You’ve probably heard of the Takings Clause of the Fifth Amendment. But does the Constitution allow a county to take and sell someones land to make a profit? That is the main question in the case Pung v Isabella County.
Abuse of Taxation
I don’t know anyone who likes paying taxes. It’s just another of those things you have to do as an adult. Contrary to what some people say, not all taxation is theft. We delegate to government, both state and federal, the power to tax, but that taxation has limits. So when does taxation become theft?
This case was filed by Michael Pung, representing the estate of Timothy Scott Pung. In it he claims:
Isabella County confiscated the Pung Estate’s private home for approximately $2,200 in taxes and fees (that were never actually owed).
Pung v. Isabella County, Michigan – Petition for Certiorari
How Isabella County handled the Pung Estate is truly disturbing.
In 1991, Timothy Scott Pung purchased his home located on St. Andrews Drive in Isabella County’s Union Township for $125,000.00. In Michigan, a property owner may claim an exemption from certain local property taxes if the owner occupies the property as his or her principal residence. Mich. Comp. Laws § 211.7cc(1). This exemption is called the Principal Residence Exemption (PRE). Like nearly all Michigan property owners with a primary residence, Timothy filed for and his property was granted the PRE credit, thereby reducing the annual property tax bill.
Pung v. Isabella County, Michigan – Petition for Certiorari
Many states have tax laws that allow discounts or exemptions for land owners that meet certain conditions, so this law is not the problem. It appears that a single local official is the problem.
Fourteen years later, Timothy unexpectedly passed away leaving a wife and two children without their father. In the years that followed, Patricia DePriest — the Union Township tax assessor — retroactively denied the PRE credit for the Pung property for the 2007-2011 tax years. After various challenges before the Michigan Tax Tribunal, the PRE credit was ordered to be fully restored. For reasons that are irrelevant for this Petition, DePriest decided to and did, once again, revoke the property’s PRE credit for the 2012 tax year. This led to a $2,241.93 unpaid tax bill for a tax that was never actually owed.
Pung v. Isabella County, Michigan – Petition for Certiorari
I know of no law that would prohibit Ms. DePriest from canceling the PRE credit for future tax bills. However, retroactively denying the credit is not only unjust, but a violation of Article I, Section 10 of the Constitution, which reads:
No State shall … pass any Bill of Attainder, ex post facto Law, or Law impairing the Obligation of Contracts,
U.S. Constitution, Article I, Section 10, Clause 1
While the tax court agreed with Mr. Pung, ordering the credit to be fully restored, it appears that Ms. DePriest ignored the order and revoked the credit for a different year. But this was not the end of Mr. Pung’s nightmare.
After more proceedings, the Michigan courts ultimately authorized the foreclosure over Pung’s strenuous objections and challenges because DePriest failed to provide timely notice of the 2012 revocation and Michigan’s various tribunals found themselves powerless to fix the error. Based upon the “unpaid” yet not owed $2,241.93 in tax resulting from the removal of the PRE credit, Isabella County initiated proceedings and effectuated foreclosure. And despite Pung’s serious efforts, the Michigan courts would not halt Isabella County treasurer’s demand for foreclosure on a tax never owed.
Pung v. Isabella County, Michigan – Petition for Certiorari
So Mr. Pung’s home was foreclosed on (stolen), to pay taxes his family did not owe, based on the dubious revocation of a tax credit for which a tax court had said was valid for previous years. The Union Township, through their tax assessor, failed to prove proper notice of the revocation and allegations of taxes owed, claimed the power to foreclose on the property, and the Michigan courts claimed there was nothing they could do. (So much for courts of law and justice.)
The questions Mr. Pung has brought to the Supreme Court are:
Pung v. Isabella County, Michigan – Petition for Certiorari
- Whether taking and selling a home to satisfy a debt to the government, and keeping the surplus value as a windfall, violates the Takings Clause of the Fifth Amendment when the compensation is based on the artificially depressed auction sale price rather than the property’s fair market value?
- Whether the forfeiture of real property worth far more than needed to satisfy a tax debt but sold for fraction of its real value constitutes an excessive fine under the Eighth Amendment, particularly when the debt was never actually owed?
Oral arguments were heard by the court on February 25, 2026.
Oral Argument Of Philip L. Ellison On Behalf Of The Petitioner
As always, oral arguments begin with the attorney for the petitioner.
MR. ELLISON: Mr. Chief Justice, and may it please the Court:
The Fifth Amendment requires just compensation be measured by the value of what’s taken. The Sixth Circuit’s categorical rule reducing just compensation to surplus auction proceeds in all instances was wrong.
Pung v. Isabella County, Michigan – Oral Arguments
Mr. Ellison is resting his case on the Fifth Amendment’s Takings Clause. There is a flaw in that argument that I’ll look at later.
