Supreme Court Decision Syllabus (SCOTUS Podcast)

PUNG v. ISABELLA COUNTY (Tax Sale/Gvmt Forclosure/Takings)

Attorney RJ Dieken, Loki Esq Law, Montana Season 2025 Episode 54

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The proper baseline for measuring “just compensation” following a tax sale is the auction sale price, not the property’s hypothetical fair market value, at least when the sale is fairly conducted in light of the country’s history of tax sales. Pp. 4–11.

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Hello, this is RJ Deakin, reading the Supreme Court of United States opinion syllabus in Pung, personal representative of the estate of Pung, versus Isabella County, Michigan. Sortiari to the United States Court of Appeals for the Sixth Circuit, argued February 25th, 2026, and decided June 23rd, 2026. The Pung family owed $2,241.93 in real property taxes. So local tax authorities in Isabella County, Michigan, initiated foreclosure proceedings and sold the Pung home, which was assessed at $194,400 for tax purposes. They sold for $76,008 at public auction. Michael Peng sued in federal court, and the district court granted Peng partial summary judgment on his Fifth Amendment claim. The court held that Peng should receive only the surplus proceeds from the tax sale, i.e., the difference between the sale price and the tax debt, not the property's fair market value. The district court also rejected Peng's claim under the Eighth Amendment Excessive Fines Clause. The Sixth Circuit affirmed. The Supreme Court held that the decision is vacated and remanded, and Justice Alito delivered the opinion. Held. The proper baseline for measuring just compensation following a tax sale is the auction sale price, not the property's hypothetical fair market value, at least when the sale is fairly conducted in light of the country's history of tax sales. For hundreds of years, English and American law have allowed the seizure and sale of property as a tax collection method, provided that the government return any surplus proceeds to the debtor. Federal statutes from the early days of the Republic applied this rule, as did this court's precedence. See for uh United States v. Taylor, United States v. Lawton, Nelson v. City of New York, BFP vs. Resolution Trust Corporation. Neither history nor precedent supports Pung's contrary argument. Pung's reliance on a recent concurrence by a justice of the Supreme Court of Michigan interpreting the state constitution does not shed much light on the taking takings clause's meaning. See Raphaeli LLC versus Oakland County. That's uh the Michigan court. Uh in a Viviano concurrence. Cases about the seizure of multiple pieces of property do not help him because the county sold just one parcel of Pung's real property, and Pung does not argue that the parcel could have been subdivided. Eminent domain cases do not help him either, because even in that context, this court has refused to designate market value as the sole measure of just compensation. It's United States versus 564.54 acres of Monroe and Pike County land. Fair market value is not an appropriate measure of just compensation in this context because owners can generally avoid tax sales. Pung's fair market value theory would impose unprecedented burdens on jurisdictions that wish to collect unpaid taxes and might well make tax sales impractical. Under Peng's rule, a tax sale would often net the government a loss paid out to the delinquent taxpayer himself, rendering tax sales infeasible as debt collection mechanisms. That Pung's novel interpretation of the takings clause would eliminate this long-standing practice is strong evidence that his interpretation is incorrect. The court will not resolve any of Peng's newfound contentions that the procedure the county followed in seizing and selling his property was unfair. The Sixth Circuit may address on remand any such arguments properly preserved in that court. The court rejects Peng's argument that the county violated the Eighth Amendment Excessive Fines Clause by failing to compensate him for his property's fair market value. Forfeiture of property can be a fine for purposes of the Eighth Amendment if it serves in part to punish, that's Austin v. Pung lacks precedent or historical evidence suggesting that a tax sale, which is fairly conducted in light of our nation's history, would violate the Eighth Amendment. In addition, imposing Pung's fair market value rule under the Eighth Amendment would entail the same drastic consequences as imposing the rule under the Fifth Amendment. The decision is vacated and remanded. Justice Alito delivered the opinion of the court, in which Chief Justice Roberts and Justices Sotomayor, Kegan, Gorsuch, Kavanaugh, Barrett, and Jackson joined, and in which Justice Thomas joined except as to parts part two B. Justice Sotomayor filed a concurring opinion in which Justice Gorsuch and Justice Jackson joined. Justice Thomas filed an opinion concurring in part and concurring in the judgment, in which Justice Gorsuch joined, except as to note one. Thanks for listening. We got a bunch here, so uh buckle up. Hopefully we'll be posting them soon.