A former property owner’s entitlement to surplus proceeds where the proceeds from a tax foreclosure sale exceed the amount owed; Rafaeli, LLC v Oakland Cnty; Constitutionality of allowing the foreclosing government unit to retain surplus proceeds pursuant to the General Property Tax Act (GPTA); Retroactivity; Pohutsky v Allen Park; Devillers v Auto Club Ins Ass’n; Whether the decision clearly established a new principle of law, resulting from overruling case law that was clear & uncontradicted; Adams v Department of Transp; Whether Rafaeli applies retroactively; Proctor v Saginaw Cnty Bd of Comm’rs
The court held that the trial court did not err by finding Rafaeli applied retroactively. Plaintiffs-property owners claimed defendants-county and treasurer foreclosed on their property under the GPTA because of delinquent taxes, unpaid assessments, fees, penalties, and/or interest. Following the foreclosures, the properties were sold at auction. According to plaintiffs, the sale prices exceeded the taxes, fees, penalties, and interest they owed, which resulted in a surplus of funds. They alleged entitlement to receive the excess funds under the holding of Rafaeli. The trial court denied defendants’ request to dismiss plaintiffs’ claims, finding that because Rafaeli did not establish a new rule of law it applied retroactively. On appeal, the court rejected defendants’ argument that the trial court erred because Rafaeli should only apply prospectively or with limited retroactivity, and therefore, it did not apply to plaintiffs’ claims. “Proctor did not presume to address every possible case and circumstance nor did it limit its retroactivity to only the matters before” the court in that case. To remove uncertainty, the court held that “Rafaeli did not announce a new rule of law but returned the law to that which was recognized at common law and by the ratifiers of the Michigan Constitution . . . and should be given full retroactive effect.” Further, Rafaeli applied to this case “even if not given full retroactive effect because the instant case was filed after Rafaeli was decided.” The parties were “under the misconception that Rafaeli would need retroactive effect in order to apply to the instant case, apparently because the foreclosure sale at issue in the instant case occurred before our Supreme Court’s Rafaeli decision. But for the purposes of this analysis, the relevant date is when plaintiffs filed their complaint commencing the case, not when the underlying conduct at issue in the complaint occurred.” Thus, because they filed this "case after Rafaeli was issued, Rafaeli applies regardless of whether that judicial decision is applied retroactively or prospectively.” Affirmed.
Full Text Opinion
State Bar of Michigan
306 Townsend St
Lansing, MI 48933-2012