Director, Center for Supreme Court AdvocacyNational Association of Attorneys General
This Report summarizes an opinion issued on January 23 (Part I); and cases granted review on December 27, 2022, and January 13, 2023 (Part II).
Case Granted Review: Tyler v. Hennepin County, MN, 22-166
Tyler v. Hennepin County, MN, 22-166. This case involves the confiscation and sale of real property to satisfy debts owed to the government. The Court will resolve two questions: (1) “Whether taking and selling a home to satisfy a debt to the government, and keeping the surplus value as a windfall, violates the Takings Clause?” (2) “Whether the forfeiture of property worth far more than needed to satisfy a debt plus interest, penalties, and costs, is a fine within the meaning of the Eighth Amendment?” Several States, including Minnesota, authorize their agencies or municipalities to satisfy debts owed to the government pertaining to real property by confiscating the title to, and any equity accrued in, that property—regardless of whether the amount confiscated exceeds the debt owed. In this action, petitioner Geraldine Tyler filed a putative class action challenging this practice as unconstitutional after a Minnesota county seized her condominium to satisfy a $15,000 property tax arrearage, sold the property for $40,000, and kept the total proceeds, including the $25,000 surplus. A federal district court dismissed the action for failure to state a claim, and the Eighth Circuit affirmed. 26 F.4th 789.
The Eighth Circuit first determined that any common-law property interest Tyler might have had in the surplus was abrogated by a Minnesota statute that permitted such surpluses to be distributed among various entities. Without a property interest in the surplus, the court explained, she could not state a claim that the surplus had been unconstitutionally taken. As to the excessive fines claim, the court adopted the district court’s analysis, which acknowledged that property foreclosure partially serves to deter tax delinquency, yet concluded that it is not a punishment (and therefore not a fine) under the Eighth Amendment.
Tyler seeks reversal on both fronts. She claims that state and federal courts are divided on the Takings Clause issue. On the merits, she argues that history dating back to English tradition evinces a common law property right in any surplus from property foreclosed to satisfy government debts. Minnesota recognizes this common law right, and under Supreme Court precedent, governments cannot abrogate this right via statute. In reaching a contrary result, Tyler argues, the Eighth Circuit improperly relied on Nelson v. City of New York, 352 U.S. 103 (1956), which rejected a takings argument because there, unlike here, the law provided the individual with an opportunity to reclaim the surplus proceeds. As to the excessive fines claim, Tyler argues that Minnesota’s tax-forfeiture statutory regime, which authorized the county to retain her surplus, imposes a fine within the meaning of the Eighth Amendment’s Excessive Fines Clause. This regime, she explains, is at least partially punitive because it goes beyond compensation and also serves to deter future tax delinquency. Indeed, she points out, the regime is analogous to a civil forfeiture scheme that the Court has previously characterized as punitive, and it fits within the Court’s general understanding of punishment in the securities context.
The county, for its part, disagrees that state and federal courts are divided on the Takings Clause issue, and, at any rate, contends that Tyler lacks a property right in the surplus under state or common law. Instead, she relinquished any property right when she did not attempt to reclaim her home after its foreclosure sale, as permitted by Minnesota law. Tyler’s contrary argument, the county maintains, is squarely foreclosed by Nelson, in which the individual similarly forewent an opportunity to reclaim surplus proceeds after a foreclosure sale. With regards to the excessive fines claim, respondent argues that Minnesota’s statutory regime is remedial rather than punitive, even when it results in large surpluses, and is thus distinguishable from other forfeiture schemes that the Court has deemed punitive.