RES 345 Week 4 Journal

Week 4 Journal

[WLO: 3] [CLOs: 2, 4]

Read the case Coleman v. District of Columbia (70 F. Supp. 3d 58) located in Chapter 22 of your textbook.

Do you agree or disagree with the court’s ruling in this particular case? Why? In addition, reflect on these three questions:

  • What happened with Mr. Coleman’s taxes, and how much was involved?
  • What is the role of the embassy in this case, and what do they get out of the sale of the property?
  • What did the District of Columbia do in handling its defense that resulted in the outcome for Mr. Coleman?

Textbook Citation-

Jennings, M. M. (2022). Real estate law (12th ed.). Cengage Learning

COLEMAN V. DISTRICT OF COLUMBIA

70 F. Supp. 3d 58 (2014)

Down and Out in D.C., but with Equity

FACTS

Benjamin Coleman is a 76–year-old veteran. He sufers from severe dementia. This suit was brought on Mr. Coleman’s behalf by Robert Bunn, his guardian who was appointed by the Superior Court. In 2006, Mr. Coleman failed to pay a $133.88 property tax bill on his home. The District of Columbia (District) placed a tax lien on Mr. Coleman’s home and added $183.47 in penalties to his preexisting tax obligation. The lien—of $317.35—was offered for sale at a public auction in July 2007, when it was sold to Embassy Tax Services, LLC (Embassy). Embassy filed an action to foreclose Mr. Coleman’s

right of redemption on February 28, 2008. It demand-ed $4,999 in addition to the lien amount of $317.35 from Mr. Coleman. The additional amount was for court costs, attorney’s fees, expenses incurred for personal service of process, expenses incurred for service of process by publication and fees for the title search. On September 24, 2008, Mr. Coleman’s son sent a handwritten letter to the Superior Court indicating that he had recently moved back into town and had discovered that his father was “living alone and had not kept to his medicine.” Mr. Coleman’s son offered to “get most of the payments in on Oct. 3, 2008.” The Superior Court gave Mr. Coleman until May 27, 2009 to complete his payments. On May 26, 2009, Mr. Coleman’s son sent another letter to the Superior Court, noting that his father had “been under the weather” but that his father had paid all of the owed taxes. Mr. Coleman’s son offered to make monthly payments of $850 beginning June 1, 2009, to satisfy his father’s obligations to Embassy. When no one appeared for Mr. Coleman at the May 27, 2009, hearing, the Court tried, unsuccess-fully, to contact his son. The Court then adopted the proposed payment schedule, stayed the deadline for Mr. Coleman to redeem his property, and set a June 24, 2009, hearing. That hearing was rescheduled on multiple occasions.

On March 31, 2010, Embassy moved for a default judgment. The motion was granted on June 11, 2010, and extinguished all title, rights, claims, and interests that Mr. Coleman had in the property. The District executed a deed to Embassy on August 31, 2010. The home at that time had a fair market value of approximately $200,000.

On December 16, 2010, Embassy filed with the Superior Court a petition for writ of possession be-cause Mr. Coleman continued to reside in his home. Mr. Coleman was evicted on August 5, 2011. Embassy sold his home for $71,000 in October of 2011. Mr. Coleman continues to reside in D.C., in a group home, a mile from his former house. Mr. Coleman brought this lawsuit against the District. He alleges that the District’s tax-sale statute violates the Takings Clause of the Fifth Amendment to the United States Constitution by taking a home-owner’s surplus equity and transferring it to a private party without just compensation or public purpose. Mr. Coleman seeks “just compensation” under the Fifth Amendment. The District has moved to dismiss.

JUDICIAL OPINION

Emmet G. Sullivan, District Judge Mr. Coleman[‘s] theory is that the District has effected an unconstitutional taking by precluding him entirely from obtaining the surplus equity in his home that re-mains after subtracting the taxes, penalties, costs, and interest he owed. The Supreme Court had occasion to interpret a federal statute that permitted the federal government to engage in tax sales to recover delinquent tax debts. See United States v. Taylor, 104 U.S. 216 (1881). The Court interpreted the statute to mean that the former owner “would be entitled to the surplus money” after the tax sale. This statutory interpretation became relevant three years later in United States v. Lawton, 110 U.S. 146 (1884). In that case, an heir to an individual whose property was sold under the same statute sought “surplus proceeds of the sale” and was denied. In light of the fact that the statute required that the surplus be provided to that individual, the Supreme Court stated that “[t]o withhold the surplus from the owner would be to violate the fifth amendment to the constitution, and deprive him of his property without due process of law or take his property for public use without just compensation.”

The issue, then, is whether Mr. Coleman has a property interest in his equity and, if so, whether an unconstitutional taking of that property has been alleged. The Fifth Amendment to the United States Constitution provides, in relevant part, “nor shall private property be taken for public use, without just compensation.” Inherent in the Amendment, then, is that “property” must be at issue. Because the Constitution protects rather than creates property interests, the existence of a property interest is determined by reference to existing rules or understandings that stem from an independent source such as state law. Mr. Coleman contended that he has a protected property interest in the equity in his home. Mr. Coleman similarly argued that he establishes the remaining elements of a Takings Clause claim: that his property was “taken”; that he was provided no “just compensation”; and that the taking was not for a “public purpose.” The Court need not—and indeed cannot—address the viability of these arguments because the District failed to respond to them. Neither its motion nor its reply brief challenged whether Mr. Coleman satisfied the elements of a Takings Clause claim. Instead, the District declared that, “There is no reason to defend a tax sale foreclosure statute as a Fifth Amendment taking because no court has found that to be the appropriate analysis.” Because the District failed to address these [issues] in its motion ‘and fail[ed] to respond to Plaintiff’s point[s] in its Reply, the Court will deem [them] abandoned at least for now.’ Accordingly, the Court must assume that Mr. Coleman established the existence of an independent property interest in the equity in his home, as well as the remaining elements of a Fifth Amendment Takings Clause claim. The motion to dismiss is denied.

CASE QUESTIONS

1. Explain what happened with Mr. Coleman’s taxes, and how much was involved?

2. What is the role of Embassy in this case, and what do they get out of the sale of the property?

3. What did the District of Columbia do in handling its defense that resulted in the outcome for Mr. Coleman?

Note: As a result of the Coleman decision, there are a series of cases pending in Michigan, one of which is a potential class action on the issue of tax sales and the retention of equity as a taking.12

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