Nick Yono v. County of Ingham ( 2023 )


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  •             If this opinion indicates that it is “FOR PUBLICATION,” it is subject to
    revision until final publication in the Michigan Appeals Reports.
    STATE OF MICHIGAN
    COURT OF APPEALS
    NICK YONO,                                                           UNPUBLISHED
    December 28, 2023
    Plaintiff-Appellant,
    v                                                                    No. 362536
    Ingham Circuit Court
    COUNTY OF INGHAM, INGHAM COUNTY                                      LC No. 20-000697-CZ
    TREASURER, and INGHAM COUNTY LAND
    BANK FAST TRACK AUTHORITY,
    Defendants-Appellees.
    Before: GLEICHER, C.J., and JANSEN and RICK, JJ.
    PER CURIAM.
    Plaintiff appeals as of right the trial court order granting summary disposition in favor of
    defendants, the County of Ingham, Ingham County Treasurer, and the Ingham County Land Bank
    Fast Track Authority. We affirm in part, reverse in part, and remand for further proceedings
    consistent with this opinion.
    I. FACTUAL BACKGROUND
    Plaintiff was the sole owner of a commercial industrial property located at 1506 N. Grand
    River Avenue in Lansing, Michigan. He purchased the property in 2006 by land contract, which
    was recorded with the register of deeds. In 2016, a certificate of forfeiture of real property was
    recorded with the register of deeds, indicating that plaintiff failed to pay $1,891 in property taxes
    in 2014. In 2017, a certificate of forfeiture of real property was recorded for nonpayment of
    property taxes in 2015 for $15,684.41. The property was worth $378,400. Under the Michigan
    General Property Tax Act (GPTA), MCL 211.1 et seq., the county and the treasurer foreclosed the
    property and held an auction for sale, but the property was not purchased. Thus, the county
    executed a quit claim deed transferring the property to the Land Bank for $1. The Land Bank may
    have since sold the property for redevelopment.
    -1-
    Plaintiff filed suit, alleging that defendants unconstitutionally took his property without
    just compensation in violation of Const 1963, art 10, § 2, and that he had a vested property interest
    equal to the fair market value minus the amount of property taxes overdue and costs attributable
    to the tax foreclosure. Plaintiff also alleged a bailment claim because he believed that defendants
    were in possession of certain items of his personal property that remained on the land after the
    foreclosure.
    Defendants denied the allegations of liability and moved for summary disposition.
    Defendants argued that they were entitled to summary disposition of plaintiff’s takings claim under
    Rafaeli, LLC v Oakland Co, 
    505 Mich 429
    ; 
    952 NW2d 434
     (2020), in which the Michigan
    Supreme Court held that a foreclosed taxpayer is entitled to compensation for the amount of any
    surplus proceeds actually realized through a tax foreclosure sale. Defendants explained that the
    transfer of the property from the county to the Land Bank did not yield any surplus proceeds, and
    argued that under Rafaeli, plaintiff had no right to recovery. Defendants claimed entitlement to
    governmental immunity as a defense to plaintiff’s bailment claim, arguing that the bailment issue
    sounded in tort. They further argued that even if they could be found liable under a bailment
    theory, they never had possession of plaintiff’s personal property. Plaintiff responded that the
    facts of this case did not fit under Rafaeli because there was no sale and therefore no surplus
    proceeds. He contended that nevertheless, his equity in the property was taken without just
    compensation. Plaintiff also asserted that defendants were not entitled to governmental immunity
    because they were not performing a governmental function when they seized his property without
    just compensation. The trial court granted defendants’ motion for summary disposition. This
    appeal followed.
    II. ANALYSIS
    A. TAKINGS CLAUSE
    Plaintiff first argues that summary disposition was improper because an unconstitutional
    taking of his property occurred when defendants transferred the property to the Land Bank for far
    less than what was owed in delinquent taxes. Plaintiff claims this was a violation of the Takings
    Clause of the Michigan Constitution, Const 1963, art 10, § 2, because he received no just
    compensation. We agree.
