In re PETITION BY WAYNE COUNTY TREASURER
Docket No. 129341
Supreme Court of Michigan
May 23, 2007
478 MICH 1
Argued October 5, 2006 (Calendar No. 10).
In re PETITION BY WAYNE COUNTY TREASURER
Docket No. 129341. Argued October 5, 2006 (Calendar No. 10). Decided May 23, 2007.
The Wayne County Treasurer petitioned the Wayne Circuit Court for the tax foreclosure of a parcel owned by Perfecting Church. The treasurer sent the statutorily required notice to the previous owner of the parcel and did not post a notice on the parcel or on a second parcel that had been purchased from the seller at the same time and recorded in a single deed for both parcels. Therefore, the church had no notice of the foreclosure proceedings. The court, Mary Beth Kelly, J., entered a judgment of foreclosure. The county thereafter sold the parcel to Matthew Tatarian and Michael Kelly. After the sale, the church learned of the foreclosure and sale and filed a motion for relief from the foreclosure judgment in the circuit court. The church noted that before the treasurer initiated the foreclosure proceedings against the first parcel, the second parcel had been listed on the county foreclosure listing and that the church had paid the outstanding taxes on that parcel and had been assured by the treasurer that there were no further outstanding taxes on either parcel. Tatarian and Kelly were allowed to intervene in the action. The circuit court granted the motion for relief from the foreclosure judgment, vacated the judgment, and restored the church‘s title to the first parcel. The Court of Appeals, FORT HOOD, P.J., and TALBOT and MURRAY, JJ., denied the intervening parties’ delayed application for leave to appeal. Unpublished order of the Court of Appeals, entered July 11, 2005 (Docket No. 261074). The Supreme Court granted the intervening parties’ application for leave to appeal. 474 Mich 1059 (2006).
In an opinion by Justice YOUNG, joined by Chief Justice TAYLOR and Justices CORRIGAN and MARKMAN, the Supreme Court held:
Under the General Property Tax Act,
Justice CAVANAGH, joined by Justice KELLY, concurring in the result only, disagreed that the notice procedures of the General Property Tax Act necessarily satisfy due process.
Justice WEAVER, concurring in the result only, would have held that, under the relevant provisions of
Affirmed.
TAXATION — CONSTITUTIONAL LAW — FORECLOSURES — DUE PROCESS.
The portion of the General Property Tax Act purporting to limit a circuit court‘s jurisdiction to modify judgments of tax foreclosure is unconstitutional and unenforceable as applied to property owners who are denied due process of law, such as where the foreclosing governmental unit fails to provide constitutionally adequate notice of the foreclosure proceedings (
Howard & Howard Attorneys, P.C. (by Jason D. Killips, Sara K. MacWilliams, Robert J. Curtis, and James Geary), for Perfecting Church.
Aldrich Legal Services, PLLC (by Brad B. Aldrich), for Matthew Tatarian and Michael Kelly.
Amici Curiae:
Michael A. Cox, Attorney General, Thomas L. Casey, Solicitor General, and Kevin T. Smith, Assistant Attorney General, for the Department of Treasury.
Michael A. Cox, Attorney General, Thomas F. Schimpf, Division Chief, and Kevin L. Francart, Assistant Attorney General, for the Michigan Land Bank Fast Track Authority.
Michael A. Cox, Attorney General, Terrence Grady, Division Chief, and Matthew H. Rick, Assistant Attorney General, for the Michigan State Housing Development Authority.
Dykema Gossett PLLC (by Jill M. Wheaton, Theodore W. Seitz, and Stacy R. Owen), for the Michigan Association of County Treasurers.
Simon, Galasso & Frantz, PLC (by Kenneth G. Frantz), for High Praise Cathedral of Faith Ministries.
Loomis, Ewert, Parsley, Davis & Gotting, P.C. (by Kevin J. Roragen and Michael H. Rhodes), for Westhaven Manor LDHA LP.
John E. Johnson, Jr., Corporation Counsel, and Joanne D. Stafford and James Noseda, Assistant Corporation Counsels, for the city of Detroit.
