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Butler v. Michigan State Disbursement Unit
Citations: 738 N.W.2d 269; 275 Mich. App. 309Docket: Docket 271818
Court: Michigan Court of Appeals; August 29, 2007; Michigan; State Appellate Court
Marcelle Butler appealed a Court of Claims order that granted summary disposition in favor of the Michigan State Disbursement Unit (MSDU), responsible for collecting and disbursing child support. Butler argued that MCL 400.238(2), which allows the MSDU to retain accrued interest on support payments for operational costs, was unconstitutional as it deprived her of property without just compensation. The court found that although the retention of interest constituted a "taking," Butler's financial loss—83 cents in 2005—was negligible. The court relied on precedent from *Brown v. Legal Foundation of Washington* to affirm that the minimal loss did not equate to a denial of just compensation, emphasizing that there is no de minimis exception under constitutional takings law. The court's review of the summary disposition was conducted de novo, confirming that there were no genuine material facts in dispute, and it upheld the ruling that even with a recognized taking, the small amount at stake did not necessitate compensation. The determination of just compensation for the plaintiff hinges on the U.S. Supreme Court's ruling in Brown, which established that "just compensation" under the Fifth Amendment is based on the property owner's loss, not the government's gain. This principle is followed in Michigan law, as seen in relevant cases. Just compensation aims to restore the property owner to their original position without enriching either party at the other's expense. In Brown, the Supreme Court identified the transfer of interest from pooled client funds to the state as a taking but emphasized that the issue was the absence of just compensation for that taking. The Court specified that compensation should reflect the property owner's net loss, factoring in any administrative costs and accrued interest. Subsequent cases affirmed that when calculating just compensation for interest taken by the state, a plaintiff's net loss is determined by subtracting accrued interest from administrative costs. In the present case, the court found that the defendant's administrative costs exceeded the plaintiff's accrued interest, resulting in a net loss of zero for the plaintiff. The plaintiff’s accrued interest in 2005 was just 83 cents, while the cost for the defendant to process a payment was 86 cents, thus affirming that no compensation was owed. The court upheld the defendant's motion for summary disposition, concluding that the plaintiff's property was not taken without just compensation and found no need to address alternative arguments for affirmation. The decision was affirmed unanimously by the judges involved.