    “This Court reviews de novo the grant or denial of a motion for summary disposition to
    determine if the moving party is entitled to judgment as a matter of law.” Glasker-Davis v
    Auvenshine, 
    333 Mich App 222
    , 229; 
    964 NW2d 809
     (2020) (quotation marks and citation
    omitted). Although defendants moved for summary disposition under several subsections of
    MCR 2.116(C), the trial court specifically granted summary disposition of plaintiff’s takings claim
    under MCR 2.116(C)(10). Summary disposition is appropriate under MCR 2.116(C)(10) “when
    the affidavits or other documentary evidence, viewed in the light most favorable to the nonmoving
    party, show that there is no genuine issue as to any material fact and the moving party is therefore
    entitled to judgment as a matter of law.” 
    Id.
     (quotation marks and citation omitted). The
    interpretation of statutes, court rules, and legal doctrines is also reviewed de novo. 
    Id.
    -2-
    The GPTA, MCL 211.1 et seq., provides for the recovery of unpaid real property taxes,
    penalties, interest, and fees through the foreclosure and sale of the property for which there is a
    tax delinquency. After being given notice of a delinquency, if a property owner fails to timely
    redeem the property, fee simple title is vested in the county treasurer. MCL 211.78 et seq. After
    the foreclosure, the state or municipality may claim the property. MCL 211.78m(1). If the state
    or municipality fails to exercise their right of first refusal, the property is put up for sale at public
    auction. MCL 211.78m(1) and (2). However, if the property is not sold at auction and the
    foreclosing unit (other than the state) retains possession, the foreclosing unit may “[t]ransfer the
    property to a land bank fast track authority created under the land bank fast track act,”
    MCL 124.751 et seq. MCL 211.78m(7)(a).
    There is no dispute that plaintiff was delinquent in paying taxes on the property in 2014
    and 2015. The record does not indicate that he ever tried to redeem the property. Thus, the
    certificates of forfeiture of real property were recorded with the register of deeds, and title was
    vested in the treasurer. MCL 211.78 et seq. The property was not sold at public auction, so the
    county deeded the property to the Land Bank for $1, per the procedure described under
    MCL 211.78m(7)(a). Plaintiff alleges that defendants’ actions violated the Takings Clause of the
    Michigan Constitution, which provides:
    Private property shall not be taken for public use without just compensation
    therefore being first made or secured in a manner prescribed by law. If private
    property consisting of an individual’s principal residence is taken for public use,
    the amount of compensation made and determined for that taking shall not be less
    than 125% of that property’s fair market value, in addition to any other
    reimbursement allowed by law. . . .
    “Public use” does not include the taking of private property for transfer to a
    private entity for the purpose of economic development or enhancement of tax
    revenues. Private property otherwise may be taken for reasons of public use as that
    term is understood on the effective date of the amendment to this constitution that
    added this paragraph. [Const 1963, art 10, § 2.][1]
    “The government’s seizure of real property is the clearest form of a taking requiring just
    compensation.” Rafaeli, 505 Mich at 455. Although general concepts involving the Takings
    Clause apply to this issue, Rafaeli is ultimately controlling here.2 See Jackson v Southfield
    Neighborhood Revitalization Initiative, ___ Mich App ___; ___ NW2d ___ (2023) (Docket
    No. 361397); slip op at 22 (finding that Rafaeli did not preclude an unjust-takings claim where the
    subject property was foreclosed on and then transferred to a land bank following an unsuccessful
    foreclosure sale). Plaintiff argues that Rafaeli does not go far enough, because unlike the property
    1
    Plaintiff brings his takings claim only under the Michigan Constitution. He makes no claims
    addressing the Takings Clause of the United States Constitution.
    2
    Rafaeli applies retroactively “to pending cases . . . in which a challenge has been raised and
    preserved.” Proctor v Saginaw Co Bd of Comm, 
    340 Mich App 1
    , 23; 
    985 NW2d 193
     (2022).
    -3-
    at issue in Rafaeli, his property was not successfully sold at auction and there were no surplus
    proceeds for defendants to retain. We agree that the Rafaeli Court was not dealing with a situation
    where property failed to sell at auction and was instead given over to a land bank. Even so, Rafaeli
    informs much of our thinking about foreclosure cases, even if the facts of that case are not identical
    to those we are dealing with in the instant matter.
