In re PETITION OF TUSCOLA COUNTY TREASURER FOR FORECLOSURE
Docket No. 328847
Court of Appeals of Michigan
Submitted November 8, 2016. Decided November 10, 2016.
317 Mich App 688
Leave to appeal denied 501 Mich 859.
The Court of Appeals held:
1. Jurisdiction is a court‘s power to act and its authority to hear and decide a case.
2.
4. The circuit court erred by granting Dupuis conditional relief from the foreclosure judgment. Although MCR 2.612(C)(1)(f) authorizes a circuit court to relieve a party from a final judgment for any reason justifying relief, the circuit court lacked jurisdiction to modify the foreclosure judgment because of the
5. The Separation of Powers Clause, Article 3, § 2 of Michigan‘s 1963 Constitution, provides that governmental powers are separated into three branches—legislative, executive, and judicial—and no person exercising the powers of one branch may exercise those powers properly belonging to another branch except as expressly provided in the Constitution. While Article 6, § 5 of Michigan‘s 1963 Constitution provides that the Supreme Court has authority to establish, modify, amend, and simplify through general rules the practice and procedure in all Michigan courts, issues of substantive law are left to the Legislature. A statute does not infringe the Supreme Court‘s rulemaking authority if the statute is grounded on policy considerations other than regulating the procedural operation of the judiciary.
6.
Trial court order granting motion to conditionally set aside foreclosure judgment reversed, and order conveying title of property to Dupuis vacated.
1. TAXATION - FORECLOSURES - JURISDICTION OF CIRCUIT COURT TO MODIFY JUDGMENTS.
MCR 2.612(C)(1)(f)—which authorizes a circuit court to relieve a party from a final judgment for any reason justifying relief—does not grant a circuit court jurisdiction to modify a foreclosure judgment when the property owner has failed to redeem the property or appeal the judgment of foreclosure within 21 days of its entry;
2. TAXATION - CONSTITUTIONAL LAW - FORECLOSURES - JURISDICTION OF CIRCUIT COURT TO MODIFY JUDGMENTS - SEPARATION OF POWERS.
Peter Goodstein for the Tuscola County Treasurer.
Outside Legal Counsel PLC (by Philip L. Ellison) for Jennifer A. Dupuis.
Before: JANSEN, P.J., and MURPHY and RIORDAN, JJ.
PER CURIAM. Petitioner, the Tuscola County Treasurer, appeals as of right the order granting respondent,
I. FACTS AND PROCEDURAL HISTORY
This case arises from the foreclosure of respondent‘s property, which is located in Arbela Township. The property became delinquent on property taxes for 2011 and 2012. On January 23, 2014, petitioner granted respondent a financial-hardship deferral that required respondent to pay the 2011 taxes by June 1, 2014, and to pay $300 a month for the 2012 taxes. However, respondent did not pay the 2011 or 2012 taxes in accordance with the financial-hardship deferral.
On May 14, 2014, petitioner filed a petition of foreclosure for properties with unpaid property taxes for 2012 and prior years, and respondent‘s property was incorporated in the petition. Respondent was provided with notice regarding a January 21, 2015 show-cause hearing and a February 2, 2015 foreclosure hearing. Respondent does not argue that she did not receive these notices. Petitioner also filed with the court proof of publication and proof of personal visits to the property.
Following a hearing on February 2, 2015, the circuit court entered a final judgment of foreclosure on the property. The judgment ordered that fee simple title would vest in petitioner on March 31, 2015, and respondent would lose all rights of redemption unless the delinquent taxes were paid before that date. The order further provided:
This judgment is a final order with respect to the property affected by this Judgment and except as provided in
MCL 211.78k(7) shall not be modified, stayed, or heldinvalid after March 31, 2015 unless there is a contested case concerning a parcel in which event this final judgment, with respect to the parcel involved in the contested case, shall not be modified, stayed, or held invalid 21 days after the entry of the judgment in the contested case.
Another notice was sent to respondent, informing her that she had to pay the delinquent taxes by March 31, 2015, to redeem the property. Respondent does not challenge that she received the notice. Respondent did not pay the delinquent taxes by March 31, 2015. The auction of the property was scheduled for August 26, 2015.
