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Oral Argument Indicates Property Rights Likely to Prevail in Supreme Court Home Equity Theft Takings Case

The decision may even be unanimous.


Geraldine Tyler is seen at an assisted living facility
Geraldine Tyler, 94, who had her home seized by the government over a property tax debt. (Courtesy of Pacific Legal Foundation)


Earlier today, the Supreme Court heard oral arguments in Tyler v. Hennepin County, an important Takings Clause case on "home equity theft." In states that allow this practice, local governments can seize the entire value of a property in order to pay off a much smaller delinquent property tax debt.  Geraldine Tyler, the plaintiff in the case, is a 94-year-old widow whose home, valued at $40,000, was seized by the County government after she was unable to pay off $15,000 in property taxes, penalties, interest, and fees. The County then kept the entire $40,000 for itself, as Minnesota law allows. Tyler contends that this practice violates the Takings Clause of the Fifth Amendment, which requires the government to pay "just compensation" when it takes private property, and also the Excessive Fines Clause of the Eighth Amendment. I covered issues in the case in more detail here.

The bottom line takeaway from the oral argument is that Tyler will almost certainly win her case, and it isn't going to be close. This could even be an extraordinarily rare Takings Clause case where the Court is unanimous! By my count, at least eight justices seem to be leaning Tyler's way. The only one that's hard for me to read is Justice Sonia Sotomayor, who is the justice least sympathetic to takings claims on the current court. But if she didn't say much that was supportive of Tyler, she also didn't say much that clearly cuts  the other way, either.

Multiple justices were clearly appalled at County's argument that there is no taking in this situation no matter how great the disproportion between the tax delinquency and the amount of money the government gets by seizing the property. For example, Justice Elena Kagan asked whether there are "any limits" here and wanted to know whether there is a taking in a situation where there is  "$5,000 tax debt, $5 million house, take the house, don't give back the rest." She wasn't happy when the County's attorney Neal Katyal ultimately conceded that, under his reasoning, there would be no taking here, and the government could keep the entire $5 million.

Similarly, Justice Gorsuch asked whether there's a taking if "the government takes a million dollar property…. for a modest amount owed to the government, a $5 amount." Katyal said there would not be a taking. Gorsuch was not a happy camper.

The justices also had little sympathy for the argument—endorsed by the lower court decision—that there is no taking because state law had defined the surplus equity as the county's property, thereby extinguishing the owner's rights. Justice Gorsuch pushed Katyal to admit that "it can't be pure positive law, state law that governs what is property, right?" Katyal admitted that Gorsuch was right. Along the same lines, Chief Justice John Roberts suggested that "there is an irreducible core of what constitutes property" that states cannot define away, and that core may come from "the Takings Clause itself."

I think the answer to this issue is that the original meaning of the Takings Clause is rooted in natural rights theories of property, and natural law—not state law—is the ultimate source of those rights, though states can regulate the rights, and have some role in defining their precise boundaries.

I don't know exactly how the Court is going to handle this crucial question. One possibility is that they might follow the Sixth Circuit's ruling in a similar case, which concluded that states cannot define away "traditional property interests long recognized under state law." But I am confident the justices will reject the notion that the state can just redefine property rights however it wants. As Chief Justice Roberts suggested, under the County's position in this case, there wouldn't be much point to the Takings Clause.

Another telling indication of where the Court is leaning was that Tyler's attorney, Christina Martin, didn't get asked a single question during her rebuttal time at the end of the oral argument. Usually, the justices will ask at least some questions during rebuttal, if they have any significant reservations about the advocate's position.

If, as is highly likely, Tyler prevails in the Supreme Court, there may be some complex questions about how to calculate the compensation she is owed. The justices struggled with the issue of whether she should automatically get all of surplus value from an auction or whether she should instead get the difference between the amount she owes the government and the value of the property at the time of foreclosure. Some of the justices suggested this issue could be remanded for consideration by the lower courts.

The Excessive Fines Clause issue in this case is a closer call than the takings question. A number of justices suggested that Court won't even have to reach the issue if they rule in favor of Tyler under the Takings Clause. That may well be what happens.

Finally, it may be worth mentioning that Katyal presented a convoluted argument attempting to prove that Tyler lacked standing to file this case. He even led off his oral argument and his brief with this theory, which implies he thought this was his best chance of prevailing (usually appellate advocates put their strongest arguments first).

I'm not going to go into the details of the standing argument, because it's extremely weak and none of the justices seemed to give it any credence. Clarence Thomas said that "I'll bypass the standing [because]… at bottom, she's saying the county took her property, made a profit on it with the surplus equity, and it belongs to her." This strikes me as a very obvious basis for standing, even for judges who favor highly restrictive standing rules.

In my last post about Tyler, I noted the unusually broad cross-ideological support for the property owner's position among the organizations filing amicus briefs in the case. If the oral argument is any indication, a similar broad consensus may be emerging among the Supreme Court justices, as well.

NOTE: Geraldine Tyler is represented by the Pacific Legal Foundation, which is also my wife's employer. She, however, is not one of the attorneys working on the case.

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