novo . Moreover "where subject matter jurisdiction is challenged under Rule 12(b)(1), as it was here, the plaintiff has the burden of proving jurisdiction in order to survive the motion." Rogers v. Stratton Indus., Inc. , 798 F.2d 913, 915 (6th Cir. 1986).

B. Analysis

Defendants argue that we lack jurisdiction for two reasons: (1) Plaintiffs' claims are not ripe for review; and (2) the Tax Injunction Act and principles of comity prevent jurisdiction from being exercised in federal court. We address these arguments in turn below.

1. Ripeness of Takings Clause...

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