Tax foreclosure; Surplus proceeds; General Property Tax Act; MCL 211.78t; Exclusive mechanism; Takings Clause; Const 1963, art 10, § 2; Retroactivity; Rafaeli v Oakland Cnty; Schafer v Kent Cnty; Hathon v State of MI; Federal takings claims; 42 USC § 1983; Foreclosing governmental unit (FGU)

The court held that MCL 211.78t provides the exclusive state-law mechanism for plaintiffs to recover surplus proceeds from tax-foreclosure sales, and that the trial court properly dismissed their complaint without prejudice because they filed suit without first using that statutory process. Plaintiffs alleged defendant-Kalamazoo County retained surplus proceeds from tax-delinquency foreclosure sales between 2013 and 2020. They brought state and federal constitutional claims and related state-law claims in circuit court. The court first held that plaintiffs were required to proceed under MCL 211.78t because Schafer described that statute as creating “a controlling and structured system for adjudication of tax-foreclosure disputes as the exclusive means of obtaining surplus proceeds,” and Hathon reaffirmed that claimants “must initiate the statutory process” by providing notice to the FGU. The court rejected plaintiffs’ argument that Hathon was not binding, explaining that it was a final order with facts and reasons and therefore “binding on this Court.” The court also held that plaintiffs’ pre-Rafaeli sales did not avoid the statute because Schafer held both Rafaeli and MCL 211.78t apply retroactively. Finally, the court held that federal law did not excuse compliance with MCL 211.78t because the statute gives former owners “the opportunity to recover” surplus proceeds and requires payment if the statutory process is followed, unlike administrative procedures that effectively immunize officials from federal claims. Because plaintiffs failed to first follow MCL 211.78t, dismissal without prejudice was proper. Affirmed.