On Wednesday, April 26th, the Supreme Court heard oral argument in Tyler v. Hennepin County, Minnesota.
Hennepin County foreclosed on Geraldine Tyler's home to cover her delinquent property taxes, selling the home for $40,000 and keeping the $25,000 surplus as profit. Tyler argues that the county cannot take the equity in her home and has asked the Supreme Court to declare the forfeiture of her home's equity an unconstitutional taking and excessive fine. The county maintains that Tyler had time to pay her taxes and is not entitled to any refund.
The Supreme Court will consider whether the county’s actions violate the Takings Clause and whether the forfeiture of property worth far more than the debt plus interest, penalties, and costs is an excessive fine within the meaning of the Eighth Amendment.
After the oral argument, Christina Martin, Counsel of Record in the case for Pacific Legal Foundation, joined us to break down the proceedings.
Christina Martin, Senior Attorney, Pacific Legal Foundation
Moderator: Tony Francois, Partner, Briscoe Ivester & Bazel
As always, the Federalist Society takes no position on particular legal or public policy issues; all expressions of opinion are those of the speaker.
Jack Capizzi: Welcome to today’s Federalist Society virtual event. Today, April 26, 2023, we are excited to present a “Courthouse Steps Oral Argument” recap in the case of Tyler v. Hennepin County. My name is Jack Capizzi, and I’m an Assistant Director of Practice Groups here at The Federalist Society. As always, please note that expressions of opinion are those of the experts on today’s call. After our speakers have given their remarks, we will turn to you, the audience, for any questions that you might have. If you do have a question at any point, please type it into the Q&A feature at the bottom of your screen, and we will get to them as we can towards the end of today’s program.
With that, thank you all for being with us. I’ll turn it over to our moderator today, who is Tony Francois. Tony is a partner at Briscoe, Ivester & Bazel and is a member of The Federalist Society’s Environmental Law and Property Rights Practice Group Executive Committee. Tony, over to you.
Tony Francois: Thank you very much, Jack, and thank you to everybody who is tuned in for joining us this afternoon, or, I guess, if you’re with me on the West Coast, this morning. A little bit of time travel going on there. We’re joined today by Pacific Legal Foundation Senior Attorney Christina Martin, who, this morning, argued the final case of the Fall 2022 Supreme Court term, Tyler v. Hennepin County. I’ll introduce Christina, and then we’ll ask her for a brief summary of the case, what’s going on in this case, and then get her thoughts on how the oral argument went this morning. You can, I think pretty soon, if you did not listen to the oral online, get the recording and the transcript, and it was a pretty interesting discussion this morning at the Court. So I would commend everybody to take a look at the original source there.
So Christina Martin is a Senior Attorney, as I mentioned, at Pacific Legal Foundation, also a former colleague of mine when I was there. Christina served, prior to this case, as co-counsel and second chair before the Supreme Court in Knick v. Township of Scott, which is a landmark case that opened the federal courthouse doors to federal constitutional takings claims and overturned a 34-year-old Supreme Court precedent that had impeded property owners’ ability to get justly compensated for takings of their property. She was also a member of the litigation team representing several family landowners in the Supreme Court’s unanimous decision in Weyerhaeuser v. United States Fish and Wildlife Service, an important case under the Endangered Species Act. Christina’s current practice focuses largely on what’s called home equity theft and ending that practice, which is the unconstitutional taking of valuable homes and land in their entirety as payment for relatively small property tax debts to local governments. Prior to today’s case, she was lead counsel before the Michigan Supreme Court in another home equity theft case, where her client’s entire rental home was taken in payment for an $8.41 tax debt. Her advocacy also led to the passage of legal reform in Montana that protects homes from such unconstitutional theft of equity.
Her writings have appeared in a variety of publications, including The Wall Street Journal, The Washington Post, The Hill, and the Willamette Law Review. She’s also a frequent guest on radio shows, speaker at conferences, and has been a guest lecturer at universities. Christina earned her Bachelor of Science in physics and a Bachelor of Arts in communications from the University of Washington in Seattle and her JD from Ave Maria School of Law in Ann Arbor, Michigan, where she was an editor of the Ave Maria Law Review. She’s admitted to the state bars of Florida and Oregon as well as various federal courts, including the Supreme Court of the United States, where, as I mentioned, this morning, she argued the home equity theft case of Tyler v. Hennepin.
And with that, I’ll hand it over to you, Christina. Give us a quick overview of what happened in this case, and then give us your thoughts on how the argument went this morning.
