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Plaintiffs alleging that a Michigan county unjustly retained $189,250 in excess tax auction proceeds can’t bring takings claims in federal court, the U.S. Court of Appeals for the Sixth Circuit held Feb. 10 ( Wayside Church v. Van Buren Cty. , 2017 BL 40722, 6th Cir., 2/10/17 ).
The district court lacked jurisdiction, and the plaintiffs must pursue their claims in Michigan state court, the court ruled in a decision by Judge Eric L. Clay, joined by Judge Bernice B. Donald.
Dissenting, Judge Raymond M. Kethledge said federal jurisdiction was proper because Michigan courts haven’t yet determined whether a local government can be sued for taking excess tax auction proceeds, and because the claims arose under the U.S. Constitution.
The county’s refusal to refund the excess proceeds would be called “theft” in “some legal precincts,” Kethledge said.
“But under the Michigan General Property Tax Act, apparently, that behavior is called tax collection,” he said.
The Fifth Amendment’s takings clause prohibits governments from taking property without providing just compensation.
But takings claims aren’t ripe for federal courts until the state fails to provide an adequate remedy, the court said.
No such deprivation occurred here because the plaintiffs could have brought their claims in the state circuit court, the appeals court said.
Lewis, Reed & Allen P.C. argued for the plaintiffs.
Kreis, Enderle, Hudgins & Borsos P.C. argued for the county defendants.
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