By: David Quinn, Junior Editor
Photo courtesy of Pixabay.com
This year, a Michigan dispute over property taxes and a forced housing auction has made its way to the US Supreme Court. The Supreme Court has granted certiorari to resolve two issues: first, whether it was a violation of the Fifth Amendment’s takings clause to seize and sell a home to satisfy a debt to the government when the auction made the sale price artificially lower than the property’s fair market value; and second, whether it was a violation of the Eighth Amendment’s clause prohibiting excessive fines for the government to foreclose real property that was worth far more than the amount needed to satisfy a tax debt, especially if the party never truly owed their supposed debt.[1]
In March 2010, Patricia DePriest, an assessor for Union Township, removed the State of Michigan’s Principal Residence Exemption (“PRE”), an exemption from local school district taxes based on the owners occupation of a property as their principal place of residence, for the property of the Pung family after Timothy Pung, who had originally received the exemption, died in 2004.[2] The PRE was retroactively denied for the tax years of 2007, 2008, and 2009 due to a belief that new owners were required to file an affidavit to claim the PRE, which the Pungs that survived Timothy did not do.[3]
The Pungs appealed the decision and refused to pay the readded tax, successfully challenging the retroactive denial of the PRE before the Michigan Tax Tribunal.[4] However, DePriest later still revoked the PRE on February 7, 2013 for the 2012 tax year, still believing that “every subsequent owner of a property was required to file a new affidavit to claim the PRE.”[5] The Pungs would refuse to pay for tax required by this revocation, leading to an unpaid tax bill of $2,241.93.[6] The Pungs’ property was foreclosed and the property, worth $194,400, was sold for $76,008.[7] Isabella County initially retained the full sale price, including the surplus after paying the unpaid tax bill, but they were forced to give up the surplus to the Pungs in district court.[8] However, the Pung family wants to recover the full fair market value for their home, not just the surplus of the forced auction.[9]
The Pacific Legal Foundation, a public interest law firm known for its work for conservative-libertarian causes in the field of property rights, are assisting the Pung family in their efforts to recover for the full value of their home.[10] They argue that just compensation to property owners should be based on the “fair market value when government takes their property, not whatever price results from an artificially depressed government auction.”[11] Moreover, they say that forfeiting seized property worth far more than what is needed to satisfy a tax debt constitutes an excessive fine.[12]
This case comes in the wake of the 2023 Supreme Court case Tyler v. Hennepin County, Minnesota wherein a Minnesota county sold the home of the plaintiff to satisfy a tax bill and kept the remaining money from the sale.[13] Here, the Court unanimously ruled that the retention of this money as a “classic taking” for which the taxpayer was entitled to just compensation.[14] Since then, as the National Law Review notes, “lower courts have been grappling with how to measure ‘just compensation’,” which includes the question of whether the foreclosure sale price is a “constitutionally sufficient proxy” for fair market value, as exemplified in how Isabella County acted with regards to the Pung family.[15]
In his brief as the petitioner to the Supreme Court, Michael Pung, representing the estate of the late Timothy Pung, argued that “just compensation requires a property owner to be left in as good a position as if his property had not been taken” and that “the excessive fines clause limits the forfeiture of Pung’s property.”[16] For the first point, Pung argues that just compensation “is the monetary equivalent of the property taken,” that Isabella County therefore owes the Pungs fair market value for taking their equity rather than the residue of “the County’s unfair auction,” that the government “may not define compensation as proceeds of an unnecessary sale it controls,” and that tax collectors are “constitutional bailees who must secure the owner’s equity and prevent sacrificial prices in forced sales.”[17] For the second point, Pung argues that the forfeiture in this case is a grossly disproportionate punitive fine, violating the Eighth Amendment.[18]
Meanwhile, the Isabella County’s brief in opposition argues that being compensated according to fair market value defies legal tradition and would render tax foreclosure inviable, that the Eighth Amendment’s excessive fine clause does not apply to tax foreclosure, and that there is no “viable issue” or “circuit split” concerning fair market value compensation that the Supreme Court would need to resolve.[19] In the reply to the opposing brief, Pung argues that the Fifth Amendment of the US Constitution protects “the owner’s equity, not the government’s auction price,” that the Eighth Amendment applies to “civil forfeiture schemes disguised as ‘tax collection,’” and that policy concerns do not override constitutional rights.[20] Moreover, Pung argues that this case “offers the Court a clean opportunity to resolve two pressing and recurring constitutional questions,” namely the disputes over the Fifth Amendment’s takings clause and the Eighth Amendment’s excessive fines clause.[21]
Oral argument for Pung v. Isabella County was held before the Supreme Court on February 25, 2026.[22] Here, some of the major issues discussed by the Court included whether auction prices were an adequate proxy for just compensation, what the historical record spoke to in terms of whether governments have been required to “pay market value beyond sales proceeds in tax forfeiture contexts,” the implication of Tyler v. Hennepin County, Minnesota in “protecting surplus equity as a discrete property interest,” the mechanics and fairness of the auction process, and the practical consequences of ruling in favor of the Pungs.[23] One notable example of the latter issue was addressed by Fredrick Liu, Assistant to the Solicitor General for the Department of Justice, who represented in the United States rather than either of the parties.[24] He opined to Justice Kagan that ruling in favor of the Pung family by adopting a fair market value measure with respect to foreclosures would “spell the end of tax sales in America” because tax sales “necessarily” yield less than fair market value, which would require the government to reimburse the taxpayer for the lost value, costing the government enough that it would no longer be worth it to them to conduct tax sales.[25]
The National Law Review identifies three major consequences that could result from a fair-market rule: first, counties could face liability for the difference between market value and tax debt; second, government officials may need to implement new measures to approximate market value despite a lack of expertise in real estate marketing and evaluation; and third, future examples of such property claims are expected to be undervaluation takings claims, allowing for more class actions and attorney-fee awards.[26]
The Supreme Court is expected to release its decision in June 2026.[27]
[1] “Pung v. Isabella County,” Oyez, accessed April 15, 2026, https://www.oyez.org/cases/2025/25-95.