Christina Martin: Sure. So in this case, our client, Geraldine Tyler, she’s 94 years old. And she used to own a condo in Minneapolis. She felt -- she basically moved into a senior living facility, stopped paying her property taxes, and she owed $2,300 in property taxes plus about $12,700 in penalties, interest, and fees when Hennepin County took the property—absolute title to the property. And then later, they sold it for $40,000. And then, rather than just keeping the $15,000 that they were owed—which you would see in any other type of debt collection—the county, pursuant to state statute, kept all $40,000 for various public uses.
And so, the question we presented to the Supreme Court is whether, first, is this a taking without just compensation for the government to take more than it’s owed, and second, whether it is an excessive fine within the meaning of the Eighth Amendment, and specifically, is this a fine within the meaning of the Excessive Fines Clause. We didn’t have the excessiveness question before the Court. So we, at oral argument this morning -- and I think it went pretty well, but you don’t know until you see the opinion. But the justices were especially interested in the takings argument, which I’m pleased about because that was the emphasis in our brief, and the emphasis -- actually, the solicitor general supported our takings argument with a slightly different theory, but they’re very complementary. And so, I think it went fairly well. Should I keep talking, Tony, or do you want to throw questions at me?
Tony Francois: Well, a couple of things that viewers might be interested in -- I listened in on the arguments this morning. I was -- had a little bit spotty internet, so at a couple of points, it dropped out. But I think I caught most of the proceedings. Was this a case in which the Court’s generally perceived conservative/liberal divide appeared, or is this issue more complicated than that in this case?
Christina Martin: Right. So one doesn’t know what the justices will do until they issue the opinion, but what I can say is that I feel that the justices had much harder questions for the county’s attorney than they had for us. So I don’t think that we will get an opinion that is -- I don’t think you’ll see that sort of conservative/liberal divide. I’m hopeful that we’ll get a very good opinion on, at least, the takings question. Hopeful, but again, you don’t know until you see the opinion. But I don’t think you have that conventional left/right divide. You had justices appointed by both parties that were very troubled by the current system. For instance, at one point, Justice Kagan asked opposing counsel the question of whether it would be okay for the government, for instance, to collect -- I don’t remember the exact figure, but it was like $20,000 out of your bank -- they’re owed $20,000, but they take $100,000. Would that be okay? And --
Tony Francois: Well, and she also had the hypothetical of, say, a property worth $5 million being taken for something like a $500 or a $5,000 tax debt.
Christina Martin: Yeah.
Tony Francois: And then, was there a limiting principle to how disproportionate the equity could be in the property that was kept by the government to the tax debt? And what did you make of the response to that?
Christina Martin: I think it was unsatisfactory to the justices. They were dissatisfied that there was not a limiting principle. At least, that’s what their body language suggests, and the -- suggested, and the follow-up questions suggested as much, too. So --
Tony Francois: Yeah, and the attorney arguing for the county relied pretty heavily on a prior decision of the Supreme Court, which he, at least, argued -- said the Court’s already said that that kind of thing would be fine—that, in tax enforcement, there’s dire consequences for not paying taxes, and that, as long as there’s some opportunity for the property owner to cure, that the Supreme Court has basically already blessed this. But it didn’t sound very strongly, to me, like many members of the Court thought that that prior decision—I think it’s referred to as Nelson—really answered the question today. What’s your thought on that?
Christina Martin: I agree. I think they were dissatisfied with his take on Nelson because in Nelson -- now, as I made clear during oral argument today, I’m not a fan of Nelson. I think Nelson conflicts with the Court’s takings jurisprudence because under Nelson, you have this very short time period in which you have to go make a claim before the taking has occurred. And I, of course, also think it was just dicta because the issue was never raised. It was never passed or pressed upon until the reply brief on the merits before the Supreme Court. I don’t know if they’re buying that because nobody -- I wasn’t getting signals that they necessarily agree with me on that, or maybe they just haven’t decided.
But as far as the suggestion -- the county suggestion that this is just like Nelson or justified by Nelson, I didn’t get the sense that the justices were buying that because, again, at least you had an opportunity to claim the funds—the surplus proceeds in Nelson. Albeit, it’s dissatisfactory to me, but at least you had an opportunity, whereas, in Minnesota, there is no opportunity. There’s zero days. The only way to save your property is to pay your property taxes, and of course, there’s many reasons why people don’t buy their property taxes. In my experience, it’s usually elderly people but then also, sometimes, people who just don’t get notice for a variety of reasons, sometimes because they’ve moved, sometimes because there’s medical issues going on, and all sorts of factors. But anyway, all that to say, I don’t think that they were really buying the attempt by the county to say Nelson justifies what’s going on in Minnesota.