    In Rafaeli, 505 Mich at 437, the two plaintiffs owed unpaid property taxes to Oakland
    County. The county and its treasurer foreclosed the properties for the delinquencies, sold the
    properties for an amount much greater than the taxes owed, and retained the proceeds. Id. The
    issue before our Supreme Court was whether the defendants committed an unconstitutional taking
    by retaining surplus proceeds from the sale of the properties that exceeded the amount the plaintiffs
    owed in unpaid delinquent taxes, interest, penalties, and fees under the GPTA. Id. The GPTA did
    not provide any recourse for the plaintiffs, as it contains no procedures allowing property owners
    to recover the surplus proceeds generated by a foreclosure sale. Id. at 449. Consequently, the
    Rafaeli Court decided the issue under the Takings Clause of the Michigan Constitution, and held
    that the defendants’ “retention of those surplus proceeds [was] an unconstitutional taking without
    just compensation under” Const 1963, art 10, § 2. Id.
    Defendants argue that there can be no unlawful taking here because no surplus proceeds
    were generated from the foreclosure of plaintiff’s property. They note that under Rafaeli, “a
    former property owner only has a right to collect the surplus proceeds from the tax-foreclosure
    sale; that is, a former property owner has a compensable takings claim if and only if the tax-
    foreclosure sale produces a surplus.” 505 Mich at 477. As such, defendants argue, there could
    not have been an unlawful taking here. However, defendants ignore the key fact that, unlike in
    Rafaeli, where a tax foreclosure sale occurred, no such sale occurred in this case. Thus, on that
    point, Rafaeli is distinguishable from the instant matter. Jackson, ___ Mich App at ___; slip op
    at 20. Even so, this Court recently opined that Rafaeli did not preclude an unjust-takings claim
    under the Michigan Takings Clause, where the plaintiffs’ properties were foreclosed upon and
    transferred over to a land bank after being purchased by the city of Southfield from the Oakland
    County Treasurer for the minimum bid, meaning that no surplus equity was generated from the
    sale. Id.; slip op at 4-5; 22.
    Although the Court in Rafaeli did state that “a former property owner has a compensable
    takings claim if and only if the tax-foreclosure sale produces a surplus[,]” id. at 477, the Sixth
    Circuit in Hall v Meisner, 51 F 4th 185, 189-190 (6th Cir 2022), was “dictum.” The Jackson Court
    agreed, stating:
    In Rafaeli, our Supreme Court had no reason to consider what result would
    be required when the government merely retained title to the subject property and
    transferred it to another governmental entity for the cost of the tax debt and
    associated fees and costs. The right to the retention of surplus proceeds necessarily
    relies on an arms-length public auction, which allows for a real-time evaluation of
    the value of the subject property. When no such auction occurs, such as was the
    case here, the lack of surplus proceeds can hardly be described as not a taking—
    plaintiffs still lost their equitable title in their properties. The crux of Rafaeli was
    that the government cannot receive more than it was owed (including costs and
    -4-
    fees, of course). In cases where there was a public tax-foreclosure sale, the amount
    the [foreclosing governmental unit (FGU)] received was the monetary value for
    which the property was sold. When there is no public sale, what did the FGU
    receive? A piece of real property with a certain value. Despite the lack of an
    exchange of currency, the government still received more than it was owed.
    Consequently, like the Sixth Circuit, we conclude the specific language in Rafaeli
    about former property owners having only an interest in the surplus from a public
    tax-foreclosure sale was obiter dicta. [Jackson, ___ Mich App at ___; slip op at
    21.]
    We agree with this analysis completely. As this Court aptly pointed out in Jackson, the Rafaeli
    Court was not dealing with a scenario like that which has been presented here, and thus had no
    cause to consider what might happen if property was not sold in a foreclosure sale and was instead
    given to a land bank. Even though no sale occurred, the fact that there were no surplus proceeds
    does not at all imply that there was no taking, or that the property lacked any inherent value.
    Plaintiff here still lost his equitable interest in the property, which certainly had some value, as
    every parcel of property does, one way or another. This is clearly the sort of taking that the
    Michigan Takings Clause is designed to prevent, and even though there was no real sale or
    purchase of the property as a result of the foreclosure, defendants necessarily got more than what
    they were owed by virtue of retaining the property without paying anything to plaintiff. Thus, we
    agree with the Jackson and Hall Courts that Rafaeli’s pronouncement that former property owners
    only have a compensable claim if a surplus exists was obiter dicta, and is not binding on this Court.
    See Estate of Pearce v Eaton County Rd Comm, 
    507 Mich 183
    , 197; 
    968 NW2d 323
     (2021)
    (“Unlike holdings, [o]biter dicta are not binding precedent. Instead, they are statements that are
    unnecessary to determine the case at hand and, thus, lack the force of an adjudication.” (quotation
    marks and citation omitted; alteration in original)).
