81 F.4th 655
6th Cir.2023Background:
- Freed fell ~$1,100 behind on property taxes; Gratiot County Treasurer Michelle Thomas foreclosed the property under Michigan’s GPTA and sold it at public auction for $42,000; the County retained all proceeds.
- Freed sued under 42 U.S.C. § 1983 alleging a Fifth Amendment taking (and Fourteenth Amendment), and an Eighth Amendment excessive-fines violation; he sought fair-market value minus debt.
- The district court initially dismissed on TIA/comity grounds; this Court reversed and remanded in Freed v. Thomas, citing Knick.
- On remand the district court found a Fifth Amendment violation but awarded Freed only the surplus sale proceeds (sale price minus debt, plus interest), denied recovery of full fair-market value, granted Thomas qualified immunity, and left attorney’s fees undecided.
- The County cross-appealed municipal liability; Freed appealed the remedy, qualified immunity ruling, and the denial without prejudice of fees.
- The Sixth Circuit affirmed: plaintiff is entitled only to surplus proceeds (not full FMV), Eighth Amendment claim fails because GPTA is nonpunitive, Thomas gets qualified immunity, and the County is liable under Monell for choosing to act as foreclosing unit.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Remedy for taking: entitlement to fair-market value vs surplus proceeds | Freed: entitled to FMV minus debt (seeks ~$98,800 less debt) | County/Thomas: remedial right is surplus sale proceeds (sale price minus debt) | Held: plaintiff gets only the surplus (sale price minus debt) plus interest; not FMV |
| Eighth Amendment excessive fines | Freed: foreclosure and retention destroyed equity in excess of tax, so punitive/excessive | Defs: GPTA is remedial, not punitive | Held: Eighth Amendment claim fails; GPTA is nonpunitive (Hall, Rafaeli) |
| Qualified immunity for Treasurer Thomas | Freed: Thomas violated clearly established Fifth Amendment right by withholding surplus | Thomas/County: enforcement of longstanding state statute; no clearly established right at time | Held: qualified immunity affirmed; right was not clearly established then |
| Municipal (Monell) liability of County | Freed: County liable for constitutional deprivation caused by its practice | County: merely followed state statute; cannot be liable | Held: County liable—its voluntary decision to act as foreclosing unit and retain proceeds was a policy/custom causing the violation |
| Appealability of attorney’s-fees denial | Freed: district court should have decided fee motion now | County: denial without prejudice during ongoing proceedings not final | Held: fees order not appealable; appeal dismissed for lack of jurisdiction |
Key Cases Cited
- Tyler v. Hennepin County, 598 U.S. 631 (2023) (tax-sale surplus belongs to property owner)
- Knick v. Township of Scott, 139 S. Ct. 2162 (2019) (property owner may bring § 1983 takings claim in federal court)
- Hall v. Meisner, 51 F.4th 185 (6th Cir. 2022) (GPTA is nonpunitive for Eighth Amendment purposes)
- Rafaeli, LLC v. Oakland County, 952 N.W.2d 434 (Mich. 2020) (Michigan Supreme Court ruling on surplus and valuation at tax sale)
- BFP v. Resolution Trust Corp., 511 U.S. 531 (1994) (sale price at public auction is best evidence of value for purposes of takings analysis)
- Monell v. Department of Social Services, 436 U.S. 658 (1978) (municipal liability requires a policy or custom causing constitutional harm)