Tony Francois: So one of the questions that’s come up in the Q&A and I think is probably important to address -- why, in this case, didn’t the homeowner pay her property taxes? And my question about that -- because that didn’t really come up in today’s argument. It did get discussed in the argument preview Teleforum that we did last week on this case. As a policy matter, I don’t want to over-characterize what was said, but tax scofflaws bad, government good, no sympathy for people that don’t pay their taxes. In this case, though, the -- and in all similar cases, the foreclosure on the property for which the taxes are delinquent is certainly the government’s remedy and is the way that the taxes get paid. I don’t think there’s any dispute about that. If the issue is what happens to the surplus on the sale of the property, at that point, does it really matter why a particular taxpayer didn’t pay?
Christina Martin: No, it doesn't matter because she’s not disputing the notice issues, I think, because actually, under due process, the notice requirements are actually pretty low. But there’s a lot of reasons why people don’t pay their taxes, but none of them justify taking more than what’s owed. And so, her original tax debt was $2,300. She’s not challenging the almost $13,000 in penalties, interest, and fees that are in costs that are tacked on, and she’s not challenging the government’s power to seize and forcibly sell the property to take its share. It’s just when the government takes everything. That is the constitutionally problematic part of what happened, and that’s what she’s challenging with both the takings claim and the excessive fines claim. She’s not bootstrapping the -- she’s not attempting to challenge the $15,000 in the excessive fines claim either.
Tony Francois: And I think in one of the earlier cases that you handled, one of the ones where the actual tax debt was quite small, wasn’t the situation something like this—I’m trying to remember it—that the -- in one year, there’d been a small underpayment that the --
Christina Martin: Yup.
Tony Francois: -- that the property owner thought he had cured in the subsequent year, but it hadn’t been applied properly? And just as a way of -- as a result, the way that was reflected on the tax bills from year to year, the property owner didn’t even really realize that the county was counting -- I don’t know if that’s --
Christina Martin: That’s exactly right. That was Rafaeli. And we have another pending case called Perez, where both -- that happened in both cases. So in Rafaeli, he had missed an early tax payment from when he first purchased the property, perhaps, because in Michigan -- Michigan is one of the states that has two time periods in which you have to pay property taxes. And people with experience in other states often don’t realize that, and they get -- pay the one bill and then don’t know about the other, so they don’t even notice when they don’t pay the other. Most people are like, “Well, wouldn’t you notice you weren’t paying your property taxes?” Not necessarily.
And so, in Rafaeli, he missed one payment, paid all of his subsequent taxes on time, and then eventually got notice that -- and it was a rental property, so it’s not like he was getting the notice mailed to the property, but he did eventually get something in the mail that said he owed $500. And that was with penalties and interest and stuff. He wrote a check. While it was in the mail, the interest continued to grow, and so he underpaid by $8, and they took it anyway.
And then, you have a similar situation with our Perez case, where Erica Perez and her family, they thought they were paying their property taxes. They just didn’t get the notice. The county served notice on the property, but they didn’t get it. And that also actually was a rental property that included -- it was two parcels: a house they were rehabbing to move into and then, a rental that they were renting out. And they never got it.
We have another client who never got notice because it was a commercial property she had purchased and spent a ton of money trying to rehab with architectural plans. And there was no working mailbox at the property. There was no mailbox, and she wasn’t allowed to occupy it or anything under the city’s code, and the city had her address. And yet, her -- because she’d applied for permits. And yet, they only sent the address to the location, which then, how would she receive that, considering there’s no mailbox there?
And so, there’s a lot of reasons why people don’t pay their taxes. They’re not just scofflaws. And also, we’ve heard really sad stories with elderly people dying in nursing homes or hospitalized somewhere for a period of time, and they only find out when it’s too late for them to sell or save their property.
Tony Francois: Yeah. Now, one of the reasons I think that’s kind of an important bit of background on this topic is because one of the arguments that the county made today is that there’s an analogy between -- or some similarity between tax delinquency, on the one hand, and this remedy that the state of Minnesota uses, which is basically seizing the entire value of the property to remedy the tax delinquency, and the common law notion of abandonment of real property, which has an intent element and is usually a matter between private parties. But counsel for the county seemed to be trying to analogize the state of Minnesota’s practice of seizing the entire property to abandonment and arguing that failure to pay the taxes was at least some indicia of basically relinquishing the entire property. But what did the justices seem to make of that?
Christina Martin: I think that they saw that that really isn’t the argument the county’s pressing for, though, that it’s -- you could be living in the property, and they’ll still take it from you anyway. So I think that some of the justices made that point with some questions, and obviously, the abandonment case law’s pretty distinguishable. In Minnesota, you can’t actually abandon real estate, interestingly. It’s just not allowed. There was a case we cited in our reply brief where the property owner hadn’t paid property taxes for 30 years, and it still wasn’t deemed abandoned. So I don’t think the Court was buying that, but they did have a number of questions on that topic.
