in Re Petition of Tuscola County Treasurer for Foreclosure

Citation: Not availableDocket: 328847

Court: Michigan Court of Appeals; November 9, 2016; Michigan; State Appellate Court

Original Court Document: View Document

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The Michigan Court of Appeals reviewed a case involving the Tuscola County Treasurer's petition for foreclosure against Jennifer A. Dupuis due to unpaid property taxes from 2011 and 2012. Dupuis received a financial hardship deferral requiring her to pay the 2011 taxes by June 1, 2014, and to make monthly payments for the 2012 taxes. However, she failed to comply, leading the Treasurer to file a foreclosure petition on May 14, 2014. Dupuis was notified of a show-cause hearing on January 21, 2015, and a foreclosure hearing on February 2, 2015, both of which she acknowledged receiving. The court issued a final judgment of foreclosure on February 2, 2015, establishing a deadline of March 31, 2015, for her to pay the delinquent taxes to avoid losing her property.

Dupuis did not pay the taxes by the deadline, and an auction was scheduled for August 26, 2015. On August 3, 2015, she filed a motion to conditionally set aside the foreclosure judgment, citing personal hardships and a misunderstanding regarding payment deadlines. She claimed to have funds available to settle the tax deficiency and had secured legal assistance. The Treasurer opposed the motion, asserting the court lacked jurisdiction post-judgment and that Dupuis's situation was a result of her own actions. However, during the hearing on August 10, 2015, the circuit court granted Dupuis's motion, citing its "equitable jurisdiction" and deeming it appropriate to do so. The appellate court ultimately reversed and vacated this order.

The court acknowledged uncertainty regarding its jurisdiction but opted to act appropriately by granting the respondent conditional relief from a foreclosure judgment. This order required the petitioner to return the property to the respondent upon payment of all outstanding taxes, interest, penalties, and fees by August 20, 2015, which the respondent fulfilled, preventing any auction. 

The standard of review for jurisdiction is de novo, examining the circuit court's authority to issue the order. The petitioner argued that the circuit court lacked jurisdiction for this order, a view the court concurred with, stating that jurisdiction is defined as a court's power to hear and decide cases and must be recognized even if not raised by the parties involved.

Circuit courts have original jurisdiction over civil claims unless explicitly restricted by law. In this instance, the circuit court's capacity to conditionally set aside a foreclosure judgment under the General Property Tax Act (GPTA) was scrutinized. Relevant provisions of the GPTA stipulate the timing of judgment entries, expiration of redemption rights, and the finality of judgments regarding foreclosure. Specifically, judgments must be made final by a specified date, and once made, they cannot be modified or stayed past the designated deadlines unless specific exceptions apply, which do not pertain to this case.

MCL 211.78k(6) establishes that if forfeited delinquent taxes, interest, penalties, and fees are not paid by March 31 following a foreclosure judgment or within 21 days in a contested case, absolute title to the property vests in the foreclosing governmental unit. This title is not subject to any liens and cannot be stayed or invalidated except under specific subsections. MCL 211.78k(7) allows for appeals to the court of appeals from the circuit court's foreclosure orders, with the judgment stayed during the appeal process. MCR 2.612(C)(1) permits relief from judgments under certain conditions, including any justifiable reason. 

In In re Petition by Wayne Co Treasurer, the Michigan Supreme Court addressed constitutional issues when a church did not receive proper notice of foreclosure due to the treasurer's failure to comply with notice requirements. The court found that the circuit court had granted relief from the foreclosure judgment, which was contested by third parties. The Supreme Court ultimately determined that MCL 211.78k(6) limits the circuit court's jurisdiction to alter foreclosure judgments if the property owner fails to redeem or appeal within the designated timeframe. This statute aims to ensure finality in foreclosure judgments and expedite the return of properties to the tax rolls. If a property owner misses these deadlines, their only recourse is to seek monetary damages for lack of notice, while the statute generally upholds due process standards in foreclosure procedures.

The Supreme Court determined that MCL 211.78k, which limits a circuit court's jurisdiction to modify foreclosure judgments, is unconstitutional when it results in property deprivation without due process. Specifically, the statute encompasses all foreclosures, including those lacking minimum due process, rendering its jurisdictional limitations problematic. While MCL 211.78k is valid when the foreclosing governmental unit complies with notice provisions, violations of constitutional notice requirements allow property owners to challenge foreclosure judgments. The Court concluded that when adequate notice is not provided, the circuit court retains jurisdiction to modify the foreclosure judgment, but it lacks such jurisdiction when adequate due process was afforded. 

In this case, the circuit court could not modify a foreclosure judgment from February 2, 2015, as the respondent did not appeal or pay overdue taxes by the redemption deadline. Therefore, the court's jurisdiction to alter the judgment was extinguished, and the attempt to relieve the judgment contradicted the statute's intent for finality. Moreover, the due-process exception referenced in prior rulings does not apply here, as the respondent received notice of the foreclosure and did not argue the lack of adequate notice or due process deprivation.

There was no due-process violation, which resulted in the circuit court lacking jurisdiction to modify the foreclosure judgment under the due-process exception from Wayne Co Treasurer. The respondent's cross-appeal claims that MCL 211.78k(5)(g) is unconstitutional due to a violation of the separation of powers doctrine. However, statutes are presumed constitutional unless their unconstitutionality is clearly demonstrated, placing the burden of proof on the party asserting the statute's invalidity. The Michigan Constitution delineates the powers of government into three branches and assigns the authority for establishing court procedures to the Supreme Court, while substantive law is the domain of the Legislature. The Supreme Court cannot enact rules that alter substantive law. If a court rule contradicts legislative public policy, the legislative principle must prevail. The Supreme Court's authority in procedural matters is supreme only when the conflicting statute does not reflect any legislative policy beyond judicial efficiency. The respondent's argument against MCL 211.78k(5)(g) also implicates MCL 211.78k(6), which stipulates that fee simple title vests in the foreclosing governmental unit post-redemption and that the foreclosure judgment cannot be altered after this period. The Supreme Court has clarified that MCL 211.78k(6) limits the circuit court's jurisdiction regarding foreclosure judgments. Ultimately, the argument that this statute infringes upon the Supreme Court's rule-making authority is rejected, as it has been previously upheld in the context of due-process challenges.

The Court clarified that if a respondent is denied due process, the circuit court can modify its judgment of foreclosure, establishing a limited exception for such cases. However, the Michigan Supreme Court did not address whether the statutory scheme in question violates the separation of powers doctrine. The court determined that the limitations on the circuit court's jurisdiction in MCL 211.78k(5)(g) and (6) do not violate this doctrine. The respondent argued that the statutory scheme interferes with the Supreme Court's established practices regarding final judgments, specifically referencing MCR 2.612(C)(1)(f), which allows for relief from judgment for any valid reason. The court disagreed, stating that the statutory provisions represent substantive law that restricts the ability of the circuit court to alter foreclosure judgments once the redemption period has expired. MCL 211.78k(6) aims to provide finality to foreclosure judgments and expedite the return of properties to tax rolls, demonstrating legislative intent to limit judicial jurisdiction in this area. Consequently, the circuit court lacked jurisdiction to grant conditional relief from the foreclosure judgment, leading to a reversal and vacating of the order.