Wayside Church v. Van Buren Cnty., Mich.

Court of Appeals for the Sixth Circuit·Decided October 6, 2025·No. 24-1676·Unpublished

Opinion

NOT RECOMMENDED FOR PUBLICATION File Name: 25a0453n.06

Case Nos. 24-1598/1676

UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT

FILED

Oct 06, 2025

)

KELLY L. STEPHENS, Clerk

WAYSIDE CHURCH, individually and on ) behalf of itself and all others similarly situated, ) et al., ) ON APPEAL FROM THE UNITED Plaintiffs-Appellees, ) STATES DISTRICT COURT FOR ) THE WESTERN DISTRICT OF ANN MEDEMA, et al. (24-1598), ) MICHIGAN Objector Plaintiffs - Appellants, )

) OPINION v. )

)

VAN BUREN COUNTY, individually and on ) behalf of itself and all others similarly situated, )

)

Defendants-Appellees.

)

)

TAYLOR BEIGHTOL (24-1676), )

Proposed Intervenor-Appellant, )

)

Before: KETHLEDGE, READLER, and BLOOMEKATZ, Circuit Judges.

READLER, J., delivered the opinion of the court in which KETHLEDGE and BLOOMEKATZ, JJ., concurred. KETHLEDGE, J. (pp. 23–26), delivered a separate concurring opinion.

READLER, Circuit Judge. For years, counties in Michigan seized tax-delinquent homes, sold them, and then pocketed or gifted to others the windfall beyond the unpaid taxes. After considerable litigation, that practice met an unceremonious fate: It was declared unlawful three times over, first by the Michigan Supreme Court, then by this Court, and most recently by the U.S.

Supreme Court. Rafaeli, LLC v. Oakland County, 952 N.W.2d 434, 441 (Mich. 2020); Hall v. Meisner, 51 F.4th 185, 188 (6th Cir. 2022); Tyler v. Hennepin County, 143 S. Ct. 1369, 1376 (2023).

The current chapter in this legal chronicle is a class action pursued against 43 Michigan counties, all located in the Western District of Michigan. The named plaintiffs along with the putative class sought to recover surplus proceeds from the sale of their properties by those counties. Following a decade of litigation, including 18 months of mediation, the parties reached a proposed resolution. But not everyone was satisfied. Over three dozen objectors challenged the settlement, asserting that the agreement was the product of collusion, and that continued settlement negotiations or a trial on the merits would have produced more favorable terms. The district court was unpersuaded. It certified the class, overruled the objections, and approved the settlement. We now affirm.

I.

Wayside Church once owned a property in Van Buren County, located near Michigan’s southwestern corner. But the church fell behind on its property taxes owed to the County, leaving $16,750 unpaid. To collect, the County foreclosed on the property. Following the foreclosure, the County sold the property for $206,000, far more than the amount of Wayside’s property tax delinquency. Yet Michigan’s General Property Tax Act authorized the County to keep the balance, which it did. In 2014, Wayside sued the County, claiming that the County’s collection practices amounted to an uncompensated taking, in violation of the Fifth Amendment. The church brought the case on its own behalf and on behalf of a class of others similarly situated, naming the County as a representative of a class of similarly situated Michigan counties.

The case, it is fair to say, did not resolve quickly. The parties have endured an over decade-

long path of litigation, largely because of the intervening case law that has informed the legal backdrop. Op. and Order Approving Settlement and Appointing Special Master, R. 544, PageID 12826 (district court acknowledging that the “case has been before [it] for nearly ten years”). The district court first dismissed Wayside’s complaint for failure to state a claim, reasoning that a former owner has no property interest in surplus proceeds under Michigan law. On appeal, a divided panel agreed the case should be dismissed, but on jurisdictional grounds rather than the merits, relying on the Williamson County rule that takings plaintiffs must first pursue relief in state court. Wayside Church v. Van Buren County, 847 F.3d 812, 817 (6th Cir. 2017); see Williamson Cnty. Reg’l Planning Comm’n v. Hamilton Bank of Johnson City, 473 U.S. 172 (1985). But the County’s victory was short lived, as the Supreme Court not long thereafter overruled Williamson County in Knick v. Township of Scott. 139 S. Ct. 2162, 2177 (2019) (holding that takings claims may be brought in federal court without first seeking relief in state court).

Meanwhile, the district court reopened the case but stayed it in light of the Michigan Supreme Court’s grant of leave to appeal in Rafaeli, LLC v. Oakland County, 919 N.W.2d 401 (Mich. 2018) (mem.), a then-pending case before the Michigan Supreme Court that was expected to resolve a state law issue that could also inform Wayside’s federal takings claim. That prediction was prescient: Rafaeli held that former Michigan property owners who had their property seized due to a tax delinquency retain a property interest in surplus proceeds from the subsequent sale of those properties, and, further, that counties violate the Michigan constitution by retaining those proceeds. 952 N.W.2d at 441–42.

Shortly thereafter, the district court lifted the stay in this case. Continued litigation resulted in an adverse ruling against the County on their claimed sovereign immunity. That decision, in turn, led to an interlocutory appeal by the County as well as another stay in the district court.

While on appeal, the case turned toward settlement talks. Beginning in April 2021, the parties participated in more than 30 mediation sessions with our Circuit’s mediation office, spanning over a year and a half. (Resolution efforts undertaken by the mediation office are confidential, we note, and thus are not disclosed to members of our Court. See 6th Cir. R. 33(b)(4)(D). Our understanding of the mediation process here thus comes from the parties and the record.) During those sessions, Wayside’s counsel and the County’s counsel invited other counties in the Western District of Michigan (most of whom were putative defendants in the case) to join the negotiations. Over time, 42 additional counties agreed to participate in the mediation.

While that process was unfolding, we issued our decision in Hall v. Meisner, 51 F.4th 185 (6th Cir. 2022). There, former homeowners in Oakland County, Michigan sued the county and its officials after the county foreclosed upon the plaintiffs’ homes without refunding them the surplus above their tax debts. Hall held that a county effects a taking of private property, as that concept is understood for Fifth Amendment purposes, when it forecloses on a home due to a tax delinquency and then gifts the property to a third party who sells it for an amount that exceeds the delinquency. Id. at 188–89. In so doing, we explained that the Takings Clause secures for the former owners a recognized property interest in surplus proceeds following a tax foreclosure sale. And that interest, we added, could not be erased by Michigan’s granting an interest of absolute title in the property to counties through foreclosure. Id. at 189, 194. That decision departed from the logic of an Eighth Circuit decision issued months earlier, Tyler v. Hennepin County, 26 F.4th 789 (8th Cir. 2022), which held that former property owners have no viable Fifth Amendment

takings claim to proceeds resulting from a tax foreclosure sale when state law does not recognize a property interest in those proceeds. 26 F.4th at 793.

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Wayside Church v. Van Buren Cnty., Mich., (6th Cir. 2025).

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