They also had a lot of questions about the history of the property interest we’re talking about, which is how were taxes collected throughout history. And we cited, in our opening brief and reiterated in our reply, Magna Carta actually limited how much could be seized to pay debts to the king, that Blackstone said that when property -- a common law, when property was taken to pay a debt, a tax debt, that it could be seized, but it was seized subject to the implied -- it was, quote, “implied contract at law” that required a sale and a refund of the “overplus.” And so we have those sources along with a number of personal property cases and then some early American cases.
And then, the county cited a couple of statutes that were both -- there was a statute in Virginia around the time of the Founding, and there was a statute in Kentucky that was a little narrower, a little after that, that both allowed forfeiture of property, at least by the text. But the county actually failed to find a single example of where that forfeiture was enforced, and in fact, we have examples where the courts refused to enforce a confiscatory forfeiture. And then, the legislature extended the time to redeem those properties, all the way -- in almost 50 years from the 1790 statute. And then, they started recognizing the right to the surplus, so I think the history’s on our side. I don’t know if the Court’s actually even going to rely upon that. I mean, at one point, Justice Kagan said that it just kind of felt like common sense that there’s a limit to how much can be taken. And so, I don’t know if they’ll even have to look at the history.
Tony Francois: I thought that was an interesting set of exchanges among the justices with you and with your opposing counsel today on the role of history in interpreting property rights. There’s, I think, a general sense that the conservative side of the Court relies heavily on historical practice and the understanding—the general public meaning—of the text of the Constitution at the time of the Founding and then the Civil War amendments at the time of their adoption, and that’s, largely, an historical inquiry. And yet, not everybody really is that strongly attached to that method. Justice Alito had some interesting questions today for your opposing counsel that, other -- caricaturing it a little bit, but he seemed to say at one point, “Okay, so other than what went on at the Founding, what have you got?” And opposing counsel said, “No, that’s basically it.”
So what’s your -- and the more progressive members of the Court, I never get the sense that they’re all that interested in history as such. Justice Jackson, in particular, did not seem to be terribly swayed today by the arguments about what the practice regarding property in Virginia was at the Founding. What’s your sense of how widely the historical analysis of practice at the Founding played with the justices today? Clearly, not all of them adopted that viewpoint, but there seem to be some. So which ones do you think showed the most interest in that question?
Christina Martin: I think that -- I think that Justice Thomas asked an interesting question. He said, “Do you have a single example of a forfeiture where it wasn’t just forfeiture of title but of value?” And the county’s counsel said, “No. A lot of cases are unreported.” Of course, despite that fact, we still have a lot of examples where the courts refused to cite it. And we said, in our reply brief, actually -- there’s an interesting line in Blackwell’s treatise on tax titles where he says, “As it stands today, a tax title is no title at all.” And then, he goes on to say that he’s looked at all these hundreds of cases involving tax titles, and none of them are enforceable because the courts were so eager to overturn them and allow people to get their property back.
I think some of that probably had to do with the fact that a lot of early American property was sold. It was vacant, perhaps, or it was sold at these auctions that were problematic. They still had clouded titles. You couldn’t even get very much money at the auction, so I suspect that played somewhat into why tax titles were so unenforceable. But in these tax forfeiture cases, they just -- they were very eager, and they say outright, “Well, if it’s confiscatory -- if it causes a forfeiture, we require strict compliance, and every i has to be dotted,” basically.
So I don’t know how many justices will actually find that to be necessary to their analysis, but I did think it was particularly interesting when the Chief Justice mentioned -- he mentioned something about -- private property is mentioned in the Takings Clause, so can we look to that? And he asked that -- I can’t remember who he asked that to, but I thought that was an interesting -- and that he was thinking about that, like without regard to history, in other words. And I think it’s common sense that real estate is property, and your interest in that real estate is property. And the Supreme Court said in Koontz that a financial interest tied to real estate is property protected by the Takings Clause, so it’s possible they -- if they rule for Ms. Tyler, they could go that path.
Tony Francois: So one of the really interesting questions that’s come in from the audience reflects a comment that Justice Gorsuch made almost in passing. There’s a general principle that appears frequently in takings cases in state and federal courts that the first step in mounting a just compensation case is proving a property interest, then proving that it’s been taken, and then proving what the compensation should be. And so, at that first step, demonstrating what the property interest is, it’s a fairly common statement for the Supreme Court and the federal courts to make that property interests are defined by state law, generally speaking. And yet, there was a colloquy today with your opposing counsel and Justice Gorsuch about that and on the question of whether or not states can essentially abrogate any element of property through state law and whether or not there’s not -- whether or not there is some, call it a constitutional -- federal constitutional minimum content of property law, if you will—that’s just my off-the-top way of trying to describe it. But what -- Justice Gorsuch, I think, wrung a concession from your opposing counsel that what the Fifth Amendment protects is not just state-defined positive law about property but that there’s some prior source of property law.