    This conclusion also tracks with the Sixth Circuit’s overall holding in Hall. In that case,
    the defendants foreclosed on the plaintiffs’ properties and ultimately turned them over to a land
    bank. Hall, 51 F 4th at 188-189. The Sixth Circuit concluded that the GPTA violated the Takings
    Clause of the United States Constitution to the extent that it allowed the defendants to take absolute
    title to the plaintiffs’ properties without just compensation. Id. at 194. Considering the ruling in
    Hall, which concerned the federal Takings Clause, it would certainly be bizarre for this Court to
    reach a different result under the Michigan Takings Clause, which the Rafaeli Court specifically
    noted “has been interpreted to afford property owners greater protection than its federal counterpart
    when it comes to the state’s ability to take private property for a public use under the power of
    eminent domain.” Rafaeli, 505 Mich at 454, citing Wayne Co v Hathcock, 
    471 Mich 445
    ; 
    684 NW2d 765
     (2004); see also Jackson, ___ Mich App at ___; slip op at 21-22.
    Additionally, the United States Supreme Court essentially adopted the reasoning set forth
    in Hall when it issued Tyler v Hennepin Co, Minn, 
    598 US 631
    , 638; 
    143 S Ct 1369
    ; 
    215 L Ed 2d 564
     (2023). There, the Supreme Court stated that unjust taking occurs in the federal context if the
    government takes a person’s property and keeps it instead of holding a foreclosure sale. Id. at 643.
    The Court discussed United States v Lawton, 
    110 US 146
    ; 
    3 S Ct 545
    ; 
    28 L Ed 100
     (1884), an
    earlier decision in which it “extended a taxpayer’s right to surplus” by holding “that the taxpayer
    -5-
    was still entitled to the surplus under the statute, just as if the Government had sold the property.”
    Tyler, 598 US at 643, citing Lawton, 
    110 US at 149-150
    . Thus, the Supreme Court held that a
    property owner is entitled to compensation based on his or her equitable interest in a foreclosed
    property, even if no sale of the property occurred. 
    Id.
    We recognize that Hall is not binding on this Court, but agree with the Jackson Court that
    its reasoning is persuasive. Jackson, ___ Mich App at ___; slip op at 18. And even if that were
    not the case, Tyler is certainly binding on this Court, and necessarily informs our determination of
    how best to apply the more broadly protective Michigan Takings Clause. See 
    id.
     We also find
    Lawton and Tyler instructive in determining the appropriate remedy here. In Lawton, the surplus
    amount was calculated based on the value of the property, since there was no sale price to consider.
    Tyler, 598 US at 643, citing Lawton, 
    110 US at 148-150
    . Notably, our Supreme Court extensively
    cited Lawton in Rafaeli, albeit in the context of a case involving a tax foreclosure sale. Rafaeli,
    505 Mich at 458-459. Thus, the Rafaeli Court essentially acknowledged the applicability of the
    Lawton line of cases, which includes Tyler. Accordingly, for all of the foregoing reasons, we
    conclude that Rafaeli applies and that plaintiff has successfully proven that defendants violated the
    Michigan Takings Clause in this matter. We therefore reverse the order granting summary
    disposition to defendants. As was the case in Lawton, we direct the trial court to calculate the
    “surplus” owed on the property by reference to the value of the property, less what plaintiff owed
    on it when the foreclosure occurred. Jackson, ___ Mich App at ___; slip op at 22.
    B. BAILMENT
    Plaintiff argues the trial court erred in granting summary disposition to defendants with
    regard to his bailment claim because defendants were not entitled to governmental immunity and
    a genuine issue of material fact existed whether defendants were in possession of his personal
    property. We disagree.
    The trial court granted defendants’ summary disposition of plaintiff’s bailment claim under
    MCR 2.116(C)(7) as well as (C)(10). Summary disposition is appropriate under MCR 2.116(C)(7)
    if the defendant is entitled to “immunity granted by law.” “A party may support a motion under
    MCR 2.116(C)(7) by affidavits, depositions, admissions, or other documentary evidence. If such
    material is submitted, it must be considered.” Maiden v Rozwood, 
    461 Mich 109
    , 118; 
    597 NW2d 817
     (1999). Summary disposition is appropriate under MCR 2.116(C)(10) “when the affidavits or
    other documentary evidence, viewed in the light most favorable to the nonmoving party, show that
    there is no genuine issue as to any material fact and the moving party is therefore entitled to
    judgment as a matter of law.” Glasker-Davis, 333 Mich App at 229 (quotation marks and citation
    omitted).