OPINION OF THE COURT
YOUNG, J. This case concerns the jurisdiction of circuit courts to modify judgments of foreclosure when the foreclosing governmental unit deprives the property owner of due process. Generally, the provision of the General Property Tax Act (GPTA),1 at issue in this case, as well as recent amendments of the GPTA, reflect a legislative effort to provide finality to foreclosure judgments and to quickly return property to the tax rolls. However, this legislative regime is problematic when the property owner is not provided with constitutionally adequate notice of the foreclosure. This is because
FACTS AND PROCEDURAL HISTORY
The property owner in this case, Perfecting Church, purchased two parcels for use as parking lots during its church services. Both parcels were transferred by a single deed that the church properly recorded. Nevertheless, after the church purchased and recorded a single deed for both the parcels, the Wayne County Treasurer listed one parcel on the Wayne County foreclosure listing. The church paid the outstanding taxes on that parcel and the treasurer assured the church
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that there were no further outstanding taxes on either parcel. Despite those assurances, the treasurer initiated foreclosure proceedings against the other parcel. However, the church never received notice of the pending foreclosure because the treasurer did not comply with the notice provisions of the GPTA. Specifically, the treasurer sent the statutorily required notice to the previous owner and did not post a notice on either of the parcels.2 Thus, the church had no notice of the foreclosure proceedings. The Wayne Circuit Court entered a judgment of foreclosure. After the redemption period passed, Wayne County sold the property to the intervening parties, Matthew Tatarian and Michael Kelly.
Subsequent to the sale, the church learned of the foreclosure and sale, and it filed a motion for relief from the foreclosure judgment in the Wayne Circuit Court. That court granted the church‘s motion and the Court of Appeals denied the intervening parties’ delayed application for leave to appeal.3 This Court granted their application for leave, directing the parties to address two issues:
(1) whether the trial court retained jurisdiction to grant relief from the judgment of foreclosure pursuant to
MCR 2.612(C) , notwithstanding the provisions ofMCL 211.78l(1) and (2); and (2) whetherMCL 211.78l permits a person to be deprived of property without being afforded due process.4
OPINION OF THE COURT
STANDARD OF REVIEW
This Court reviews questions of law, such as issues of constitutional and statutory construction, de novo.5
ANALYSIS
Under the GPTA, a “foreclosing governmental unit shall file a single petition with the clerk of the circuit court of that county listing all property forfeited and not redeemed to the county treasurer under [
Except as otherwise provided in subsection (5)(c) and (e),9 fee simple title to property set forth in a petition for foreclosure filed under section 78h on which forfeited delinquent taxes, interest, penalties, and fees are not paid within 21 days after the entry of judgment shall vest absolutely in the foreclosing governmental unit, and the foreclosing governmental unit shall have absolute title to the property. The foreclosing governmental unit‘s title is not subject to any recorded or unrecorded lien and shall not
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be stayed or held invalid except as provided in subsection (7).10
The statute also provides for an appeal to the Court of Appeals within 21 days of the judgment of foreclosure.11 Finally, the GPTA provides property owners who claim they did not receive any notice an action for monetary damages in the Court of Claims.12
OPINION OF THE COURT
The intervening parties challenge the propriety of the grant of relief from judgment obtained by the church. They argue that
The intervening parties accurately construe these provisions of the GPTA. If a property owner does not redeem the property or appeal the judgment of foreclosure within 21 days, then
However, the church argues that because the county denied it due process when taking its property, the church can avoid the limitations of the statute. The intervening parties respond that regardless of the property owner‘s claim, the statute only provides for one
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remedy once the redemption and appeals period has passed — a claim for monetary damages under
As stated, we believe that the intervening parties’ interpretation of the GPTA is correct. The act does not provide an exception for property owners who are denied due process. Thus, the intervening parties correctly assert that the GPTA does not provide relief for the church or other property owners who are denied due process.