I wonder if you would be interested in commenting on that. I think that’s a pretty interesting question. I think your point on that was that, in a number of recent decisions, the Supreme Court has not dwelt in any lengthy manner on what the precise state property law interest is. A couple of years ago, in the Cedar Point decision, that was pretty easily determined by the Court to involve an easement for access for property that almost veers into, well, yeah, maybe there is a federal common law in certain areas. So anyway, any thoughts you have on that would be interesting.
Christina Martin: Yeah, I think I stopped shy. Maybe I said something, and I just forgot about it. I think I stopped shy of saying this is a right that preexists state law. But that is something that I believe is true. What I emphasized instead was that the Court doesn’t always look at state law when it’s deciding what -- in Horn, it didn’t look at the raisin -- at state -- California state to decide that raisins were private property protected by the Takings Clause. They just kind of stated the obvious, which is personal property is protected by the Takings Clause.
And granted, they looked at Magna Carta, and they looked at early American history in the process, but I think they just confirmed what everybody already knows, which is you own your stuff just like you own your real estate.It belongs to you. What was interesting—I’m going off on a tangent here—but what was interesting was that, at one point, the county seemed to suggest that real estate is protected less than personal property, which was sort of like the opposite of the assumptions that the government’s attorneys were making in Horn. So that was interesting. And somebody asked them -- I don’t remember which justice it was. It was somebody on --
Tony Francois: It was the Chief, actually, thought that was the reverse of, at least, what the American tradition has been that the -- to the extent that there’s a pecking order among types of property, real estate is the top and then cash and certain kinds of personal property.
Christina Martin: Yeah.
Tony Francois: One of the -- one of the things that your opposing counsel had to conceded was that Minnesota treats tax delinquencies for real property this way but not parking tickets or registration delinquencies on automobiles and easily agreed that there’s no way the IRS, for example, could seize your $100,000 certificate of deposit in its entirety to satisfy a $20,000 income tax debt. And on both of those, the rationale for the distinction had nothing to do with the type of property. He simply said, yeah, but there’s just no generalized history of doing it that way for those types of property. Whereas, as you’ve mentioned, alluding to these two state statutes from the Founding era, there is at least some evidence for it with real property.
Justice Barrett had a funny rejoinder to that that, well, there certainly weren’t cars at the Founding. And he said, “Well, okay. Cut car, paste in buggy, same principle.” But the Chief’s observation on all of that, though, was that the direction seemed to be going in the wrong way, that if you’re going to -- if you’ve been reading the history of the view of property in the Founding era and come to the conclusion that land was less important than cash, you’ve missed something pretty important along the way.
One of the interesting things about today’s argument was that the solicitor general, on behalf of the United States, was given time to argue and was actually there arguing in support of the property-rights-takings plaintiff. And so, I wanted to get your observations on the solicitor general’s argument today and where that was consistent with the position that you’ve taken on behalf of Geraldine Tyler and where it diverges.
Christina Martin: Sure. So the solicitor general’s amicus brief was technically in support of neither party, but they support our takings claim, and then, they support -- they’re against the excessive fines argument. And we focused in our briefs on the share of the property that exceeded the value of what was owed to the government. Essentially, we referred to it as the equity. But we also talked about it as the excess value that exceeded the debt from the government. And so, we focused on that mainly because we were trying to make it very clear we’re not challenging the government’s power to seize and forcibly sell property to collect a debt because that is a power that there’s just a ton of case law that makes very clear the government does, in fact, have that power.
But the solicitor general did something that I actually quite like, which is that she -- the United States amicus brief said that the taking -- rather than focus on the equity, they focused on the title and the real estate. So the taking was of the real estate. And it’s just without compensation. And I view the two as very complementary. We’re just sort of slicing up the property because ultimately, the right to be paid for the excess value is -- it arises from the fact that you were the owner of the property.
And I think I quoted during oral argument the idea this is similar -- this property interest we’re describing is similar to how it was mentioned in Phillips—in a parenthetical, actually -- it was that -- in Phillips, that was a case about interest that follows the principal. Interest is a private property interest. And there’s a phrase that says, “The interest follows the principal as a shadow follows the body.” And this is sort of -- we were focusing on the fact that, yes, there’s the share of property, but it arises from the body. The share is the shadow, the -- and they focused on the body. So we like that.