    Bailments are a form of express or implied contract. Nat’l Ben Franklin Ins Co v Bakhaus
    Contractors, Inc, 
    124 Mich App 510
    , 512 n 2; 
    335 NW2d 70
     (1983), citing 8 Am Jur 2d, Bailments,
    § 2, p 738, and In re George L Nadell & Co, Inc, 
    294 Mich 150
    , 154; 
    292 NW 684
     (1940).
    “ ‘Bailment,’ in its ordinary legal signification, imports the delivery of personal property by one
    person to another in trust for a specific purpose, with a contract, express or implied, that the trust
    shall be faithfully executed and the property returned or duly accounted for when the special
    purpose is accomplished.” Goldman v Phantom Freight, Inc, 
    162 Mich App 472
    , 479-480; 413
    -6-
    NW2d 433 (1987). “[I]t is a relationship wherein a person gives to another the temporary use and
    possession of property other than money, the latter agreeing to return the property to the former at
    a later time.” 
    Id. at 480
    . Michigan law classifies bailments as either gratuitous (for the sole benefit
    of either the bailor or bailee) or mutual (for the benefit of both parties). Godfrey v City of Flint,
    
    284 Mich 291
    , 295; 
    279 NW 516
     (1938). If a bailment relationship exists, standards of care are
    automatically imputed on both the bailor and bailee. 
    Id. at 297
    .
    “One of the essential elements of a bailment is that the property be taken into the possession
    of the bailee, and the bailee must, at a minimum, knowingly take the property into possession or
    control for there to be a bailment.” 8 Am Jur 2d, Bailments, § 4. Plaintiff’s bailment claim merely
    alleged the following:
    33. It is believed that Defendants are in possession of the Plaintiff’s personal
    property (“Personal Property”) that which remains on the Property after the
    foreclosure.
    34. This has created a constructive (or implied) Bailment relationship between
    Defendant’s [sic] (bailee) and Plaintiff (bailor).
    35. As a result, Defendant’s [sic] or bailees[] have an obligation to protect and
    account for Plaintiff’s Personal Property.
    36. If Defendants fail to protect or account for Plaintiff’s Personal Property,
    Plaintiff seeks compensatory and punitive damages.
    Thus, there was no evidence in the record that the Land Bank was in possession of plaintiff’s
    personal property. Eric Schertzing, a member of the Board of Directors of the Land Bank, attested
    in an affidavit that there was no personal property on the premises when it was transferred to the
    Land Bank in 2018. He further attested that the Land Bank has kept the premises secure from
    intrusion in anticipation of a future sale. In response, plaintiff submitted his own affidavit in an
    attempt to contest the facts stated by Schertzing. Plaintiff attested that the property was not vacant
    until he was evicted, and at that time he had “personal property in the building with a value of
    $60,000, consisting of equipment (labeling machine, hi lo [sic]), product inventory, miscellaneous
    equipment, racking systems and shelving.” However, plaintiff’s affidavit fails to establish that
    these items of personal property were actually on the land or that defendants were in possession of
    said property. Plaintiff presented no further documentary evidence to establish that defendants
    had possession of any of his personal property, or to show that a bailment existed between the
    parties. Therefore, plaintiff has not presented a genuine issue of material fact as to whether
    defendants possessed his personal property, and his bailment claim fails as a matter of law.
    Summary disposition was proper under MCR 2.116(C)(10).3
    3
    Having decided that summary disposition was proper under MCR 2.116(C)(10), this Court need
    not decide if summary disposition was also proper under MCR 2.116(C)(7).
    -7-
    III. CONCLUSION
    The trial court erred by granting defendants’ motion for summary disposition as to
    plaintiff’s Takings Clause claim, but did not err by granting summary disposition as to defendant’s
    bailment claim. We therefore affirm in part, reverse in part, and remand for further proceedings
    consistent with this opinion.
    /s/ Elizabeth L. Gleicher
    /s/ /Michelle M. Rick
    -8-
    

Document Info

Docket Number: 362536

Filed Date: 12/28/2023

Precedential Status: Non-Precedential

Modified Date: 12/29/2023