Suits against counties on hold

ALPENA — Several tax foreclosure lawsuits brought against Michigan counties — including suits against Alpena, Alcona, Montmorency, and Presque Isle counties — are on hold until similar cases can be heard by the Michigan Supreme Court.

The Hemlock-based law firm Outside Legal Counsel is representing clients in 10 lawsuits in various courts in different regions of Michigan. The lawsuits allege it’s illegal for counties to sell tax-foreclosed property for more than the tax that is owed on that property.

The stakes are high.

“How the Michigan Supreme Court decides Rafaeli will dictate how these cases go,” said attorney Alan Vander Laan, who represents Alpena, Alcona, and Montmorency counties. “If they overrule Rafaeli, then foreclosures in the state of Michigan, and property tax collection as we know it, will end, and the Legislature will have to come up with another scheme. If the court agrees with my view, there’s been no taking, then it will be the status quo.”

Attorney Philip Ellison, with Outside Legal Counsel, said the cases have been stayed either formally or informally by judges until the Michigan Supreme Court makes a decisions on an Oakland County case.

In that case, Rafaeli vs. Oakland County, Uri Rafaeli — represented by the firm Pacific Legal Counsel — alleges Oakland County foreclosed on a home owned by Uri Rafaeli’s business over an $8.41 tax debt. The county sold the property for $24,500 and kept the profits. While most states refund the surplus, Michigan is among a handful of states that allows “property theft” to fill government coffers, according to Pacific Legal Counsel’s website.

Ellison said the outcome of that case will ultimately determine how his cases, affecting Northeast Michigan counties, proceed through the courts. Even if the homeowners he represents are 100% successful in their case, they still had to pay all of their taxes, he said.

“They actually paid their property taxes the hardest way possible: They lost their house,” he said.

Ellison has also filed a second set of lawsuits in U.S. District Court, which he said wasn’t until a recent change at the federal level allowed federal courts to hear cases related to the takings clause in the Fifth Amendment, which says private property shall not be taken for public use without just compensation.

If the Michigan Supreme Court provides homeowners relief, the federal cases would no longer be necessary, Ellison said.

Attorney Alan Vander Laan, who represents Alpena, Alcona, and Montmorency counties, said those federal cases have also been stayed by the judges waiting for the Michigan Supreme Court to decide the Rafaeli case and for the resolution of another in U.S. circuit court.

Crystal Nelson can be reached at 989-358-5687 or cnelson@thealpenanews.com.