On August 3, 2015, respondent moved to conditionally set aside the judgment of foreclosure pursuant to MCR 2.612(C)(1)(f). Respondent explained in an affidavit that the foreclosure was the result of past hard times and a misunderstanding with township officials. Specifically, respondent stated that she fell on hard times after her husband broke his back and that a township board member told her that she needed to pay the delinquent taxes by May 2015. According to respondent, she submitted $6,000 to petitioner in early May 2015, but petitioner returned the money to her by mail about a month later. Respondent stated that she had the necessary funds to pay the entire tax deficiency in full, including penalties, costs, and expenses, and she had finally located an attorney who could help her.
Petitioner responded on August 6, 2015, contending that the circuit court lacked jurisdiction because the judgment of foreclosure was entered, the redemption period had expired, and respondent was not claiming a denial of due process. Petitioner further argued that, even if the court had jurisdiction, it should not grant relief under MCR 2.612(C)(1)(f) because respondent‘s position “is solely the result of her actions and inac-
II. STANDARD OF REVIEW
We review de novo whether the circuit court had subject-matter jurisdiction to enter the order granting conditional relief. In re Wayne Co Treasurer Petition for Foreclosure of Certain Lands for Unpaid Prop Taxes, 265 Mich App 285, 290; 698 NW2d 879 (2005). Whether a statute is unconstitutional because it violates the separation-of-powers doctrine is a question of law, which we review de novo. See Phillips v Mirac, Inc, 470 Mich 415, 422; 685 NW2d 174 (2004); Okrie v Michigan, 306 Mich App 445, 453; 857 NW2d 254 (2014).
III. JURISDICTION
Petitioner contends that the circuit court did not have jurisdiction to enter the order granting respondent conditional relief from the judgment of foreclosure. We agree.
“Jurisdiction is a court‘s power to act and its authority to hear and decide a case.” Riverview v Sibley Limestone, 270 Mich App 627, 636; 716 NW2d 615 (2006). “[A] court must take notice when it lacks jurisdiction regardless of whether the parties raised the issue.” In re Knox Complaint, 255 Mich App 454, 457; 660 NW2d 777 (2003). A circuit court‘s subject-matter jurisdiction is conferred by statute as follows:
Circuit courts have original jurisdiction to hear and determine all civil claims and remedies, except where exclusive jurisdiction is given in the constitution or by statute to some other court or where the circuit courts are denied jurisdiction by the constitution or statutes of this state. [
MCL 600.605 .]
“Thus, circuit courts are presumed to have subject-matter jurisdiction unless jurisdiction is expressly prohibited or given to another court by constitution or statute.” Wayne Co Treasurer, 265 Mich App at 291.
At issue in this case is the circuit court‘s ability to conditionally set aside a judgment of foreclosure entered pursuant to the General Property Tax Act (GPTA),
The circuit court shall enter final judgment on a petition for foreclosure filed under [
MCL 211.78h ] at any time after the hearing under this section but not later than the March 30 immediately succeeding the hearing with the judgment effective on the March 31 immediately succeeding the hearing for uncontested cases or 10 days after the conclusion of the hearing for contested cases. All redemption rights to the property expire on the March 31 immediately succeeding the entry of a judgment foreclosing the property under this section, or in a contested case 21 days after the entry of a judgment foreclosing the property under this section. The circuit court‘s judgment shall specify all of the following:* * *
(b) That fee simple title to property foreclosed by the judgment will vest absolutely in the foreclosing governmental unit, except as otherwise provided in subdivisions (c) and (e),1 without any further rights of redemption, if all 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.
* * *
(g) 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.
Except as otherwise provided in subsection (5)(c) and (e), fee simple title to property set forth in a petition for foreclosure filed under [
MCL 211.78h ] 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). [Emphasis added.]
MCR 2.612(C)(1), the court rule under which the circuit court granted conditional relief, provides in relevant part:
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:
* * *
(f) Any other reason justifying relief from the operation of the judgment.