I think at one point, though, Justice Sotomayor expressed some dissatisfaction with the solicitor general’s position because she -- I think she called it more aggressive than our position or something. It causes more problems. I don’t know if that’s true. I view the two as very complementary. I’ll leave it to the Court to decide how they want to slice it. If they want to go with the whole or slice it, I’ll be happy either way. And I know Ms. Tyler will be, too.
Tony Francois: One of the conceptual challenges in this particular case seems to be -- and harkening back to the earlier discussion about state definitions of property interests -- at Time A, Ms. Tyler owned her house and owed some taxes on it. And at Time B, she had no house, owed no taxes but had also experienced a $25,000 decline in net wealth because she did not recover the equity in the home. And so, that seems self-evidently that she’s been deprived of something and that the thing that she’s been deprived of was the value of her main personal asset. And yet, when you start slicing it real thinly to identify what the identified -- the defined property interest is, is it the equity? Is it the right to receive the fair value of it? It’s kind of taken up in the right to alienate property. What precise interest is this?
On the one hand, I guess, doctrinally or from a scholar’s point of view, it seems important to nail that down quite precisely. But on the other hand, it also seems like, if at Point A, she had property and a tax debt plus -- she had property with equity, net of a tax debt. And at Point B or Time B, she had nothing, then something’s been taken in there. The solicitor general did talk a bit about the excessive fines prong of the case, and the deputy SG did her best to convince the Court that there’s nothing to see there. We haven’t really talked about the fines part of the case.
Give us your sense of -- well, first of all, what’s the argument that the $25,000 equity loss is a fine and then, how that fits into what the Supreme Court was reviewing. I know you mentioned earlier that the question in this case is whether it’s a fine and doesn’t yet get to whether it’s excessive.
Christina Martin: Yeah. So the theory is that the government here has taken more than needed to make itself whole and that that confiscation is, at least partly, punitive. And that’s -- and that it’s partly punitive for basically public harm that they’re trying to address as opposed to an individualized harm. And because of that, I think that would qualify as a form of punishment. And so, the Excessive Fines Clause should apply. Obviously, I think there’s substantially more support for the takings claim, but that is partly perhaps because the Court has had a lot more to say about takings claims than about the Excessive Fines Clause.
I don’t know if the Court will decide the excessive fines question because if they rule favorably on the takings question, then that would provide a complete remedy for Ms. Tyler. Whereas, if they rule for her on the excessive fines question, it would -- we don’t know if it -- what kind of remedy it would provide because you’d then have to go on to prove it’s excessive. So I’m not sure if they’ll decide to reach it or not. Both are squarely presented because this was on a motion to dismiss, so really the only question is is whether -- are they plausibly alleged claims. But I won’t venture a guess, but they were definitely -- I’d say the bulk of the time was spent on the takings question.
Tony Francois: Yes. So one thing that struck me, listening to the discussion today, and just thinking about the issue, is that, of course, there are tax penalties that have been collected through, I presume, some formulaic elaboration on the tax debt itself—interest penalties, and I assume the fees are legal fees for conducting the foreclosure—so that maybe it’s just a rudimentary way of thinking of it. If the tax penalty was probably a fine -- and one of the formulations I’ve seen of the excessive fines standard is that if there’s a legislative determination of what a fine should be, then that’s almost like de facto, not excessive. I think a lot of us think there’s improvements in that standard that need to be made. But here, there was a legislatively determined penalty imposed and paid. And so, the retention of the surplus, whether you call that equity or anything else, is in excess of the legislatively determined penalty. And it seems to kind of disappear into semantics to say, “Oh, that’s a non-excessive penalty as well because we just said we’re allowed to keep it.”
If there is a -- so the relief that you’ve asked the Court for is to reverse the dismissal of the case and remand for trial on the takings claim. If the Court reverses -- well, let’s just ask both questions on both the takings claim and the excessive fines claim. What happens on remand now? What needs to be proven for this to result in just compensation and a full remedy for your client?
Christina Martin: Sure. So we’ll have to prove that Ms. Tyler actually owned the property and what it was worth. I mean, I think it’s pretty obvious, and I doubt anyone’s tried to dispute that she doesn’t own it, but that is technically something that we’ll have to actually -- there’ll be discovery and submission. And we’ll see if they answer and they challenge that at all. But we -- the main thing, the focus, will be on valuation.
For the takings question, the question would be how much was the property when the government took it from her. And so, assuming that the taking occurred when the government took absolute title and extinguished Ms. Tyler’s interest, then we would need to determine what it was worth at that point. Now, it’s possible the parties will just come to an agreement on that. I can’t -- I don’t know what the future holds on that. But in a typical eminent domain case, if they don’t, you have a valuation trial. And that’s really the big point of dispute.
