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Court of Appeals rules against ACLU in Detroit tax foreclosure case

Sep 22, 2017

The Michigan Court of Appeals has ruled against plaintiffs in a discrimination lawsuit against Wayne County over tax foreclosures.

The ACLU filed the lawsuit on behalf of a group of Detroit homeowners. It alleges that cities in Wayne County failed to perform required property tax assessments for years, over-assessing homes and forcing homeowners into tax foreclosure. The plaintiffs argue that these actions violated the Fair Housing Act because they disproportionately affected African-American homeowners. 

The court affirmed a lower court decision that it lacked jurisdiction in the case. The lower court said, and the Court of Appeals agreed, that the plaintiffs were challenging the defendants' equalization process, and that the Michigan Tax Tribunal has exclusive jurisdiction in that matter. 

Bernadette Atuahene is a visiting professor of law at Wayne State Law School who has researched Detroit tax foreclosures. She found that between 2009 and 2015, in each of those years, between 55% and 85% of properties were being assessed at more than 50% of fair market value -- a violation of Michigan's constitution

"The case was never heard on the merits," she said. "This is just basically a conversation between the lawyers and the courts about where the case should be brought. Should it be brought in the Michigan Tax Tribunal, or should it be brought in state court?"

Atuahene said the reason the plaintiffs' attorneys -- the ACLU, the NAACP Legal Defense Fund, and the law firm Covington and Burling -- did not file initially in the Michigan Tax Tribunal were twofold. First, the Michigan Tax Tribunal is a tribunal, not a court, and in the Fair Housing Act, it is stated that claims must be litigated in a court. The second reason is that the Michigan Tax Tribunal does not have a class-action mechanism.

"Instead, taxpayers have to appeal their decisions one by one, which gives no relief for systemic harm, which is what is happening here in Detroit," says Atuahene.

The Michigan ACLU has filed two lawsuits related to Detroit tax foreclosures. One, against Wayne County, was the subject of this decision. A separate case, filed against the city of Detroit, is moving forward.