The question then becomes whether such a regime is constitutional when it operates to deprive a property owner of its property without due process. This Court must presume a statute is constitutional and construe it as such, unless the only proper construction renders the statute unconstitutional.14 The United States Supreme Court recently has held that “due process requires the government to provide ‘notice reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.‘”15 Furthermore, “‘when notice is a person‘s due . . . [t]he means employed must be such as one desirous of actually informing the absentee might reasonably adopt to accomplish it.‘”16 However, “[d]ue process does not require that a property owner receive actual notice before the government may take his property.”17
OPINION OF THE COURT
As noted above, the statute permits a foreclosing governmental unit to ignore completely the mandatory notice provisions of the GPTA, seize absolute title to a taxpayer‘s property, and sell the property, leaving the circuit court impotent to provide a remedy for the blatant deprivation of due process. That interpretation, allowing for the deprivation of due process without any redress would be patently unconstitutional.18 Unfortunately, as noted above, the plain language of the statute simply does not permit a construction that renders the statute constitutional because the statute‘s jurisdictional limitation encompasses all foreclosures, including those where there has been a failure to satisfy minimum due process requirements, as well as those situations in which constitutional notice is provided, but the property owner does not receive actual notice. In cases where the foreclosing governmental unit complies with the GPTA notice provisions,
OPINIONS BY CAVANAGH AND WEAVER, JJ.
court‘s jurisdiction to modify judgments of foreclosure is unconstitutional and unenforceable as applied to property owners who are denied due process.
CONCLUSION
Because there is no construction of the GPTA that renders the statute constitutional in cases where the taxing authority has denied the taxpayer due process, the statute is unconstitutional as applied to those individuals. In the present case, the county completely failed to comply with the notice provisions in the GPTA. As such, the county deprived the church of its property without providing due process. Therefore, for the reasons stated, we affirm the order of the Wayne Circuit Court that restored the church‘s title to the property in question.
TAYLOR, C.J., and CORRIGAN and MARKMAN, JJ., concurred with YOUNG, J.
CAVANAGH, J. (concurring in the result only). I concur with the result reached by the majority. I write separately, however, to note that I do not agree that the notice procedures in the General Property Tax Act,
KELLY, J., concurred with CAVANAGH, J.
WEAVER, J. (concurring in the result only). Recent amendments of Michigan‘s General Property Tax Act
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(GPTA),
I would hold that the relevant provisions of
I. FACTS
On July 1, 1999, respondent Perfecting Church purchased two vacant Wayne County properties for $100,000 and used both properties as parking lots for church service attendees.4 On June 14, 2002, the Wayne County Treasurer filed a petition for foreclosure listing several thousand properties with unpaid taxes for the
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year 2000. The properties at issue here, the second lot and the first lot, were included in those foreclosure proceedings. On March 10, 2003, the Wayne Circuit Court entered a judgment of foreclosure regarding both of the vacant properties owned by Perfecting Church.
Pursuant to
Consequently, Perfecting Church never received notice of the pending foreclosure. It was not until October 2003, seven months after the circuit court entered the foreclosure judgment, that Perfecting Church became aware of the tax delinquency pertaining to the first lot when the church‘s general manager saw it listed in the Wayne County forfeiture listing. After contacting the Wayne County Treasurer‘s office, Perfecting Church obtained and paid the tax bill for the first lot on October 14, 2003.
At that time, Perfecting Church also inquired about the tax status of the second lot and was advised by the treasurer‘s office that payment of taxes on the first lot would cover the second lot as well, because both properties were listed on the same deed. Apparently, this assertion by the treasurer‘s office was incorrect, and Wayne County subsequently sold the second lot at auction. On November 4, 2003, the treasurer conveyed the second lot by quitclaim deed to the purchasers at
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the auction, intervening appellants Matthew Tatarian and Michael Kelly (appellants).
On May 14, 2004, pursuant to
Appellants sought leave to appeal in this Court. This Court granted the application and directed the parties to include among the issues to be briefed: (1) whether the trial court retained jurisdiction to grant relief from the judgment of foreclosure pursuant to
II. STANDARD OF REVIEW
Whether a court has subject-matter jurisdiction is a question of law that this Court reviews de novo. Lapeer
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Co Clerk v Lapeer Circuit Judges, 465 Mich 559, 566 (2002). Questions of statutory construction are also reviewed de novo. Grimes v Dep‘t of Transportation, 475 Mich 72, 76 (2006). Finally, questions concerning the constitutionality of a statutory provision are subject to review de novo. City of Taylor v Detroit Edison Co, 475 Mich 109, 115 (2006).
