U.S. Supreme Court Revives Michigan Property Rights Case Involving Isabella County Tax Foreclosure
High court sends Isabella County tax foreclosure dispute back to lower court, allowing family to continue challenging the loss of a home over a $2,242 tax debt.
The U.S. Supreme Court has revived a Michigan property-rights lawsuit involving an Isabella County family that lost its home through tax foreclosure, sending the case back to a lower court for further review. The ruling vacates a previous decision against the Pung family and allows them to continue arguing that the county’s foreclosure process violated constitutional protections.
The case, Pung v. Isabella County, was brought by attorney Philip L. Ellison and Outside Legal Counsel PLC on behalf of the estate of Timothy Scott Pung. The case was argued before the nation’s highest court in February. According to the law firm, the Supreme Court determined that a tax-foreclosure auction price may only serve as a constitutional benchmark if the sale was conducted fairly and in accordance with the nation’s historical traditions regarding tax sales.
At the center of the dispute is a family home in Isabella County that was assessed at approximately $194,400. Court filings indicate the property was ultimately foreclosed over an alleged tax debt of about $2,242. The home later sold at a tax auction for $76,008 before being resold on the open market for $195,000.
The Supreme Court did not adopt the family’s broader argument that fair market value should automatically control in every tax-sale case. However, the justices also declined to uphold the lower court’s ruling in favor of the county. Instead, the Court sent the case back for further proceedings to determine whether the foreclosure process itself was fair.
In a concurring opinion, Justice Clarence Thomas wrote that “what Isabella County did to the Pungs was wrong, and, on my initial view, likely unconstitutional,” according to the court filing cited by the law firm.
The Supreme Court’s decision leaves unresolved key questions about what constitutes a fair tax foreclosure process. Several justices emphasized that the Court was not establishing the full constitutional boundaries for such cases, leaving those issues for future litigation.
The case now returns to the Sixth Circuit Court of Appeals, where attorneys for the Pung family will continue arguing that Isabella County’s foreclosure procedures failed to meet constitutional standards. The outcome could have broader implications for property owners challenging tax foreclosures and the loss of home equity across the country.
According to the Supreme Court ruling, counties may not automatically rely on auction prices to justify tax foreclosures if questions remain about whether the underlying sale process was conducted fairly.