This Court has repeatedly confirmed that when the government takes property, the constitutional calculus begins with its fair market value. That is measured from the time of the take.
The error here is clear. The Pung home was worth $194,400. The tax debt was roughly $2200. Just compensation meant returning remaining equity. The lower courts erred when holding that the later auction price of just $76,000, less the debt, was categorically the only just compensation owed.
Pung v. Isabella County, Michigan – Oral Arguments
The real question is what compensation is “just”? Merriam-Webster’s Online Dictionary defines “just” as “conforming to a standard of correctness.” So if you own a home worth almost $200,000, does the $76,000 it was auctioned off for really conform to the standard of correctness? According to Mr. Ellison, the court had previously said no.
There’s another argument to be made. Mr. Ellison claims not only a violation of the Takings Clause, but the Eighth Amendment’s Excessive Fines Clause as well.
In addition to the Fifth Amendment, the Eighth Amendment’s Excessive Fines Clause provides a backstop as well. Taking a six-figure home to punish over a small four-figure tax constitutes a fine and was sufficiently alleged to be grossly disproportionate to get past the initial pleading stage.
The judgment below should be reversed, and I welcome the Court’s questions.
Pung v. Isabella County, Michigan – Oral Arguments
That’s the position of Mr. Ellison for Mr. Pung. What about the other side?
Matthew T. Nelson, On behalf of the Respondent
Mr. Nelson represents Isabella County and the Union Township.
The Sixth Circuit here correctly applied historic practice, this Court’s precedents, and economic reality to determine that surplus proceeds less the — from an auction sale, less the tax debt that’s owed establishes just compensation. Property sold under a compelled — on — in a compelled market, under compelled market conditions, is worth what the market pays for it under those conditions and not what the property would be worth in an idealized private sale.
Pung v. Isabella County, Michigan – Oral Arguments
The problem with Mr. Nelson’s argument is that the government created the “compelled market,” in this case without legal foundation. Remember, Ms. DePriest was ordered by a court to restore Mr. Pung’s tax exemption. She apparently complied, only to subsequently revoke the exemption for a different year.
By contrast, Petitioner’s fair market value theory has no foothold in historic practice, this Court’s precedents, or economic reality. Even though the government has been selling properties at auction and returning the overplus for centuries, not a single case has ever suggested that the surplus proceeds are equal to the property’s fair market value less the debt.
Pung v. Isabella County, Michigan – Oral Arguments
I’m not sure about court precedent, but Mr. Ellison’s argument is based on the supreme law of the land, that Constitution of the United States. Shouldn’t that be enough?
Moreover, the prop — the Petitioner’s fair market value approach assumes market conditions that simply don’t exist after a foreclosure because of the property owner’s decisions not to pay the tax, not to sell the property, not to obtain a statutory deferral, and not to exercise the right of redemption.
The Takings Clause does not require compensation to the owner for owner-created reductions to the property value. That would be unjust to the government and to the public.
I welcome the Court’s questions.
Pung v. Isabella County, Michigan – Oral Arguments
Again, it seems Mr. Nelson has forgotten that Ms. DePriest had a court order to restore the exemption, only to change the year and focused, allegedly, without sufficient notice. That means that Mr. Pung did not owe the Union Township any back taxes. The alleged depression of the property’s value is solely the consequences of the questionable actions by Ms. DePriest.
Fifth Amendment Takings Clause
Mr. Ellison is basing his argument primarily on the Fifth Amendment’s Takings Clause, but there’s a problem with that: What the Township took the property for.
… nor shall private property be taken for public use, without just compensation.
U.S. Constitution, Amendment V
But the court keeps going to “history and tradition.” This property was not taken for public use, but to pay an alleged public debt. This action did violate the Fifth Amendment, just not the Takings Clause. I’ll discuss that in the section on Due Process.
JUSTICE THOMAS: What do you do with the fact that the English and American legal traditions seem to permit these sorts of foreclosures?
Pung v. Isabella County, Michigan – Oral Arguments
Legal tradition may allow such foreclosures, but that is not the supreme law of the land, the Constitution is. Justice Sotomayor asked a similar question.
JUSTICE SOTOMAYOR: Suggested. Give me a holding from a court in our 250-year history where we have said that the measure of damages on a tax foreclosure is fair market value, not the auction price.
Pung v. Isabella County, Michigan – Oral Arguments
Rather than tradition, Mr. Ellison points to the law.
MR. ELLISON: The answer is that the Fifth Amendment guarantees just compensation; it doesn’t guarantee the outcome of an auction.
Pung v. Isabella County, Michigan – Oral Arguments
Which begs the question, what is “just compensation?”
What is Just Compensation?
As I’ve already pointed out, Merriam-Webster’s Online Dictionary defines “just” as “conforming to a standard of correctness.” What does that mean in the real world?
