(The Center Square) – A Michigan family’s decades-long fight over a property seizure will be before the U.S. Supreme Court on Wednesday for oral arguments.
This marks the latest challenge to how counties across the country handle property tax foreclosures.
In December, the Pung family filed their opening brief in Pung v. Isabella County. Represented by attorney Phil Ellison and the Pacific Legal Foundation, the case asks the nation’s highest court to decide whether local governments must compensate homeowners based on fair market value.
The plaintiffs argue that the government should not be allowed to seize properties worth far more than needed to satisfy a tax debt. PLF Senior Attorney Christina Martin told The Center Square that the Pung family is feeling hopeful going into Wednesday.
“The Pungs are grateful the Supreme Court will be hearing the case and they hope that the Court takes this opportunity to protect home equity from predatory tax foreclosure systems that unnecessarily foreclose and sell property for a fraction of its value,” Martin said.
The dispute dates back to 1994, when Scott Pung received an exemption on a small local tax. Over a decade later, after Scott and his wife had both died, the local tax assessor said that the family should have reapplied for the exemption following Scott’s death.
“The tax assessor was wrong: State law says the exemption continues as long as family members continue to live in the home,” Martin previously told The Center Square. “Scott’s son still lived there. No further paperwork was necessary.”
The Pung family fought the assessment and initially won. But as legal challenges continued, Isabella County launched foreclosure proceedings over a disputed 2012 bill. That led to the county seizing the home in 2015, just 10 days after the family prevailed in the Michigan Court of Appeals for earlier tax years.
“The home was worth nearly $200,000 and all the properly imposed taxes were paid,” Martin said. “The Pungs tried to get the home back, but the county fought them every step of the way, refusing to allow the Pungs to even pay the improperly imposed debt to recover the home.”
The county eventually auctioned the home for $76,000 – keeping all the money it profited. A federal court later concluded that Isabella County only needed to return the surplus proceeds from the auction, not the full value of the home the family lost.
The plaintiffs argue that the house being sold under its proper home value “destroyed” equity in an “unnecessary auction” and that they are due fair market value from the county, not just what is surplus from the auction. The Pung family argues that, at that time, Michigan counties like Isabella County were using property foreclosures to make profits.
Over the coming months, the Supreme Court will consider whether the government must pay fair market value, rather than auction surplus, when it takes property. It will also consider legal arguments about whether Isabella County imposed an excessive fine in violation of the Eighth Amendment, especially since plaintiffs argue the underlying tax debt should never have existed.
Jay Carson, senior litigator at the Buckeye Institute, told The Center Square that the case should be decided in favor of the Pung family.
“In this case, fair market value sure looks like it might be the best or most appropriate test to use,” he said.
This case follows the foundation’s 2023 Supreme Court victory in Tyler v. Hennepin County, which barred the government from taking more than what is owed in tax foreclosures.
Now, this case asks the court to go even further, in a decision that will have broad implications for homeowners nationwide. Martin explained why PLF thinks everyone should care about this case.
“If the government can unnecessarily foreclose on the Pung home and sacrifice the family’s home equity, then the government can do it to anyone,” she said.
The Supreme Court is expected to release its decision by the end of June.
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