In Re Petition of Barry County Treasurer for Foreclosure ( 2024 )

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
In re PETITION OF BARRY COUNTY
TREASURER FOR FORECLOSURE.
BARRY COUNTY TREASURER, UNPUBLISHED
February 1, 2024
Petitioner-Appellant/Cross-Appellee,
v No. 360920
Barry Circuit Court
MARY ANN MEAD, LC No. 2020-000289-CZ
Respondent-Appellee/Cross-
Appellant.
Before: RICK, P.J., and SHAPIRO and YATES, JJ.
PER CURIAM.
Petitioner, Barry County Treasurer (the Treasurer), appeals by delayed leave granted1 the
trial court’s order directing it to pay respondent, Mary Ann Mead, $18,862.50 in surplus proceeds
from a tax-foreclosure sale. The Treasurer argues that the trial court erred when it granted Mead’s
motion for disbursement of the surplus proceeds because Mead forfeited her right to recover the
surplus proceeds from the tax-foreclosure sale by failing to file a timely notice as required by MCL
211.78t(2). Because this Court’s published decision in In re Petition of Muskegon Co Treasurer
for Foreclosure, ___ Mich App ___; ___ NW2d ___ (2023) (Docket No. 363764), establishes that
the Treasurer is entitled to prevail because Mead forfeited her right to claim any proceeds, we must
reverse the trial court’s order and remand for entry of judgment in favor of the Treasurer.
1
In re Petition of Barry Co Treasurer for Foreclosure, unpublished order of the Court of Appeals,
entered October 6, 2022 (Docket No. 360920).
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I. FACTUAL BACKGROUND
In 2020, our Supreme Court ruled that former owners of properties sold at tax-foreclosure
sales possess “a cognizable, vested property right to the surplus proceeds resulting from the tax-
foreclosure sale of their properties.” Rafaeli, LLC v Oakland Co, 505 Mich 429, 484; 952 NW2d
434 (2020). The Supreme Court further held that that right continues to exist after title passes to
the foreclosing governmental unit. The government’s “retention and subsequent transfer of those
proceeds into the county general fund,” the Court explained, “amounted to a taking of plaintiffs’
properties” and the former owners are entitled to just compensation in the form of the return of the
surplus proceeds. Id. at 484-485.
In response to the decision in Rafaeli, the Legislature passed 2020 PA 255 and 2020 PA
256, which were given immediate effect on December 22, 2020. With passage of 2020 PA 256,
the Legislature added MCL 211.78t to the General Property Tax Act, see MCL 211.1 et seq. That
statute includes a subsection, MCL 211.78t(2), which states that, for properties that a foreclosing
governmental unit sold at a tax-foreclosure sale after July 17, 2020, a former property owner who
intends to seek surplus proceeds from the tax-foreclosure sale must file a notice of intent to seek
the surplus—using the form identified as Form 5743—with the foreclosing governmental unit by
the July 1 after the effective date of the foreclosure. After the tax-foreclosure sale, the foreclosing
governmental unit must then notify the former property owners who filed a notice of the amount
of surplus proceeds, if any, by the following January 31. See MCL 211.78t(3)(i). The notice must
include a statement that directs the claimant to file a motion in the circuit court in the foreclosure
proceeding to recover any remaining proceeds. MCL 211.78t(3)(k).
Mead owned real property in Barry County, but she fell behind on her property taxes. The
Treasurer foreclosed on her property effective March 31, 2021. The property was sold at auction
on August 18, 2021, for $21,250, and the proceeds were applied to the $1,325 that Mead owed.
Mead did not file Form 5743 with the Treasurer until September 2021.
In January 2022, Mead moved in the trial court for disbursement of surplus proceeds from
the tax-foreclosure sale. She asked the trial court to instruct the Treasurer to pay her $19,925. The
Treasurer asserted that Mead was not entitled to proceeds from the sale because she did not file
the notice required under MCL 211.78t(2). Mead insisted that the Treasurer’s refusal to turn over
the surplus proceeds was unlawful in various respects. For example, she argued that the failure to
give her the proceeds violated her right to due process and constituted an unconstitutional taking.
