WASHINGTON — A recent U.S. Supreme Court decision in a case involving Hennepin County’s seizure and sale of a 94-year-old woman’s condo could unleash a torrent of lawsuits from homeowners whose property was seized under Minnesota’s forfeiture law, which the high court has ruled unconstitutional.
Several attorneys in Minnesota are seeking to file a class action suit in the U.S. District Court for the District of Minnesota on behalf of homeowners who say their property was unfairly seized, just like Geraldine Tyler, the plaintiff in the Supreme Court case.
Vildan Teske, a Minneapolis attorney, is among the lawyers hoping to represent plaintiffs like Tyler.
“I would expect there would be a significant number of them,” Teske said. “There are hundreds, if not thousands, of potential members of the class.”
Tyler owed Hennepin County about $15,000 in back taxes and fees for her condo and the county seized and sold her property for $40,000. Instead of returning the $25,000 difference between the sales price and what she owed, the county pocketed the balance, something state law allowed it to do.
In a rare 9-0 decision, the Supreme Court ruled last month that Hennepin County’s foreclosure of Tyler’s home was an unlawful taking and the state’s forfeiture law is unconstitutional.
“The taxpayer must render unto Caesar what is Caesar’s, but not more,” wrote Chief Justice John Roberts.
The Supreme Court remanded Tyler’s case to Minnesota’s District Court, where Teske and other lawyers hope to press for a class action. Teske said many of the people who have contacted her lost their property because of tax bills that “were relatively small compared to the value of the homes that they lost.”
She said forfeitures in the state impacted the most vulnerable – the elderly, disabled and people with low incomes and/or mental health challenges who are unable to defend their property rights.
There’s no way to know now how many Minnesotans would qualify for the class action Teske and her co-counsels are trying to organize. Minnesota’s forfeiture law dates back to 1935, but it would be up to the district court to determine a statute of limitation.
Sharon Sporleder, 68, who lost the home in Robbinsdale last winter, hopes to be in that class.
Sporleder had lived in the three bedroom, one bath home for 25 years. But she owed Hennepin County $20,603 in back taxes and fines. She said she was trying to work out a payment plan with the county to pay what she owed, but was unsuccessful. Sporleder was forced to leave the house and the property, valued at about $260,000.
“I feel I am being punished for something over which I have no control,” Sporleder said in a letter detailing her efforts to keep her home.
Carri Degidio, who had lived in the home with Sporleder as a tenant, said she stayed in the house until the sheriff evicted her, leaving most of her possessions and her two cats behind and herself temporarily homeless.
Degidio was eventually able to reclaim her cats and find a place to stay, but said the episode has left emotional scars.
“I am lost as to what the state of Minnesota does and who they help because its looking like they only help themselves,” Degidio said.
Hennepin County Assistant Administrator Dan Rogan said he could not provide any information “at this time” about Sporleder’s case. Rogan also said the Supreme Court’s decision will not stop Minnesota’s counties from seizing properties for back taxes – but they will no longer keep the excess equity.
“The U.S. Supreme Court decision does not prevent states from seizing property and selling it in order to collect taxes,” Rogan said. “Rather, the decision requires that a former owner be able to claim any ‘excess value’ that may exist in a property above the taxes and costs owing.”
Christina Martin, the attorney representing Tyler, who argued her case before the U.S. Supreme Court, said any Minnesota county that continued to keep excess equity in a foreclosure sale “would be subject to liability under the takings clause.” Martin works for Pacific Legal Foundation, a nonprofit that champions conservative or libertarian causes – like property rights.
Meanwhile, Ryan Brown, spokesman for the Minnesota Department of Revenue, said the department is “in the process of analyzing this decision and the potential impact to the tax forfeiture process.”
One thing is certain. Because of the Supreme Court’s decision, Minnesota’s forfeiture law must be changed. So must similar statutes in about a dozen other states.
Matthew Hilgart, spokesman for the Association of Minnesota Counties, said the state’s 87 counties are establishing a “work group” to review the findings of the high court’s decision and “figure out a way forward to make sure the new tax forfeiture mechanics don’t disproportionately place costs and burdens on fellow residents and taxpayers.”
The Supreme Court ruled Minnesota’s forfeiture law unconstitutional on May 25, just three days after the state’s legislature ended its session. So, any changes to the law must wait until the next session of the legislature, expected in February of 2024, unless there’s a special session.
“There’s no consensus about what to do in this interim period,” Hilgart said.
With the Supreme Court’s decision still pending, one state lawmaker introduced a bill that would change the state’s forfeiture law in the last few days of the session.
State Sen. Warren Limmer, R-Maple Grove, said on Tuesday he will reintroduce his bill whenever the state legislature is gaveled in again.
Limmer’s bill would limit counties to keeping only the amount of money they were owed when they seize a property.
“Not everyone can go to the U.S. Supreme Court to seek justice from all-powerful government interests,” Limmer said.
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