In Re Petition of Emmet County Treasurer for Foreclosure
359447
Mich. Ct. App.Jan 12, 2023Background
- The property was owned by Dona Lee Bouford‑Hiar, who died on December 13, 2019; her will devised her real and personal property to her niece, Georgia Litzner.
- The property had been forfeited to the Emmet County Treasurer for unpaid taxes; a judgment of foreclosure was entered February 13, 2020 and became effective March 31, 2020.
- The treasurer sold the property October 2, 2020 for $281,250, leaving alleged surplus proceeds of about $260,487.50.
- Litzner moved (May 2021) for disbursement of the surplus under MCL 211.78t, claiming she had a legal interest as the sole devisee; DHHS claimed a Medicaid estate‑recovery lien and urged probate administration.
- The circuit court denied Litzner’s motion, reasoning a will does not confer a legal interest until probated (and probate occurred only in October 2021); the Court of Appeals reversed and remanded.
Issues
| Issue | Plaintiff's Argument (Litzner) | Defendant's Argument (Treasurer / DHHS) | Held |
|---|---|---|---|
| Whether a devisee who succeeds in interest at testator's death but whose will is not yet probated is a "claimant" under MCL 211.78t | Devisee has a legal interest that "devolves" on death and thus qualifies as a claimant for surplus proceeds | A will confers no legal effect until probate, so no legal interest existed before the foreclosure became effective | Court: Devisee had a sufficient legal interest to be a claimant; reversed and remanded for further proceedings |
| Whether Litzner’s failure to file the statutory notice of claim (by July 1) bars her claim | Could not file notice by that date because the GPTA amendment and prescribed form were not yet in effect; she filed a disbursement motion promptly under the next timing rule | Treasurer: failure to comply with the notice requirement should defeat the claim | Court: Accepted that Litzner could not comply with the earlier notice deadline and that her May 2021 motion was reasonable; did not affirm denial on this ground |
| Whether Litzner’s failure to present proofs at the circuit court hearing justifies denial | Hearing was stayed to allow DHHS to open probate, so she never had an opportunity to present proofs on the merits | Treasurer: burden is on claimant to prove interest; lack of proof supports denial | Court: Hearing never reached proof; denying claim without allowing proof was error — remanded for determination of relative priorities and proof |
| Impact of DHHS’s Medicaid estate‑recovery claim on entitlement to surplus | (Raised but not resolved on appeal; Litzner argued DHHS might be barred by laches) | DHHS asserted a >$800,000 Medicaid recovery claim and that probate administration must resolve priority | Court: Declined to decide Medicaid‑recovery or laches issues; left for lower courts in appropriate proceedings |
Key Cases Cited
- Rafaeli, LLC v. Oakland Co., 505 Mich. 429 (Mich. 2020) (holding governmental retention of surplus foreclosure proceeds was an unconstitutional taking)
- 2 Crooked Creek, LLC v. Cass Co. Treasurer, 507 Mich. 1 (Mich. 2021) (consulting legal definitions when statute does not define a term)
- In re Estate of Rasmer, 501 Mich. 18 (Mich. 2017) (Medicaid recovery limited to assets included in probated estates)
- Pardeike v. Fargo, 344 Mich. 518 (Mich. 1955) (title to real estate passes on death to heirs/devisees)
- In re Powers' Estate, 362 Mich. 222 (Mich. 1961) (will has no legal effect until probated)
- In re Allen's Estate, 240 Mich. 661 (Mich. 1927) (probated will relates back to testator's death)
- Russello v. United States, 464 U.S. 16 (U.S. 1983) (discussion of the term "interest" as a broad descriptor of rights or title)