Mead also contended that the Treasurer’s notice that she could file a motion in the circuit court to
recover the proceeds in effect waived the deadline stated under MCL 211.78t(2) or estopped the
Treasurer from asserting that her notice of intent was untimely.2
On February 11, 2022, the trial court heard arguments on Mead’s motion to disburse the
excess proceeds and agreed with Mead. Thus, the trial court issued an order directing the Treasurer
to pay Mead $18,862.50 in surplus proceeds. The Treasurer then appealed to this Court by delayed
2
Mead has not properly asserted either her waiver or estoppel argument on appeal. Thus, she has
abandoned those claims on appeal, so we need not address them. See Isagholian v Transamerica
Ins Corp, 208 Mich App 9, 14; 527 NW2d 13 (1994).
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leave granted. Mead cross-appealed the trial court’s order to the extent that it reduced the amount
owed by the 5% sales commission stated under MCL 211.78t(9).
II. LEGAL ANALYSIS
The Treasurer contends that the trial court erred when it determined that Mead was entitled
to the surplus even though she did not comply with the requirements prescribed by MCL 211.78t.
This Court reviews de novo whether the trial court properly interpreted and applied MCL 211.78t.
See Makowski v Governor, 317 Mich App 434, 441; 894 NW2d 753 (2016). When interpreting a
statute, this Court’s charge is to give effect to the intent of the Legislature, and the words actually
used by the Legislature in the statute are the most reliable evidence of its intent. See US Fidelity
Ins & Guaranty Co v Mich Catastrophic Claims Ass’n (On Rehearing), 484 Mich 1, 13; 795 NW2d
101 (2009). In MCL 211.78t(11), the Legislature stated that MCL 211.78t serves as the “exclusive
mechanism for a claimant to claim and receive any applicable remaining proceeds under the laws
of this state.”
Mead argues that, notwithstanding MCL 211.78t(11), the Legislature drafted MCL 211.78t
to be permissive. More specifically, she maintains that the Legislature provided that MCL 211.78t
should apply only to property owners who elect to use its provisions. This Court has flatly rejected
that argument, explaining that “our Legislature intended MCL 211.78t as the sole mechanism by
which a former owner of foreclosed property could obtain any proceeds remaining from the tax-
foreclosure sale and satisfaction of the owner’s delinquent taxes and associated costs.” Muskegon
Co, ___ Mich App at ___; slip op at 4.
Mead suggests that MCL 211.78t fails to adequately codify the holding in Rafaeli because
it refers to “remaining proceeds,” whereas our Supreme Court referred to “surplus proceeds.” She
implies that this difference in terminology suggests the existence of alternate means for recovering
the proceeds. Under MCL 211.78l(1), owners of extinguished recorded or unrecorded interests in
property sold or transferred at tax-foreclosure sales may recover the property or their interests in
the property. The statute provides, in relevant part, that “[a]n action to recover any proceeds from
the sale or transfer of property foreclosed for nonpayment of real property taxes under this act must
be brought as provided under section 78t.” “ ‘Any proceeds’ is sufficiently broad to suggest that
the Legislature intended to include proceeds of any kind in this category,” Muskegon Co, ___ Mich
App at ___; slip op at 4, so the Legislature’s statement that “an action” to recover the proceeds
remaining from a tax-foreclosure sale after the satisfaction of the foreclosed owner’s tax debt must
be brought under MCL 211.78t leaves no room for alternate means by which foreclosed property
owners may recover excess proceeds. See id. at ___; slip op at 5.