On the excessive fines question, we would then have to litigate about whether it’s excessive. And there’s actually -- this is sort of an open question among the lower courts, which is -- because the Supreme Court hasn’t really given a ton of guidance on excessiveness, just one -- Bajakajian, one case. And so, the question is, how much can be taken into consideration? Can they consider her ability to pay, for instance? In some circuits, certainly. And what culpability did she have? Did she know? What did she know?
And then, there’s a determination by the judge of, well, how is -- is this grossly disproportionate to the offense it’s designed to punish. And some of that is seemingly subjective. Though, I shouldn’t say that about a constitutional analysis, but ultimately, there’s some kind of line drawn. So I like the takings claim better, for obvious reasons. It’s a lot less complicated, a lot less murky. It’s very clear what is the taking and how to move forward on that.
The excessive fines question, though -- it’s still a solid claim. If they somehow revive both questions, then I think, perhaps, the takings question is obviously still the better -- my more favorite one, but I’m biased. I love the Takings Clause, so --
Tony Francois: Sure. And then -- yeah. So then the Bajakajian case that you referred to is a Supreme Court decision that said that -- it involved a person traveling, and I think it predates TSA. But customs seized—like out of a movie scene—a gym bag full of cash from a traveler for failing to declare the cash on a customs form. And Justice Thomas’s, I think, opinion for the Court in that case is actually a pretty pro-plaintiff reading of the clause and the way it’s applied in the case, and yet, it does not -- that one decision does not really seem to have dominated the way that the lower courts look at it and so definitely would probably benefit from further elaboration by the Court. This would be a good opportunity for them to at least say, “This is a fine.” I think it’s the recent—what is it -- the Timbs case that said that also that this clause is incorporated against the states by the Fourteenth Amendment. Well, very interesting argument today.
One thing we haven’t talked about is the standing argument that the county made today, and just as an advocate, I was surprised. I think about half of the argument time for the county got spent arguing that your client doesn’t have standing. And it seemed that every single justice who engaged with that question seemed to be saying, “That’s not working; why don’t you move on,” starting with Justice Thomas. I think I wrote it down. “I’ll just step past standing on this.” It seemed to draw almost unanimous -- almost hostility from the justices. And yet, it was pressed on, leaving your opposing counsel not that much time to really argue the merits.
But had standing been argued -- obviously, standing in federal court can be raised any time, but had that been argued below? Was this a --
Christina Martin: No, no. In fact, the county below said that the federal courts do have standing over the case because the question of whether the Tax Injunction Act might apply came up. And they -- the county’s the one that removed it to federal court. And so, they had said there’s standing. They had never questioned that the complaint wasn’t at least sufficiently pled for them to understand that there’s an injury that’s being alleged here. And that actually is extremely broad, the complaint is. They’re trying --
Tony Francois: Why would the county ever move to federal court? That’s something I didn’t know about this -- at the origin.
Christina Martin: I presume because Rafaeli went well in a state supreme court, maybe. I guess they -- maybe they thought it would turn out the -- maybe they were afraid it would turn out the same in a state supreme court. I don’t know. I don’t know why they did it. Maybe they --
Tony Francois: Rafaeli was Michigan; this is Minnesota, so --
Christina Martin: Right. Yeah.
Tony Francois: Okay. There was a gambit that local governments used to very effectively use –
Christina Martin: I mean, they correctly predicted the Eighth Circuit was going to side with -- I mean, the Eighth Circuit agreed with them. I said that the -- to the extent there was a traditional property right, the statute abrogated it. And I’m hoping that the Court’s opinion is going to make very clear that there’s some property rights that can’t be abrogated, at least where confiscation is concerned. We can talk about regulatory takings on some other case, but this is a physical taking.
Tony Francois: Well, I think we’re closing in on the end of the program. It’s the $64,000 question: what’s the decision going to be?
Christina Martin: I am not going to go on a record with my prediction. But I am -- I’m going to say I’m very happy with how argument went today, and it gives me a great cause for hope that maybe soon we will have a good decision, and we can basically limit how much government takes if you owe them some money.
Tony Francois: Maybe, with our time remaining -- I mentioned in your introduction that you’d been involved in the successful legislative effort in Montana to correct this problem, to reform this at the legislative level. What’s been going on in some of the other states in that area?
Christina Martin: Yeah. So since Montana, we at least protected homes in Montana. There’s still problems with commercial property there, but homes are safe. And after that legislation was passed, we actually got legislation—Pacific Legal Foundation did—in North Dakota. And the Wisconsin Realtors Association actually led the efforts, and we helped a little. But it was really their baby, I would say, that got the Wisconsin statute fixed to protect equity there.