III. ANALYSIS
The GPTA authorizes county treasurers to foreclose on tax-delinquent property and to sell the property at auction to satisfy tax delinquencies. Republic Bank v Genesee Co Treasurer, 471 Mich 732, 737 (2005). However, a person may not be deprived of property without due process of law. Const 1963, art 1, § 17; US Const, Am XIV, § 1. In Dow v Michigan, 396 Mich 192, 210 (1976), this Court held that due process requires that before the government takes a person‘s property by foreclosure, the person must be afforded notice and the right to contest the foreclosure. Following our decision in Dow, the Legislature added additional notice provisions to the GPTA to satisfy the constitutional due process requirements set forth in Dow. See, e.g., Smith v Cliffs on the Bay Condo Ass‘n, 463 Mich 420, 428-429 (2000). As a result, the GPTA sets forth an extensive set of procedures to provide a property owner with notice in the tax foreclosure and sale process. Id. at 428.
This Court must presume that
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or unconstitutional, this Court must choose the constitutional interpretation of the statute. Id.
Among the foreclosure provisions of the GPTA, three are relevant to the disposition of this case:
Section 78i(10)8 states:
The failure of the foreclosing governmental unit to comply with any provision of this section shall not invalidate any proceeding under this act if the owner of a property interest or a person to whom a tax deed was issued is accorded the minimum due process required under the state constitution of 1963 and the constitution of the United States.
Essentially, § 78i(10) provides that as long as the property owner against whom foreclosure is sought is accorded notice satisfying minimum due process, the failure of the governmental entity to comply with other
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provisions in this section does not invalidate the proceeding. The linchpin of a valid foreclosure then is that a property owner must be “accorded the minimum due process required under the state constitution of 1963 and the constitution of the United States.”9
The next relevant provision is
Fee simple title to property set forth in a petition for foreclosure filed under section 78h on which forfeited delinquent taxes, interest, penalties, and fees are not paid within 21 days after the entry of judgment shall vest absolutely in the foreclosing governmental unit, and the foreclosing governmental unit shall have absolute title to the property. The foreclosing governmental unit‘s title is not subject to any recorded or unrecorded lien and shall not be stayed or held invalid except as provided in subsection (7).10
In other words, once a valid judgment of foreclosure is entered,
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the foreclosing governmental unit, and the foreclosing governmental unit shall have absolute title to the property.”
After title vests in the foreclosing governmental entity pursuant to § 78k(6),
(1) If a judgment for foreclosure is entered under section 78k and all existing recorded and unrecorded interests in a parcel of property are extinguished as provided in section 78k, the owner of any extinguished recorded or unrecorded interest in that property who claims that he or she did not receive any notice required under this act shall not bring an action for possession of the property against any subsequent owner, but may only bring an action to recover monetary damages as provided in this section.
(2) The court of claims has original and exclusive jurisdiction in any action to recover monetary damages under this section.
Here, respondent Perfecting Church did not bring an action for possession against appellant subsequent owners. Instead, Perfecting Church sought relief from the foreclosure judgment on the basis that the judgment was void because Perfecting Church never received notice of the foreclosure action. Appellants do not contest that Perfecting Church was deprived of notice,
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but argue that, despite this fact,
As a preliminary matter, I note that a circuit court has power to grant relief from a judgment under
(1) On motion and on just terms, the court may relieve a party or the legal representative of a party from a final judgment, order, or proceeding on the following grounds:
(a) Mistake, inadvertence, surprise, or excusable neglect.
(b) Newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under
MCR 2.611(B) .(c) Fraud (intrinsic or extrinsic), misrepresentation, or other misconduct of an adverse party.
(d) The judgment is void.
(e) The judgment has been satisfied, released, or discharged; a prior judgment on which it is based has been reversed or otherwise vacated; or it is no longer equitable that the judgment should have prospective application.
