After a ruling from the nation’s top court, another chapter in a yearslong legal saga over a $2,241 tax debt and property foreclosure in Isabella County has ended in favor of local officials.
On Tuesday, nearly all the justices of the U.S. Supreme Court rejected arguments from the family of the late Timothy Pung of Union Township. The family says they were owed the fair market value of their Isabella County home, after county officials seized the property. It was auctioned off in 2018 for $76,000 after they failed to pay back taxes.
The Pung family’s attorney, Phillip Ellison, argued the county’s actions violated the Pung’s Fifth Amendment rights, specifically the takings clause, which requires government entities provide “just compensation” to property owners if their property is taken by the government.
Ellison said the “just compensation” provision in the amendment means the Pung family was owed the fair market value of the home, which at the time was assessed at $194,000. The Pung family was given roughly $74,000 after the sale. Roughly $2,000 was taken out of the auction price to pay the tax debt that was owed to the county.
“The proper baseline for measuring just compensation following a tax sale is the auction sale price, not the property’s hypothetical fair market value,” reads the opening line of the opinion. “Under Pung’s rule, a tax sale would often net the government a loss, paid out to the delinquent taxpayer himself, rendering tax sales infeasible as a debt-collection mechanism.”
Ellison’s second constitutional argument was also rejected by all nine justices. He claimed that the actions taken by the county were a form of punishment for not paying taxes on the property, violating the Eighth Amendment’s provision on excessive fines.
“We are grateful the U.S. Supreme Court rejected Pung’s challenge to the constitutionality of the process governments have relied on for centuries to collect property taxes that remain unpaid for years,” said Matthew Nelson, one of the attorneys who represented Isabella County. “This decision ensures that government retains an important tool to promote the equitable allocation of the cost of government services to all property owners.”
Nelson told WCMU the key to winning the constitutional questions posed in this case were the centuries of property rights precedent, established as far back as the signing of the Magna Carta.
The opinion was unanimous in its outcome, in favor of Isabella County. However, not all the justices signed onto every aspect of Alito’s final decision, meaning, the case, with origins dating back to 2008, is still not fully closed.
Justices Clarence Thomas and Neil Gorsuch each filed their own concurrences in the opinion, which kicks certain aspects of the case down to the Sixth Circuit Court of Appeals for a new hearing. The lower court will now have to decide whether the auction procedure of the home was conducted fairly in accordance with the Constitution by the county.
“The case isn't over,” said Larry Salzman, vice president of the Pacific Legal Foundation, a national nonprofit law firm that that focuses on government overreach and abuse. “The Pungs won the right to continue their fight in the lower courts."
WCMU reached out to Ellison to a request for comment and did not immediately hear back.
