Gloves Off: Class action attorneys call out Wayne County Executive Warren Evans and Treasurer Eric Sabree for refusal to turn over $120+ million in surplus profits to residents who lost their homes through tax foreclosure
Despite two Michigan Supreme Court rulings, Wayne County uses stall tactics, denied FOIA requests in years-long battle to avoid repayment to thousands of residents
Media Contact: Barbara M. Fornasiero, EAFocus Communications; barbara@eafocus.com; 248.260.8466
Southfield, Mich. — September 11, 2024 —“Wayne County is not above the law, but Wayne County Executive Warren Evans and Wayne County Treasurer Eric Sabree are acting like it is.” That’s the claim of co-counsel Aaron Cox, The Law Offices of Aaron D. Cox; David J. Shea, Shea Law; and Jason Thompson, Sommers Schwartz, who are leading a class action lawsuit filed on behalf of thousands of Wayne County residents entitled to receive the surplus profits pocketed by Wayne County when their tax foreclosed homes were sold at auction. The County, at the direction of Wayne County Executive Warren Evans and Wayne County Treasurer Eric Sabree, is holding on to an estimated $120+ million that the Michigan State Supreme Court has ruled – twice – does not belong to municipal governments, calling it a “theft.”
Background
In the landmark 2020 Michigan Supreme Court Case, Rafaeli v. Oakland County, the Court, voting 7-0, reversed a Court of Appeals decision and found that local governments cannot retain surplus proceeds from the sale of a home that had been foreclosed upon for failure to pay property taxes (i.e. tax foreclosure). To do so was deemed “unlawful” and an unconstitutional taking without just compensation under the Michigan Constitution. The United States Court of Appeals for the Sixth Circuit followed in 2022, and by 2023, the Supreme Court of the United States unanimously declared the practice unconstitutional in an identical case arising out of Hennepin County, Minnesota.
The Michigan Supreme Court then took up the question of whether tax foreclosed property owners who lost surplus proceeds before the Court decided the Rafaeli case – that is if the taking occurred prior to the 2020 decision – could pursue a claim for a return of their money against the counties. On July 29, 2024, in another 7-0 decision, the Michigan Supreme Court – after hearing arguments on related cases subsequent to Rafaeli – ruled that the 2020 decision must be applied retroactively, giving full constitutional protection to an even larger group of citizens.
Following the 2020 ruling in Rafaeli, Michigan counties, including Oakland County, where the Rafaeli case originated, began reaching settlements in class action lawsuits to return the surplus funds to citizens. Oakland County created a $38 million fund to repay surplus proceeds and began the repayment process in the summer of 2023. In another settlement, nearly all the counties on the west side of Michigan have agreed to return surplus funds to their citizens.
Where’s the money?
In the meantime, four years after the first Michigan State Supreme Court ruling and the subsequent class action lawsuit demanding repayment, Wayne County digs in its heels, with Evans and Sabree remaining defiant and refusing to return to Wayne County residents – their constituents – the more than $120 million in ill-gotten funds.
“Oakland County did the right thing in a timely manner. Wayne County has done nothing but dodge its financial responsibility and harm some of its most vulnerable residents, particularly in Detroit, where the bulk of the surplus funds were illegally taken,” attorney Aaron Cox said.
“The Michigan Supreme Court has ruled twice that counties cannot lawfully keep one dime beyond what was owed by foreclosed owners in back taxes and related penalties and fees,” attorney Philip Ellison of Outside Legal Counsel, PLC, who is also involved in the class action lawsuit, added. “Instead of complying, Wayne County stalls, prevents access to the records, ignores FOIA requests, and tries to dismiss the class action to avoid its obligations repay its taxpayers. When Judge Parker (Judge of the United States District Court for the Eastern District of Michigan), issues a ruling, they fight it. They appeal. We will not stop until the citizens of Wayne County get what is owed them.”
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