Retroactive application of Rafaeli, LLC v Oakland Cnty; MCL 211.78t; Limitations period for surplus-proceeds claims; MCL 211.78l; Schafer v Kent Cnty; Exclusivity of state procedure & prematurity of federal takings claims; 42 USC § 1983; Hathon v State of Michigan; Due-process notice triggering use of §78t; In re Kent Cnty Treasurer for Foreclosure; Measure of recovery limited to “remaining proceeds”; MCL 211.78t(12)(b); Effect of Nelson v City of NY & Tyler v Hennepin Cnty, MN on surplus proceeds; Foreclosing governmental unit (FGU)

On remand from the Michigan Supreme Court, the court held that: (1) claimants seeking surplus proceeds from pre-Rafaeli tax-foreclosure sales must use the exclusive state procedure in MCL 211.78t, (2) circuit courts must apply Schafer’s limitations framework and decide whether the FGUs provided constitutionally sufficient notice, (3) federal takings and interest claims are premature, and (4) recovery is limited to “remaining proceeds” as defined in §78t. The consolidated cases involved former owners whose properties were foreclosed and sold. In Proctor I, the Court of Appeals recognized viable state claims to surplus proceeds and potential interest, but the Supreme Court vacated Parts II-B and II-C and remanded for reconsideration in light of Schafer and Hathon. On appeal, the court first explained that Rafaeli applies retroactively and, critically, that §78t “‘applies retroactively to all claims that arise from tax-foreclosure sales prior to Rafaeli[,]’” making it the path plaintiffs must follow. By statute, that “‘section is the exclusive mechanism for a claimant to claim and receive any applicable remaining proceeds under the laws of this state.’” The court directed trial courts to use Schafer’s limitations rule permitting claims “filed within the balance of time remaining under the applicable statutes of limitations as of” 12/22/20, running from the date of Schafer, and to account for any tolling during the appellate proceedings. Relying on Hathon (and Nelson), the court held that “properly notified claimants must first utilize the statutory process provided by MCL 211.78t” before pursuing § 1983 remedies or interest. The court remanded for fact-finding on: (1) whether plaintiffs preserved their rights by giving §78t notice, and (2) whether the FGUs provided constitutionally adequate notice sufficient to trigger plaintiffs’ obligation to use §78t, noting the lower courts may consider arguments about “actual notice.” Finally, the court reaffirmed that compensation under Michigan law is limited to “remaining proceeds” as defined in §78t(12)(b), rejecting claims for additional sums such as loss of equity. Reversed in part and remanded.