Julia D. Mahoney
Professor of Law
The United States Supreme Court is scheduled to hear oral argument on April 26 in Tyler v. Hennepin County, Minnesota, a major property rights case that concerns the constitutionality of a government’s retention of the surplus when selling a home in satisfaction of a homeowner’s debt. The latest in a series of high-profile property rights cases adjudicated by the Roberts Court, Tyler promises to shed light on an important—and contentious—question: What are the limits of the powers of the individual states to define “property” for purposes of the Takings Clause of the Fifth Amendment? Tyler may also furnish valuable clues about the Court’s use of “history and tradition” in constitutional analysis.
The facts of the dispute are heart-rending. In 2010, then octogenarian (and now nonagenarian) Geraldine Tyler, concerned for her health and safety, moved out of a condominium she owned and into a senior living facility. Starting the next year, Tyler neglected to pay property taxes on her former home. By 2015, Tyler owed Hennepin County, Minnesota a total of $15,000 in back taxes, penalties, interest and other costs. That year, the county government took “absolute title” to the condominium, which under Minnesota law had the effect of extinguishing all Tyler’s interests in the property. The following year, the county government auctioned the property for $40,000. In accordance with state law, Tyler received none of the proceeds.
Tyler sued, arguing that the government had taken her property, which she identifies as the difference between the $15,000 she owed for her non-payment of taxes (plus follow-on charges) and the $40,000 sale price. This taking of her “home equity,” according to Tyler, contravenes the Fifth Amendment to the United States Constitution, which provides: “[N]or shall private property be taken for public use, without just compensation.” Tyler also argued that the government’s retention of the “home equity” surplus constituted an “excessive fine” within the meaning of the Eighth Amendment.
A federal district court soundly rejected Tyler’s claims. “A litigant does not plead a viable takings claim,” wrote Judge Patrick J. Schiltz, “unless the litigant plausibly pleads that the government took something that belonged to her.”[1] Tyler, in the district court’s assessment, failed to do so, for nothing in state law, the most common source of property rights, “gives the former owner of a piece of property that has been lawfully forfeited to the state and then sold to pay delinquent taxes a right to any surplus.”[2] Nor could Tyler point to any other source of property rights, such as federal law, in the surplus. As for the excessive fines claim, the district court concluded that “Minnesota’s tax-forfeiture scheme bears none of the hallmarks of punishment” and thus the confiscation of Tyler’s “home equity” did not constitute a “fine.”[3]
The U.S. Court of Appeals for the Eighth Circuit affirmed the district court’s judgment. Writing for a unanimous panel, Judge Steven M. Colloton stated that whatever common law rights to surplus equity after a tax forfeiture sale a former owner might once have enjoyed under Minnesota law, those rights were long ago “abrogated by statute.”[4] Because state law recognizes no property interest in surplus proceeds from sales “conducted after adequate notice to the owner,” there could be no unconstitutional taking.[5] On the excessive fines question, the appellate court expressed full agreement with the district court’s “well-reasoned” order.[6]
In her efforts to convince the Supreme Court to reverse the Eighth Circuit and remand the case for further proceedings on her takings and excessive fines claims, Tyler is represented by the Pacific Legal Foundation (PLF). A powerhouse public interest law firm, PLF has racked up an impressive record of victories before the Court, including one in Cedar Point Nursery v. Hassid, a significant takings case, in 2021.[7] In opposition, Hennepin County has enlisted some heavy duty legal talent of its own in the form of a team of Hogan Lovells lawyers led by former Acting Solicitor General Neal Katyal.
PLF’s merits brief acknowledges that state law is a “common source” of constitutionally recognized property interests while emphasizing that it cannot be the “exclusive” source, for that would enable the states to evade the Constitution by “legislatively redefining” property.[8] Hogan Lovells directs the Court’s attention to the fact that the forfeiture at issue is the result of a failure to pay taxes. As its brief details, the taxing power is a “core attribute” of state sovereignty and the Court has traditionally accorded states “substantial deference” in evaluating the constitutionality of exercises of that power.[9]
Both PLF and Hogan Lovells contend that “history and tradition” should weigh heavily in the Court’s analysis. But they agree on little else. On the takings issue, PLF points to numerous Anglo-American legal sources, including the Magna Carta, that stand for the principle that tax collectors can only seize property to satisfy the actual debt to the government and must return any excess proceeds in the event of a sale. Hogan Lovells, on the other hand, draws on an extensive historical record to argue that forfeiture to the government of an owner’s entire interest in a property for failure to pay taxes is deeply rooted in history and tradition. Similar forfeiture provisions have existed throughout American history, its brief points out, although admittedly such practices “have largely represented a minority rule.”[10] The two briefs also diverge on “history and tradition” with respect to the Eighth Amendment. Relying in part on recent scholarship indicating the “Founding generation had a more expansive understanding of ‘fines’ than” the Court’s precedents to date “have yet explored,” PLF advances the claim that the forfeiture of Tyler’s home equity merits treatment as a fine “subject to scrutiny under the Excessive Fines Clause.”[11] In response, Hogan Lovells argues that there are no Founding era sources directly on point that support the application of the Excessive Fines Clause to tax forfeitures.
It is not clear how the Court will rule on the questions presented. But one thing is certain: next week’s oral argument promises to be interesting.
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jmahoney@virginia.edu
[1] Tyler v. Hennepin Cnty., 505 F. Supp. 3d 879, 890 (D. Minn. 2020).
[2] Id. at 894.
[3] Id. at 897.
[4] Tyler v. Hennepin Cnty., 26 F.4th 789, 793 (8th Cir. 2022).
[5] Id.
[6] Id. at 794.
[7] 210 L. Ed. 2d 369, 141 S. Ct. 2063 (2021).
[8] Brief for Petitioner, Tyler v. Hennepin Cnty., 2023 WL 2339362 (U.S.), 9.
[9] Brief for Respondents, Tyler v. Hennepin Cnty., 2023 WL 2759804 (U.S.), 15.
[10] Id. at 16.
[11] Brief for Petitioner at 34.