Mead next asserts that a property right cannot be extinguished before it arises, which, she
insists, did not happen until after the tax-foreclosure sale of her property generated a surplus. Our
Supreme Court has recognized that the right to surplus proceeds after a tax-foreclosure sale flows
from ownership of the property that was seized to pay a public debt. The Court explained that the
state traditionally could not collect more than what was owed, so it had an obligation to return the
excess. See Rafaeli, 505 Mich at 463-468. Although the right to surplus proceeds does not vest
until after the sale, the right nevertheless exists as a distinct right before the sale of the property to
satisfy the tax debt. Id. at 475-476. Put another way, a property owner’s right to any surplus exists
before the tax-foreclosure sale, even though it is not compensable until after that sale generates the
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surplus. See id. at 476-477. Accordingly, Mead had a “right to collect surplus proceeds[,]” which
“existed before the tax-foreclosure sale[,]” Muskegon Co, ___ Mich App at ___; slip op at 9, but
she forfeited that right by failing to comply with the statutory notice requirement.
Mead further insists that this Court must affirm because if MCL 211.78t(2) bars recovery,
then it contravenes substantive due process. “Both the Fourteenth Amendment to the United States
Constitution and Const 1963, art 1, § 17 guarantee that no state shall deprive any person of life,
liberty or property, without due process of law.” Cummins v Robinson Twp, 283 Mich App 677,
700; 770 NW2d 421 (2009) (quotation marks and citation omitted). The right to due process of
law has a substantive component and a procedural component. Cary Investments, LLC v Mount
Pleasant, 342 Mich App 304, 314; 994 NW2d 802 (2022). The substantive component bars certain
governmental actions regardless of the fairness of the procedures used to implement them. See
Bonner v Brighton, 495 Mich 209, 225-226; 848 NW2d 380 (2014). The procedural component
“requires ‘notice and an opportunity to be heard’ prior to a deprivation of life, liberty, or property.”
Cary Investments, 342 Mich App at 315.
This Court has expressly rejected all the due-process arguments Mead has advanced. See
Muskegon Co, ___ Mich App at ___; slip op at 7-9. First, this Court refused to accept the framing
of the claim to surplus proceeds as a violation of substantive due process. Instead, this Court ruled
that when “ ‘a constitutional claim is covered by a specific constitutional provision’ ” such as the
Takings Clause, then “ ‘the claim must be analyzed under the standard appropriate to that specific
provision, not under the rubric of substantive due process.’ ” Id. at ___; slip op at 9. Second, in
responding to the argument that the Treasurer’s failure to give Mead adequate notice violated her
right to procedural due process, this Court concluded that a treasurer’s “notices were not rendered
inadequate by the fact that they were sent to [the claimants] before the tax foreclosure sale—if
anything, the earlier notice was an even greater safeguard of [the claimants’] rights than the post-
sale notice that they advocate for now.” Id. Third, this Court held that “[t]he statutory scheme set
up by our Legislature and followed by [a treasurer] satisfies due process.” Id. at ___; slip op at 8.
Therefore, Mead has no viable due-process argument left after our decision in Muskegon Co.
Finally, Mead claims she is entitled to the return of the surplus proceeds to prevent a taking
in violation of Michigan Const 1963, art 10, § 2. In Muskegon Co, ___ Mich App at ___; slip op
at 9-11, this Court explained in detail why a Takings Clause challenge to the Treasurer’s actions
necessarily fails. We are bound by that decision, so we must reverse the trial court’s February 24,
2022 order granting Mead’s motion to disburse surplus proceeds and remand the case for entry of
judgment in favor of the Treasurer.3
Reversed and remanded for entry of judgment in favor of the Treasurer. We do not retain
jurisdiction. There being an important question of public policy, the Treasurer may not tax costs.
See MCR 7.219(A).
/s/ Michelle M. Rick
/s/ Douglas B. Shapiro
/s/ Christopher P. Yates
3
Given our resolution of this claim of error, we need not address Mead’s cross-appeal.
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