Compensable “taking” under 1963 Const, art 10, § 2; Unjust enrichment claim following a tax-foreclosure sale under the General Property Tax Act (GPTA); Jackson v Southfield Neighborhood Revitalization Initiative; Yono v County of Ingham; Rafaeli, LLC v Oakland Cnty; Foreclosing governmental unit (FGU)

On remand for reconsideration in light of Jackson and Yono, the court held that the “trial court erred by summarily disposing of all of [plaintiff-]Kakalia’s claims asserted in its third amended complaint.” At issue was whether Kakalia had a compensable takings claim under Article 10, § 2 “and/or a claim for unjust enrichment following a tax-foreclosure sale of its property under the former provisions of the” GPTA. Its “property was not sold at a public auction; instead” defendant-county exercised its statutory election to purchase it from defendant-Otsego County Treasurer, “the FGU, for the minimum bid under MCL 211.78m(1), as amended by 2014 PA 501.” In Jackson, the Supreme Court “extended the principles outlined in Rafaeli to cases where the property was not offered for sale at public auction and, instead, a governmental unit other than the state purchased a tax-foreclosed property from the FGU for the minimum bid under former MCL 211.78m(1).” The Supreme Court held “that a minimum-bid transfer between governmental units under former MCL 211.78m constitutes a taking under the Takings Clause of the Michigan Constitution ‘if the value of the property retained exceeds what the government was owed.’” But it “‘reaffirm[ed] the Rafaeli Court’s rejection of the full fair market value of plaintiffs’ properties as the appropriate measure of damages for a tax foreclosure taking when a property was offered for sale at a public auction.’” Thus, the court found that “to the extent that the value of Kakalia’s property exceeded the amount that Kakalia owed in delinquent taxes and attendant fees, the government received a surplus value and thus there was a taking without just compensation in violation of the Michigan Constitution’s Takings Clause.” It noted that “MCL 211.78t, which was added by 2020 PA 256, outlines how a former property owner or other claimant may claim an interest in the remaining proceeds following a sale of foreclosed property and is the ‘exclusive mechanism for a claimant to claim and receive any applicable remaining proceeds under the laws of this state.’ Although MCL 211.78t applies retroactively, it does not apply when a governmental unit has exercised its right of first refusal under former MCL 211.78m(1) and purchased the property from the FGU for the minimum bid.” Thus, the court concluded that “the MCL 211.78t claims process” did not apply here. Instead, Kakalia “should proceed through standard processes of inverse condemnation, separate from the statutory process of MCL 211.78t.” Vacated and remanded.