In a unanimous opinion, the U.S. Supreme Court holds that local governments seeking forfeiture of property as compensation for a public debt may not profit from it beyond the amount a person owes. The case may have a significant impact on a broader array of forfeiture cases, such as when municipalities impound and auction off cars or other property taken from people who are unable to pay fines and fees.
Additionally, the concurrence warns lower courts against repeating the mistakes of the Eighth Circuit in this case, when analyzing the Excessive Fines Clause.
- Whether a Minnesota law permitting a county to take more than it is owed from a taxpayer constitutes a “taking” in violation of the Takings Clause of the Fifth Amendment.
- Whether the County’s excessive forfeiture–regardless of whether it serves a “remedial” purpose–constitutes an excessive fine in violation of the Eighth Amendment.
- A Minnesota law that permits a county to take more than it is owed from a taxpayer constitutes a “classic taking” in violation of the Takings Clause of the Fifth Amendment.
- Having ruled in favor of Tyler on her takings clause claim, the Court did not resolve Tyler’s excessive fines claim, though the concurrence strongly suggests Tyler would have also prevailed on that ground.
Ninety-Four-year-old Geraldine Tyler owned a one-bedroom condominium in Hennepin County, Minnesota, which she lived in for ten years before relocating to a senior community living facility in 2010. Tyler ceased payment of property taxes on the condominium, and by 2015 had accumulated a tax debt of $15,000. To satisfy the debt, Hennepin County foreclosed on Tyler’s property, selling it for $40,000. The county used the proceeds to extinguish the existing $15,000 debt but also kept the $25,000 net proceeds from the sale. Tyler filed a putative class action against Hennepin County arguing that the County had unconstitutionally retained the excess value of her home above her tax debt in violation of the Takings Clause of the Fifth Amendment and the Excessive Fines Clause of the Eighth Amendment.
The United States District Court for the District of Minnesota dismissed Tyler’s suit for failure to state a claim, and the Eighth Circuit Court of Appeals affirmed. The Supreme Court of the United States granted certiorari and a unanimous bench reversed in favor of Tyler. Justice Neil Gorsuch filed a concurring opinion which Justice Ketanji Brown Jackson joined.
A. Takings Clause
Under the Minnesota law, an owner forfeits the property interest in their home when they are delinquent on their property taxes. Accordingly, the State argued, Tyler’s tax payment delinquency stripped her of her property right, and therefore she had no interest protected by the Takings Clause. The Court summarily rejected this argument, citing history and precedent as a basis for characterizing the excess forfeiture by Hennepin County as a “classic taking” in violation of the constitution. “Property rights cannot be so easily manipulated,” Chief Justice Roberts opined.
Next, the County argued that Tyler had no property interest in the surplus because she constructively abandoned her home by failing to pay taxes. The Court rejected this argument as well, noting that the County failed to cite any case which held that failing to pay property taxes, without more, sufficiently constitutes abandonment. According to the Chief Justice, “[t]he County cannot frame that failure as abandonment to avoid the demands of the Takings Clause.”
The Court also disagreed with the Eighth Circuit’s holding that nothing in the Constitution prevents the government from retaining the surplus where the record shows adequate steps were taken to notify the owners of the charges due and the foreclosure proceedings.
B. Excessive Fines Clause
Because Tyler agreed that “relief under the Takings clause would fully remedy her harm” the majority declined to address the merits of her excessive fines claim.
However, a concurrence by J. Gorsuch, joined by J. Jackson, addressed the excessive fines claim squarely, noting that the excessive fines analysis undertaken by the district court and adopted by the Eighth Circuit “contain mistakes future lower courts should not be quick to emulate.” The concurrence specifically identifies and discusses three of those mistakes:
- Contrary to the holding of the lower courts, Supreme Court caselaw is clear that “any statutory scheme that serves in part to punish,” constitutes a fine for the purposes of the excessive fines clause—even if its primary purpose is remedial.
- It is legally irrelevant that the delinquent taxpayer may actually make money (from the surplus) as a result of the effectuation of the economic penalty, and that certainly does not render the tax-forfeiture scheme non-punitive.
- Even if the purpose of the tax-forfeiture scheme was solely to serve as a deterrent to taxpayers considering tax delinquency, that also does not render it non-punitive; a scheme may be punitive where it serves other goals of punishment.
You can read the Supreme Court’s decision here.
Tyler v. Hennepin County, Minnesota, et al.
Supreme Court of the United States
May 25, 2023
No. 22-166, 2023 WL 3632754