Tax foreclosure; Surplus proceeds; General Property Tax Act; MCL 211.78t; Hathon v Michigan; MCL 211.78t(11); Pre-Rafaeli v Oakland Cnty claims; Takings Clause; Const 1963, art 10, § 2; Rafaeli retroactivity; MCL 211.78t retroactivity; Schafer v Kent Cnty; Interest; Attorney fees; 5% sales commission; Dismissal without prejudice; MCR 2.116(C)(8)

The court held that plaintiffs first had to use MCL 211.78t to recover surplus proceeds from pre-Rafaeli tax-foreclosure sales, but the trial court erred by dismissing the plaintiff-appellant’s remaining claims with prejudice. Defendants foreclosed on plaintiffs’ properties before Rafaeli, and retained surplus sale proceeds. The trial court dismissed plaintiffs’ state tort and state and federal constitutional claims with prejudice. On appeal, the court held that Schafer and Hathon controlled because “MCL 211.78t creates a controlling and structured system” and is the “exclusive means of obtaining surplus proceeds.” It also noted that Hathon required “[p]roperly notified claimants” to “first utilize the statutory process” before challenging the adequacy or application of that process. The court rejected appellant’s attempt to avoid MCL 211.78t based on the pre-Rafaeli timing of the foreclosure sales, reasoning that Schafer and Hathon addressed pre-Rafaeli claims and were binding. But the court declined to decide whether MCL 211.78t provided constitutionally adequate relief as to interest, attorney fees, and the 5% sales commission because those challenges were premature until the statutory process was completed. Finally, the court held that dismissal should have been without prejudice because the trial court did not adjudicate the merits, and appellant should “retain [her] prerogative to reassert” claims to the extent the statutory remedy proved inadequate. Affirmed in part, reversed in part, and remanded.