And after we won Rafaeli in the Michigan Supreme Court, the state mostly fixed that statute. I say “mostly” because they created a really complicated claim procedure that maybe violates due process—might have problems. But I’ve been informed by Legal Aid in Michigan that actually it's -- for a lot of people, it’s doing the trick, and it’s helping them save their property -- their equity and their property before -- so even though the complication that -- it’s all very complicated. Legal Aid has been able to fill a pretty significant void there.
Tony Francois: Very good, very good. And it’d be -- just off the top of your head, so this isn’t every state in the country, but who are the currently offending states on this -- I get -- maybe that sort of jumps the bounds of being a moderator, but which states are other potential defendants in -- or need to worry about this decision?
Christina Martin: Right. Yeah. So we have a lawsuit pending in Massachusetts. And we -- that’s actually administered by cities there. The cities and towns administer it. They’ve got discretion about whether they take everything or not. And so, we have a lawsuit pending there.
New York is very naughty and most jurisdictions in New York. New Jersey, we have a lawsuit there. Nebraska, there’s a cert petition that we’ve got pending in the Supreme Court that actually opposing counsel mentioned, which was nice. And anyway, there’s a long list, so you can check it out at homeequitytheft.org. You can see the little map and check and see if your state is a good -- a nice state or a naughty state. And we have some states in yellow because they’ve got statutory language that causes concern.
You’ll actually see Wisconsin’s in yellow. Although, I am not convinced it should be just because there’s -- the potential that some of the new language that hasn’t been interpreted yet might go the wrong way. So you can see if your state is naughty or nice at homeequitytheft.org.
Tony Francois: Well, it’s been -- we mentioned in the argument preview Teleforum last week, this has been a banner year for Pacific Legal Foundation for whom you’re working now—former colleagues there. Both the -- well, both -- starting the term with the first case argued, Sackett v. EPA, and then awaiting decision on that case. The Wilkins case, which was argued by your colleague, Jeff McCoy, and already decided favorably for PLF’s client there. And now, arguing the last case of the term, so very big year for PLF.
Ironically, your opposing counsel, today, also argued the other case that was argued on the first day of the term on behalf of a state. And so, kind of some interesting bookends there. But tell us in just a few minutes we’ve got left—we were talking about this off-air before we started—how long have you and PLF been working on this issue, from when you first became aware of it and started filing briefs on it to now?
Christina Martin: Yeah. So our first brief, I think, was 2015. It was an amicus in a district court case. We did it just because PLF knows all about property rights, and we thought we had something to offer. We filed it. That actually is what led to a lot of our opportunities elsewhere. People saw that somebody’s paying attention to it—a nonprofit. We don’t charge our clients.
And so, we got our first, I think, direct rep -- I can’t remember if it was 2016 or 2017, but it’s just kind of snowballed from there, especially after we took a more aggressive approach at locating and making our abilities known to people in these naughty states. So it’s been -- it’s actually not been that long that we’ve been on the issue, but I -- one thing I will say is that it seemed, for the most part, that people would just lose their home, and nobody would even know about it. Nobody even thought this was possible in America.
And when I learned about it in Washington, D.C. -- it’s actually -- that’s how we found out about it, and it was a class action that had been filed. I read a news article about it. And The Washington Post had actually done a story that I think is what promoted that class action. At first, I thought, well, surely this is only Washington, D.C., but we started looking into it and found out this is a pretty widespread and mostly modern problem.
So it’s exciting because soon all these people who have lost everything will at least -- many of them, their statute of limitations has already run. I’ve heard from a lot of people some pretty shocking stories, and it’s not always who you would think it would be. I’ve heard from lawyers who’ve actually lost their property this way just because -- for a variety of reasons. They didn’t -- either they didn’t get notice, or they just had hardships and whatnot, family members dying, illnesses, etc. And it would be great to at least let them know that this isn’t going to happen to people in the future.
Tony Francois: Well, we will certainly await the Court’s decision. It’s late April, so we won’t have to wait that long. It’ll have to be decided by at least by the end of June. I think that’s all we’ve got, Jack, if we want to throw it back to you. I think we’ve addressed all the questions that came in over the Q&A. So I think, with that, we’ll turn it back to you, Jack.
Jack Capizzi: Absolutely. Thank you, Tony. Well, certainly, on behalf of FedSoc, we want to thank Christina for being with us today and Tony for moderating. A recording of this webinar will be available in a few days on our website. And if you do have questions, you can email us at email@example.com. With that, that’ll be all. Thank you all for joining today. We’re adjourned.