In In re Wayne Co Treasurer Petition, 478 Mich 1, 5; 732 NW2d 458 (2007), our Supreme Court addressed constitutional concerns related to
The Court noted that
If a property owner does not redeem the property or appeal the judgment of foreclosure within 21 days, then
MCL 211.78k(6) deprives the circuit court of jurisdiction to alter the judgment of foreclosure.MCL 211.78k(6) vests absolute title in the foreclosing governmental unit, and if the taxpayer does not redeem the property or avail itself of the appeal process in subsection 7, then title ”shall not be stayed or held invalid ....” This language reflects a clear effort to limit the jurisdiction of courts so that judgments of foreclosure may not be modified other than through the limited procedures provided in the GPTA. The only possible remedy for such a property owner would be an action for monetary damages based on a claim that the property owner did not receive any notice. In the majority of cases, this regime provides an appropriate procedure for foreclosing property because the statute requires notices that are consistent with minimum due process standards. [Id. at 8.]
Our Supreme Court then addressed the situation in which the statutory scheme deprives a property owner of his or her property without due process, holding that to the extent
the plain language of [
MCL 211.78k ] simply does not permit a construction that renders the statute constitutional because the statute‘s jurisdictional limitation en-compasses 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, MCL 211.78k is not problematic. Indeed,MCL 211.78l provides in such cases a damages remedy that is not constitutionally required. However, in cases where the foreclosing entity fails to provide constitutionally adequate notice,MCL 211.78k permits a property owner to be deprived of the property without due process of law. Because the Legislature cannot create a statutory regime that allows for constitutional violations with no recourse, that portion of the statute purporting to limit the circuit court‘s jurisdiction to modify judgments of foreclosure is unconstitutional and unenforceable as applied to property owners who are denied due process. [Id. at 10-11.]
Thus, the Court concluded that
Although it is true that MCR 2.612(C)(1)(f) authorizes a circuit court to relieve a party from a final judgment when such relief is justified, the circuit court in the instant case could not use that authority
Further, the judicially created due-process exception in Wayne Co Treasurer is inapplicable because respondent has never argued that petitioner failed to provide her with constitutionally adequate notice of the foreclosure proceeding or that she was otherwise deprived of due process. Contrary to the situation in Wayne Co Treasurer, respondent was provided with notice of the foreclosure proceedings, and she failed to participate or pursue any available remedies under the GPTA to protect her interest. Accordingly, because there was no due-process violation, the circuit court did not have jurisdiction to modify the judgment of foreclosure pursuant to the due-process exception from Wayne Co Treasurer.
Respondent contends on cross-appeal that
“Statutes are presumed to be constitutional, and we have a duty to construe a statute as ‘constitutional unless its unconstitutionality is clearly apparent.‘” Zdrojewski v Murphy, 254 Mich App 50, 74-75; 657 NW2d 721 (2002) (citation omitted). The party contending that the statute is unconstitutional has the burden to establish that the law is invalid. Id. at 75.
The Separation of Powers Clause of the Michigan Constitution provides that “[t]he powers of government are divided into three branches: legislative, executive and judicial. No person exercising powers of one branch shall exercise powers properly belonging to another branch except as expressly provided in this constitution.”
While the Michigan Supreme Court “retains the authority and duty to prescribe general rules that ‘establish, modify, amend, and simplify the practice and procedure in all courts of this state,‘” issues of “‘substantive law are left to the Legislature.‘” People v Jones, 497 Mich 155, 166; 860 NW2d 112 (2014) (citations omitted). Thus, our Supreme Court may not enact “‘court rules that establish, abrogate, or modify the substantive law.‘” Id. (citation omitted). See also McDougall v Schanz, 461 Mich 15, 30-31; 597 NW2d 148 (1999) (“[I]f a particular court rule contravenes a legislatively declared principle of public policy, having as its basis something other than court administra-
Respondent argues that
We disagree with respondent‘s contention that a statute divesting the circuit court of jurisdiction to modify or invalidate a judgment of foreclosure follow-
We conclude that the limitation on the circuit court‘s jurisdiction as outlined in
We disagree with respondent because the statutory provisions at issue constitute substantive law.
Reversed and vacated.
JANSEN, P.J., and MURPHY and RIORDAN, JJ., concurred.