(f) Any other reason justifying relief from the operation of the judgment.
Contrary to appellants’ assertion,
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Dictionary (7th ed). A motion for relief from a judgment of foreclosure under
Further,
It follows that a foreclosing governmental unit cannot receive fee title to property when the property owner was not provided with minimum due process notice of an impending foreclosure. Therefore,
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is that
Thus, it is necessary to determine whether the foreclosure on Perfecting Church‘s property met the minimum due process notice requirements. Both the Michigan and United States constitutions guarantee that a person shall not be deprived “of life, liberty or property, without due process of law.” Const 1963, art 1, § 17; US Const, Am XIV, § 1. Due process of law entitles a person whose interest is at stake to “‘notice and an opportunity to be heard.‘” Dusenbery v United States, 534 US 161, 167 (2002), quoting United States v James Daniel Good Real Prop, 510 US 43, 48 (1993). Due process protects a real estate owner‘s interest in property. Dow, supra at 204. “People must pay their taxes, and the government may hold citizens accountable for tax delinquency by taking their property. But before forcing a citizen to satisfy his debt by forfeiting his property, due process requires the government to provide adequate notice of the impending taking.” Jones v Flowers, 547 US 220, 234 (2006).
For the first component of due process — notice of an impending taking — to be constitutionally adequate, the notice must be “reasonably calculated, under all the circumstances, to apprise interested parties of the pendency of the action and afford them an opportunity to present their objections.” Mullane v Central Hanover Bank & Trust Co, 339 US 306, 314 (1950); Smith, supra at 429. This Court previously
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held that the notice procedures contained within the GPTA satisfy the notice component of due process. Smith, supra at 428-429. However, in this case, the treasurer failed to follow the notice procedures of the GPTA.
The GPTA requires the foreclosing governmental unit to mail notice to the property owner as identified by the property‘s deed filed with the county register of deeds.
For the second component of due process — an “opportunity to be heard” — to be constitutionally adequate, the hearing must be “at a meaningful time and in a meaningful manner.” Armstrong v Manzo, 380 US 545, 552 (1965); Van Slooten v Larsen, 410 Mich 21, 53 (1980), 299 NW2d 704 (1980). “A hearing would not be ‘at a meaningful time’ unless the owner of a significant interest in the property had an opportunity to cure any delinquency deter-
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mined upon the hearing and avoid foreclosure and the taking of his property by the state.” Dow, supra at 206 n 21. The property owner must be able to contest the government‘s right to foreclose. Id. at 210. If the only hearing available to a property owner is a hearing in the Court of Claims for money damages, the property owner is deprived of an opportunity to contest the foreclosure and to defend his or her land. “‘The opportunity to defend one‘s property before it is finally taken is so basic that it hardly bears repeating.‘” Id. at 205 n 20, quoting Arnett v Kennedy, 416 US 134, 180 (1974) (White, J., concurring in part and dissenting in part).
The United States Supreme Court has held that the government does not always have to provide a hearing before the deprivation of a right. Parratt v Taylor, 451 US 527, 540-541 (1981). But the situations in which a postdeprivation hearing passes constitutional scrutiny are limited to those in which a predeprivation hearing would be unworkable. Id. at 541. The United States Supreme Court has held that the Due Process Clause is not implicated when the government negligently causes the loss of property. Daniels v Williams, 474 US 327, 328 (1986). “Historically, this guarantee of due process has been applied to deliberate decisions of government officials to deprive a person of life, liberty, or property.” Id. at 331. Appellants argue that the treasurer‘s negligence in providing notice means that a due process analysis does not apply. But the treasurer deliberately foreclosed on Perfecting Church‘s property. Therefore, the negligent-actor rule from Parratt and Daniels does not apply to this case.
