Donald Freed v. Michelle Thomas
976 F.3d 729
6th Cir.2020Background
- Donald Freed fell behind on property taxes (about $735, growing to $1,109 with fees); Gratiot County foreclosed under Michigan’s GPTA and sold the home at auction for $42,000; Freed received no surplus proceeds.
- Freed sued county treasurer Michelle Thomas, Gratiot County, and the Michigan AG under 42 U.S.C. § 1983 alleging a Fifth Amendment taking and an Eighth Amendment excessive fine, seeking damages, injunctive and declaratory relief.
- Defendants moved to dismiss for lack of federal jurisdiction, relying on Williamson County ripeness and this circuit’s Wayside Church decision; the district court initially denied then later sua sponte dismissed for lack of jurisdiction.
- After the district court’s dismissal, the Supreme Court decided Knick, overruling Williamson County’s exhaustion rule and holding § 1983 federal takings suits may be brought immediately.
- On remand appeal, the Sixth Circuit held the Tax Injunction Act (TIA) and comity do not bar Freed’s federal suit because he challenges post‑collection retention of surplus sale proceeds (a taking), not the assessment, levy, or collection of taxes; the case is reversed and remanded for further proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Applicability of the Tax Injunction Act (TIA) | Freed: suit challenges post‑collection retention of surplus proceeds (not tax collection), so TIA doesn't apply | Defendants: Freed’s recovery of surplus interferes with tax‑collection regime and is barred by TIA | Held: TIA does not bar suit—Freed challenges post‑collection refund procedure, surplus proceeds are not "tax" proceeds under TIA |
| Comity / abstention | Freed: federal courts may hear §1983 takings claims; comity doesn’t bar actions that do not attack tax validity or collection | Defendants: comity counsels abstention because suit arises from state tax foreclosure scheme | Held: Comity does not bar suit—case does not challenge taxing authority or administration, only alleged unconstitutional taking |
| Precedential effect of Wayside Church | Freed: Wayside Church’s TIA/comity discussion is dictum and not binding after Knick | Defendants: Wayside Church controls and requires state‑court remedy before federal suit | Held: Wayside Church’s TIA/comity discussion treated as nonbinding dictum; not controlling here |
| Ripeness and state remedies (Williamson County / Rafaeli implications) | Freed: Knick overruled Williamson County; state remedies are not a jurisdictional bar | Defendants: plaintiffs should pursue state remedies; Rafaeli decisions show state process adequate | Held: Knick removes Williamson County ripeness bar; court declines to resolve adequacy of state remedies now and remands to district court to address merits and any state‑remedy issues |
Key Cases Cited
- Knick v. Township of Scott, 139 S. Ct. 2162 (2019) (overruled Williamson County; §1983 takings claim may be brought in federal court immediately)
- Williamson County Regional Planning Comm'n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985) (former rule requiring exhaustion of state compensation remedies for federal takings claims)
- Wayside Church v. Van Buren County, 847 F.3d 812 (6th Cir. 2017) (panel opinion holding Williamson County bar applied; TIA/comity discussion treated as persuasive but here deemed dictum)
- Rosewell v. LaSalle Nat'l Bank, 450 U.S. 503 (1981) (TIA limits federal injunctions interfering with state tax collection; state remedies requirement is narrow)
- Direct Marketing Ass'n v. Brohl, 575 U.S. 1 (2015) (TIA does not reach all state tax administration; focus is on relief that would reduce tax revenue flow)
- Hibbs v. Winn, 542 U.S. 88 (2004) (explaining narrow scope of claims subject to TIA; focus on interference with collection)
- Steel Co. v. Citizens for a Better Environment, 523 U.S. 83 (1998) (federal courts must assess subject‑matter jurisdiction before deciding merits)
- Islamic Center of Nashville v. Tennessee, 872 F.3d 377 (6th Cir. 2017) (TIA barred federal suit that effectively sought to avoid future tax liability)
- Chippewa Trading Co. v. Cox, 365 F.3d 538 (6th Cir. 2004) (comity doctrine discourages federal challenges to state tax systems)