JUSTICE SOTOMAYOR: I — I think your fallback position or your main position is just compensation under the Constitution requires fair market value?
MR. ELLISON: Correct.
JUSTICE SOTOMAYOR: If I disagree with that and I believe just compensation should be defined the way Justice Scalia did in BDP, which is what’s reasonable under the circumstances, and I believe that a fair — that a valid auction is a reasonable compensation, you lose on your main argument, correct?
MR. ELLISON: We would — we would — if — if you do not believe that fair market value is the standard, correct.
Pung v. Isabella County, Michigan – Oral Arguments
Mr. Liu argued for the United States. While claiming to not support either side his argument on this point certainly appeared to support Isabella County’s position.
According to Petitioner, compensation should instead reflect a property’s fair market value. But, as this Court recognized in BFP, foreclosed property is simply worth less.
Pung v. Isabella County, Michigan – Oral Arguments
Which is the point. Governments have used the power to foreclose to artificially depress the perceived valued of property in order to exercise eminent domain at a discount. What about foreclosure makes a $200k property worth only $76k? Nothing. The person who bought the property at auction simply made a $76k investment to acquire a $194k property, a nice $118k unrealized profit.
JUSTICE GORSUCH: Except for someone did shortly after the auction buy the property for the prior $194,000. Doesn’t that give rise to some reason to be concerned about the procedures that your client used?
MR. NELSON: No, Your Honor. The — the procedures here have been the historic process that have been used since the beginning of the republic.
Pung v. Isabella County, Michigan – Oral Arguments
Not a bad payday for whoever bought that property. It also proves the point that simply because a property has been foreclosed on, its fair market value does not automatically decline. So why is Isabella County fighting this so hard?
Petitioner’s approach would defy that reality and spell the end of tax sales in this country.
Pung v. Isabella County, Michigan – Oral Arguments
Because governments want to be able to take people’s homes? Or is it they don’t really care about the equity people lose, as long as the government gets its tax dollars?
Justice Thomas looked at this from a different point of view.
JUSTICE THOMAS: What was the assessed value on which the tax was imposed?
MR. NELSON: The assessed value here was approximately $194,000.
JUSTICE THOMAS: Can Petitioner use that as a basis for its disagreement with the foreclosed sale value?
Pung v. Isabella County, Michigan – Oral Arguments
Interesting question. You see, Union Township valued the property at $194,000 before the foreclosure, but not after it. Of course the original valuation by the township was for the purposes of imposing taxes, so they would benefit from a higher valuation. Could this be a basis for Mr. Pung’s disagreement?
MR. NELSON: Justice Thomas, we do not believe so because the — if the measure of the property’s value is at the time of the taking, it’s either — if the taking is the surplus proceeds, then the amount of the surplus proceeds is what’s taken. If the property value is the equitable interest in the property at the time that the right of redemption expired, the property was no longer worth the — the assessed value under the market — under market conditions because the property was in foreclosure and the right of redemption had not been exercised such that the value of the equitable interest in the property had diminished to a forced-sale value, which we believe is the teaching from BFP.
JUSTICE THOMAS: So it — the value decreased approximately $120,000 in that short period?
Pung v. Isabella County, Michigan – Oral Arguments
Remember, the alleged decrease in the value of the property had nothing to do with the property itself. It was wholly created by Ms. DePriest and the township, for its own benefit, the collection of taxes that a court had found to be unlawful.
MR. NELSON: We believe that the property — yes, the property decreased in value by — by a very significant amount between the time of the assessment and the time of the foreclosure — or, excuse me, the — the expiration of the right of redemption because of the non-payment of the tax.
No reasonable buyer out in the market would acquire the property at the moment of foreclose — of the — of the taking here for the $194,000 because —
Pung v. Isabella County, Michigan – Oral Arguments
Except as Justice Gorsuch has already pointed out, someone did acquire the property for the full $194,000 valuation, shortly after the auction.
Due Process
Mr. Ellison argues that the difference between the auction price and the assessed price constitutes an excessive fine. I think he has a point. After all should the failure to pay an alleged $2,200 tax come with a $118,000 fine? I don’t think so. I think a better arguments is a violation of the Fifth and Fourteenth Amendment’s Due Process Clauses.
No person shall … be deprived of life, liberty, or property, without due process of law;
U.S. Constitution, Amendment V
Justice Jackson raised this point when questioning Mr. Ellison.
JUSTICE JACKSON: Can — can — can I just follow up on that? Because I’m wondering whether or not that kind of concern doesn’t ring more in, like, a due process claim rather than just compensation because, to the extent you’re arguing about or your claim is that they needed to do other steps before they took the property, I didn’t understand the — the — the Takings Clause to be concerned about pre-takings deprivation, that the Takings Clause was just about just compensation. And so wouldn’t — wouldn’t you be needing to bring kind of a due process-type claim if you’re complaining about the personal property aspect of this?