Appellants also argue that the purpose behind the GPTA should prevail over the Due Process Clause. They
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argue that the Legislature‘s express intention to streamline the foreclosure process should take precedence over a person‘s constitutional right to defend the person‘s property against a taking. It is true that, in enacting the GPTA, the Legislature intended to create a faster system in which purchasers of foreclosed property could receive clear title to put the land into productive use. Nevertheless, the United States Constitution requires that a person be provided with notice and a hearing before property can be taken. In Dow, supra at 209, the Court quoted Stanley v Illinois, 405 US 645, 656 (1972), in which the United States Supreme Court stated:
“The establishment of prompt efficacious procedures to achieve legitimate state ends is a proper state interest worthy of cognizance in constitutional adjudication. But the Constitution recognizes higher values than speed and efficiency. Indeed, one might fairly say of the Bill of Rights in general, and the Due Process Clause in particular, that they were designed to protect the fragile values of a vulnerable citizenry from the overbearing concern for efficiency and efficacy that may characterize praiseworthy government officials no less, and perhaps more, than mediocre ones.”
The government “exert[s] extraordinary power against a property owner” when it takes and sells an owner‘s property. Jones, supra, 547 US at 239. The Due Process Clause is designed to protect citizens against that use of power. The Legislature cannot circumvent the constitutional obligation of due process in order to speed up the foreclosure process and convey clear title to land it acquired through foreclosure.
I note that the Legislature amended the GPTA in 2003 by enacting 2003 PA 263, which added a new
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subsection,
A judgment entered under this section is a final order with respect to the property affected by the judgment and except as provided in subsection (7) shall not be modified, stayed, or held invalid after the March 31 immediately succeeding the entry of a judgment foreclosing the property under this section, or for contested cases 21 days after the entry of a judgment foreclosing the property under this section.
That subsection effectively prohibits a circuit court from using
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seriously question the constitutionality of
Unlike the majority, I am satisfied that the 1999 amendments of the GPTA can be construed so as not to violate the constitutional guarantee of due process when the government fails to provide notice before foreclosing on property.
The circuit court correctly applied
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1999 amendments did not prohibit the circuit court from modifying its judgment, the circuit court properly retained jurisdiction to modify its judgment of foreclosure pursuant to
IV. CONCLUSION
I would hold that under the relevant provisions of
I would affirm the circuit court‘s order granting Perfecting Church‘s motion for relief from the judgment of foreclosure.
Notes
Except as otherwise provided in subsection (5)(c) and (e), fee simple title to property set forth in a petition for foreclosure filed under section 78h on which forfeited delinquent taxes, interest, penalties, and fees are not paid on or before the March 31 immediately succeeding the entry of a judgment foreclosing the property under this section, or in a contested case within 21 days of the entry of a judgment foreclosing the property under this section, shall vest absolutely in the foreclosing governmental unit, and the foreclosing governmental unit shall have absolute title to the property, including all interests in oil or gas in that property except the interests of a lessee or an assignee of an interest of a lessee under an oil or gas lease in effect as to that property or any part of that property if the lease was recorded in the office of the register of deeds in the county in which the property is located before the date of filing the petition for foreclosure under section 78h, and interests preserved as provided in section 1(3) of 1963 PA 42,
MCL 554.291 . The foreclosing governmental unit‘s title is not subject to any recorded or unrecorded lien and shall not be stayed or held invalid except as provided in subsection (7) or (9).
Except as otherwise provided in subsection (5)(c) and (e), fee simple title to property set forth in a petition for foreclosure filed under section 78h on which forfeited delinquent taxes, interest, penalties, and fees are not paid on or before the March 31 immediately succeeding the entry of a judgment foreclosing the property under this section, or in a contested case within 21 days of the entry of a judgment foreclosing the property under this section, shall vest absolutely in the foreclosing governmental unit, and the foreclosing governmental unit shall have absolute title to the property. The foreclosing governmental unit‘s title is not subject to any recorded or unrecorded lien and shall not be stayed or held invalid except as provided in subsection (7) or (9).
I believe thatIf a judgment for foreclosure is entered under [
MCL 211.78k ] and all existing recorded and unrecorded interests in a parcel of property are extinguished as provided in [MCL 211.78k ], the owner of any extinguished recorded or unrecorded interest in that property who claims that he or she did not receive any notice required under this act shall not bring an action for possession of the property against any subsequent owner, but may only bring an action to recover monetary damages as provided in this section.