Our Amicus Brief in the Pung v. Isabella County Home Equity Theft Takings Case

Today, I submitted an amicus brief in Pung v. Isabella County, the “home equity theft” takings case I previously wrote about here. The brief is on behalf of the Cato Institute, and a group of takings and property law scholars: Jessica Asbridge (Baylor University), James W. Ely, Jr. (Vanderbilt), Julia Mahoney (University of Virginia), and myself. Here is a summary of our brief, adapted from the Introduction:

At its heart, this is a simple case. The Takings Clause of the Fifth Amendment requires payment of “just compensation” whenever the government takes “private property” for “public use.” U.S. Const. Amend. V. In this case, the government undeniably took the
property of the Pung estate and paid far less than just compensation for it. If this Court does not reverse the badly flawed decision of the Sixth Circuit, state and local governments could systematically undercompensate vulnerable property owners who lose their land to tax foreclosure. Such an outcome would gravely undermine the rule set out in this Court’s unanimous decision in Tyler v. Hennepin County, which held that “home equity theft” violates the Takings Clause and vindicated “[t]he principle that a government may not take more from a taxpayer than she owes.” 598 U.S. 631, 639 (2023).

The compensation paid to the Pung estate fell far short of the “fair market value” standard required by this Court’s precedents, as indicated by the County’s own valuation of the property at $194,400 – more than twice the amount it paid to the estate. Pet. Cert. at 5. The flawed auction held by the county brought in a price of only $76,008, of which the owner received some $73,800 after subtracting the $2241.93 tax debt supposedly owed by the Pung estate. Id. The new owner of the property then sold it for $195,000, further underscoring the enormous disparity between the Pung estate’s loss and the compensation received. Id.

Part I of this amicus brief explains why reversal of the Sixth Circuit decision is required by basic Takings Clause principles, including those enunciated in Tyler. There is no other way to forestall home equity theft and ensure that property owners facing loss of property through tax foreclosure are fully compensated.

Part II outlines historical evidence showing the importance of the requirement of just compensation, and the need to fully compensate property owners for
property taken by the government. Mere partial compensation is not enough.

Finally, Part III explains why a ruling upholding the lower court is likely to result in severe abuses of property rights, because local governments often have incentives to undercompensate property owners whose land is subject to tax foreclosure. Elderly, minority, and less affluent property owners are likely to
be particularly vulnerable.

This is a shorter and simpler amicus brief than most of those I write, because the case itself is simple. It comes down to the basic principle that the Takings Clause requires payment of full compensation for property taken by the government, and what the Pung estate got here obviously falls far short of that standard. Allowing the local government to get away with that would set a very dangerous precedent.

As noted in Part I of our brief, many legal scholars (myself included) argue that “fair market value” compensation is actually often insufficient. We don’t ask the Supreme Court to resolve that longstanding problem here. But, at the very least, courts cannot allow the government to take property while paying far less than fair market value, which is what Isabella County is trying to get away with here.

As in Tyler v. Hennepin County (2023), of which Pung is a natural extension, this case features a broad cross-ideological coalition of groups filing amicus briefs supporting the property owner. Our own brief includes takings scholars with a range of different views, as well as the libertarian Cato Institute (where I am the Simon Chair in Constitutional Studies, in addition to my primary job at George Mason University).

Other amicus briefs on our side include those filed by libertarian and conservative property rights advocates, such as the Institute for Justice, and a range of groups led by the Buckeye Institute. But there are also briefs by left-liberal groups, such as the Constitutional Accountability Center, and briefs filed by the AARP (which emphasizes the disproportionate harm elderly property owners suffer from home equity theft), and disability rights advocates (which emphasizes the danger to disabled homeowners). There area also briefs by  legal aid groups, business groups (including the US Chamber of Commerce and NFIB, the latter of which joined by Buckeye Institute brief), consumer advocates, taxpayer rights groups, and more. Some of the briefs focus on the argument that the County’s actions here violate the Excessive Fines Clause of the Eighth Amendment, rather than on the Takings Clause. For a complete list and links to the briefs, see here.

Rarely do we see such a broad coalition supporting judicial protection for property rights. But it has come together in both this case and Tyler. I am guardedly optimistic the Court will reach the right result here. It might even be unanimous, as the Tyler decision was.

I am grateful to the other takings scholars in our group for their help in writing the brief, and to Daniel Suhr of Hughes & Suhr LLC for his invaluable assistance with editing, formatting, and filing.