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The United States Supreme Court has granted certiorari in Pung v. Isabella County, a landmark property rights case led by attorney Philip L. Ellison of Outside Legal Counsel PLC. The petition asks the Court to resolve what “just compensation” means after a tax-foreclosure sale and whether massive equity losses can also violate the Eighth Amendment’s Excessive Fines Clause.
The case arises from a long-running dispute over Michigan’s Principal Residence Exemption (PRE) on the Pung family home. After the local assessor revoked the PRE for 2012, the then-County Treasurer, Steven Pickens, proceeded to foreclose over an alleged (but not actually owed) tax delinquency of about $2,241.93. The home — assessed at $194,400 at the time — was auctioned by Isabella County for only $76,008 and quickly resold by the purchasing speculator for approximately $195,000. The County retained the auction proceeds beyond the alleged debt, wiping out more than $118,000 in owner equity. Today, the home has greatly increased in value.
Michael Pung, as personal representative of the estate, filed suit under 42 U.S.C. § 1983. The district court recognized a taking but limited recovery to the “surplus proceeds” (auction price minus taxes and charges), and the Sixth Circuit affirmed thereby setting the stage for Supreme Court review.
Takings Clause (Fifth Amendment): Is “just compensation” measured by the fair market value of the equity taken (here, the home’s value minus the small debt), or only by the surplus proceeds realized at a distressed, government-run auction?
Excessive Fines (Eighth Amendment): When government keeps value far exceeding any tax debt, does that operate as a punitive, grossly disproportionate forfeiture barred by the Excessive Fines Clause?
The outcome will affect homeowners and counties nationwide. Using fair market value would compensate owners for all equity taken; using surplus-only lets governments rely on depressed auctions that destroy equity while minimizing payouts. The Court’s decision will clarify the measure of compensation and whether excessive-forfeiture safeguards apply in tax-foreclosure settings.
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