Action alleging an unconstitutional taking of real property under 42 USC § 1983; Whether the federal court had subject-matter jurisdiction; Williamson Cnty. Reg’l Planning Comm’n v. Hamilton Bank of Johnson City; Whether a takings claim under the General Property Tax Act (MCL 211.78 et seq.) can be brought in federal court upon the taking of property without just compensation; Wayside Church v. Van Buren Cnty.; Rafaeli, LLC v. Oakland Cnty. (Rafaeli I & II); Knick v. Township of Scott; Whether the Tax Injunction Act (TIA) barred federal jurisdiction; 28 USC § 1341; Rosewell v. LaSalle Nat’l Bank; Direct Mktg. Ass’n v. Brohl; Hibbs v. Winn; Coleman ex rel. Bunn v. District of Columbia (D DC); Islamic Ctr. of Nashville v. Tennessee; Whether the doctrine of comity barred federal jurisdiction; Chippewa Trading Co. v. Cox; Fair Assessment in Real Estate Ass’n, Inc. v. McNary; National Private Truck Council, Inc. v. Oklahoma Tax Comm’n; Dictum; BDT Prods., Inc. v. Lexmark Int’l, Inc.; Distinguishing a holding from dictum; United States v. Hardin; United States v. Swanson; Metropolitan Hosp. v. United States Dep’t of Health & Human Servs.

[This appeal was from the ED-MI.] Holding that neither the TIA nor the related doctrine of comity barred plaintiff-property owner’s suit from proceeding in federal court, the court reversed and remanded. He brought this action after the state foreclosed on his property (for falling behind approximately $1,100 on his property taxes), sold it at auction for approximately half of its fair market value, and kept all the proceeds. The district court agreed with defendants that plaintiff could not bring his claim in federal court and dismissed it. On appeal, the court first found that the “TIA does not preclude the exercise of federal jurisdiction in this case because [plaintiff] is not attempting to enjoin Michigan’s assessment, levy, or collection of a state tax.” It noted that “this is a case about post-collection federal constitutional violations that may proceed in federal court, not a tax case barred by the TIA.” Plaintiff was not seeking to “anticipatorily restrain collection of a state tax.” He also was not “bringing a facial constitutional challenge to Michigan’s tax-collection procedures.” Rather, the case was about “refund procedures, not collection procedures. Moreover, the excess sale proceeds at issue in this lawsuit arise from a tax-foreclosure sale, but they are not tax proceeds.” Any funds in excess of his “$1,100 tax debt—the only funds at issue in this lawsuit—represent surplus property, not tax proceeds.” The court also found that “the principle of comity between the federal courts and state governments does not bar this suit in federal court because [plaintiff] does not challenge the validity of Michigan’s tax system.” It noted that a favorable outcome for him would “not prevent Michigan from foreclosing on and selling property to recover delinquent taxes.” In addition, “takings suits in federal courts to recover excess equity as a result of state tax foreclosure sales do not violate” judicial federalism, and plaintiff “may invoke the protection of the federal courts to seek compensation for an alleged unconstitutional taking by a local government in violation of the Fifth Amendment.” The court found that the “Wayside Church majority’s discussion on the TIA and comity” should be treated as dictum “since the court concluded in its primary holding that it lacked jurisdiction based on Williamson County.”