MR. ELLISON: We — we would acknowledge that due process comes awful close in the — in the just compensation world, but the question that’s being challenged here is does the result of this foreclosure process result in just compensation.
Pung v. Isabella County, Michigan – Oral Arguments
There’s still that problem that Union Township did not take Mr. Pung’s property for public use, but to pay a public debt. Can a government take a person’s property for failure to pay a public debt? Yes, but they have to follow due process, which is defined as:
An established course for judicial proceedings or other governmental activities designed to safeguard the legal rights of the individual.
Due Process – The Free Legal Dictionary
Did the Union Township safeguard the legal rights of Mr. Pung when they foreclosed and auctioned off his property for the tax they alleged he owed?
Justice Alito asked about the question of the consequences of not paying taxes. But as Mr. Ellison pointed out in response, Mr. Pung did not owe taxes because Ms. DePriest retroactively denied a tax credit for one year after the credit she was forced to reinstate. And she allegedly entered foreclosure proceedings without sufficient notice of the ex post facto denial of the credit. So whether or not Mr. Pung actually owed any taxes should be questioned.
Mr. Nelson, defending the foreclosure, stated:
With regard to after the property is turned over now to the county, who is the — the — the Respondent here, when it’s turned over to the county, the county has no authority to say now this tax should not have been paid unless what happens is —
JUSTICE GORSUCH: Oh, goodness.
MR. NELSON: — the — well, unless —
JUSTICE GORSUCH: Really? I mean, nobody can say, hey, there was a mistake?
MR. NELSON: Well, the opportunity —
JUSTICE GORSUCH: I have to — I have to foreclose on someone’s home for a tax bill I now know is false, but I — I — I — you know, I — I’m forced to do it?
Pung v. Isabella County, Michigan – Oral Arguments
Oops. The county has to foreclose on a property for a tax bill they know is false? That doesn’t sound right. Mr. Nelson argues that Mr. Pung had the opportunity to challenge the tax bill in court.
MR. NELSON: So, Your — Your Honor, the Petitioner here had the opportunity to come to the show-cause hearing or the foreclosure hearing in — the show-cause hearing with the treasurer or the foreclosure hearing with the court and say this tax was never properly assessed.
At that time, there is an opportunity to — to say the tax is not properly assessed, we’re going to go ahead and reverse this — this whole process, and we’re in the clear. But that didn’t happen.
Pung v. Isabella County, Michigan – Oral Arguments
I wonder why Mr. Pung, or his attorney, didn’t attend either hearing? I couldn’t find anywhere else in either of these oral arguments or the petition for certiorari where these hearings were mentioned. I wonder, since there was a hearing on the revocation of the tax credit for previous years, was there a communication breakdown? Was Mr. Pung given proper notice?
MR. LIU: Well, I think the — what the facts of this — this case show is that Mr. Pung was given notice of the delinquency. I mean, he face-to-face was told by the township assessor that he owed the tax.
JUSTICE SOTOMAYOR: And he went to tax court, and the tax court said no, you don’t.
MR. LIU: That —
JUSTICE SOTOMAYOR: And he presented the government with that notice, and the government said bye.
MR. LIU: Right. And — and I think this is a — an unusual feature of this case, that while Mr. Pung did appeal the denial of the principal residence exception as to certain years, he didn’t appeal that denial as to the year at issue here.
Pung v. Isabella County, Michigan – Oral Arguments
Could it be because Ms. DePriest didn’t deny the exception until after the tax court told her no on previous years? What changed between 2011 and 2012 that a court would find sufficient to allow the denial to stand? Nothing I saw.
Conclusion
This was not a violation of the Fifth Amendment’s Takings Clause. It was not a violation of eminent domain we’ve seen so often in the last couple of decades. It’s far, far worse. This violation of the Due Process Clauses of the Fifth And Fourteenth Amendments amounts to flat out theft. And the actions of Ms. DePriest seem more like a vengeful grudge than the due process actions of a government actor, sfomething that was not lost on Justice Barrett.
JUSTICE BARRETT: So, counsel, I — I want to echo what Justice Gorsuch said. I mean, it seems like there was some real unfairness to your client. I mean, frankly, reading the briefs, it sounds to me like the tax assessor was like Inspector Javert, but it was even worse because Jean Valjean hadn’t stolen the bread. I mean, you didn’t even —
(Laughter.)
JUSTICE BARRETT: — you didn’t even owe the tax, and it’s this small tax and — and the big — you know, the big loss of the family home and — and of the money. So it — it does seem that there’s some unfairness there.
Pung v. Isabella County, Michigan – Oral Arguments
Court watchers seem to think the court leaned toward Mr. Ellison’s arguments for Mr. Pung. We’ll have to wait and see if their prognostication are correct.