[2] Pung v. Kople., No. 22-1919/1939, 2025 WL 318222 at 1 (6th Cir. Jan. 28, 2025).
[3] Id, 1.
[4] Id, 2.
[5] Id, 2.
[6] Id, 2.
[7] “Isabella County Home Seizure Challenged at U.S. Supreme Court,” The Midwesterner, accessed April 15, 2026, https://www.themidwesterner.news/2025/12/isabella-county-home-seizure-challenged-at-u-s-supreme-court/.
[8] “Pung v. Isabella County,” Oyez, accessed April 15, 2026, https://www.oyez.org/cases/2025/25-95.
[9] Maxine McCullough, “Pung v. Isabella County Goes to the Supreme Court February,” The Morning Sun, February 10, 2026, https://www.themorningsun.com/2026/02/07/pung-v-isabella-county-goes-to-the-supreme-court-february/.
[10] “Michael Pung v. Isabella County,” Pacific Legal Foundation, March 2, 2026, https://pacificlegal.org/case/pung-isabella-county-home-equity-theft/; Pacific Legal Foundation Snags Supreme Court trifecta | Reuters, accessed April 15, 2026, https://www.reuters.com/legal/government/pacific-legal-foundation-snags-supreme-court-trifecta-2023-03-10/.
[11] “Michael Pung v. Isabella County,” Pacific Legal Foundation, March 2, 2026, https://pacificlegal.org/case/pung-isabella-county-home-equity-theft/.
[12] Id.
[13] Tyler v. Hennepin County, Minnesota, 598 U.S. 631, 634 (2023).
[14] Id, 639.
[15] Matt Abee, “U.S. Supreme Court Hears Arguments in Pung v. Isabella County,” The National Law Review, March 9, 2026, https://natlawreview.com/article/us-supreme-court-hears-arguments-pung-v-isabella-county.
[16] Brief for Petitioner at 13, 31, Pung v. Isabella County, 20251201104412403_25-95 Merits Brief efiling.pdf
[17] Id, 14, 18-19, 21, 27.
[18] Id, 31, 35, 41.
[19] Brief in Opposition at 5, 10, 13, Pung v. Isabella County, 20250813115130886_25-95 Brief in Opposition.pdf
[20] Brief in Support of the Petition at 2, 5-6, p, 20250912101330573_250914a Reply for efiling.pdf.
[21] Id, 7.
[22] Pung v. Isabella County, No. 25-95, oral argument (U.S. Feb. 25, 2026), accessed April 15, 2026, https://www.supremecourt.gov/oral_arguments/audio/2025/25-95.
[23] Matt Abee, “U.S. Supreme Court Hears Arguments in Pung v. Isabella County,” The National Law Review, March 9, 2026, https://natlawreview.com/article/us-supreme-court-hears-arguments-pung-v-isabella-county.
[24] Matt Abee, “U.S. Supreme Court Hears Arguments in Pung v. Isabella County,” The National Law Review, March 9, 2026, https://natlawreview.com/article/us-supreme-court-hears-arguments-pung-v-isabella-county; Pung v. Isabella County at 2.
[25] Pung v. Isabella County at 78.
[26] Matt Abee, “U.S. Supreme Court Hears Arguments in Pung v. Isabella County,” The National Law Review, March 9, 2026, https://natlawreview.com/article/us-supreme-court-hears-arguments-pung-v-isabella-county.
[27] Id.