The Usual Suspects in Tyler v. Hennepin County

This week, the Supreme Court is hearing oral argument in Tyler v. Hennepin County, a case that arose from a highly controversial practice known to its critics as “home equity theft.” Numerous amici have filed in support of both sides of that case, and their briefs illustrate two themes that are also evident in the similarly controversial practice of civil asset forfeiture. First, government can and does function as its own special interest. Second, in doing so it can galvanize other interests into unlikely alliances that transcend what are sometimes stark ideological divides.

The Facts of the Case

“Home equity theft” is a term sometimes applied to a practice currently permitted in a handful of states whereby a property owner who owes unpaid property taxes can, under certain circumstances, be subject to a foreclosure process that ultimately deprives him or her of the entire property interest, including any equity in excess of the amount owed. This lost equity can be substantial, and home equity theft has been criticized as both an improper windfall for government and a serious injustice to the former property owner.

Tyler v. Hennepin County arose from such a foreclosure. Geraldine Tyler (now 94 years old) owned a condominium in Minneapolis, where she lived for more than 10 years before moving into an apartment in 2010. She subsequently failed to pay the property taxes on her condo, and by 2015 the unpaid debt had grown to $15,000—mostly due to interest, fees, and other costs. After adhering to applicable Minnesota tax-forfeiture law, Hennepin County took absolute title to Tyler’s condo and eventually sold it for $40,000. The government kept all of the sale proceeds, including the $25,000 surplus exceeding Tyler’s tax debt. The case made its way up the federal court system, and the Supreme Court granted certiorari to decide whether this practice violates either the Fifth Amendment by taking property without just compensation or the Eighth Amendment by constituting an excessive fine. Tyler is being represented by the Pacific Legal Foundation, a public interest law firm that is among the country’s most prominent opponents of home equity theft.

Hennepin County’s Amici

The case itself is important, but an interesting subplot involves the slate of amici who have filed briefs supporting one side or the other. Amicus curiae (“friend of the court”) briefs are filed by individuals or groups who are not parties to a case but nevertheless have an interest in its outcome. Often—but not always—amici file in support of one party or the other, and their briefs are supposed to present different arguments or perspectives for the justices to consider. Sometimes this can influence court’s opinions. To external observers, these briefs can also provide insight into the positions of various interest groups on disputed issues, and these are not always intuitive.

However, most of the amici that lined up to support Hennepin County in this case were intuitive. They largely consisted of state and local governments and associations that represent the interests of those governments. National groups including the Government Finance Officers Association, the International Municipal Lawyers Association, the National Association of Counties, the National League of Cities, and the Local Government Legal Center jointly filed a brief defending home equity theft, writing that Tyler “tries, and fails, to fashion a takings claim out of her wish that the government share its earnings from a sale after all of her interests in the property were extinguished.” Other briefs were joined by a variety of other niche associations representing local governments and their officials, such as the Wisconsin Counties Association, the Michigan Association of Counties, the Ohio Prosecuting Attorneys Association, the Tax Collectors & Treasurers Association of New Jersey, the Minnesota Association of County Officers, and more.

A notable brief supporting Hennepin County was filed by Oakland County, Michigan, which was itself the defendant in the 2020 Michigan Supreme Court case of Rafaeli, LLC v. Oakland County. In that case, Uri Rafaeli had purchased a property for $60,000 through his business, but accidentally underpaid his property taxes by $8.41 one year. Oakland County eventually foreclosed on his property over what had become a $285.81 debt, sold it for $24,500, and kept all the proceeds. The Michigan Association of Counties filed an amicus brief in that case too, writing that Rafaeli should not be “entitled to a red cent of the proceeds.” The Michigan Supreme Court saw otherwise, unanimously ruling that home equity theft violated the state’s constitution.

Tyler’s Amici

In contrast to the relatively uniform nature of the government-interests amici supporting Hennepin County, the amici that filed in support of Tyler were eclectic. Briefs came in from interest groups as diverse as the AARP, the National Association of Home Builders, the U.S. Chamber of Commerce, the National Association of Realtors, the National Federation of Independent Business Small Business Legal Center, the National Legal Aid & Defender Association, and the American Property Owners Alliance.

Numerous briefs supporting Tyler’s case also came in from conservative, libertarian, and other broadly free market and individual liberties–oriented groups, including the Cato Institute, the Mackinac Center for Public Policy, the Buckeye Institute, the Competitive Enterprise Institute, the Manhattan Institute, the Illinois Policy Institute, the Platte Institute, the National Taxpayers Union Foundation, the Americans for Prosperity Foundation, and the Claremont Institute’s Center for Constitutional Jurisprudence. On the other side of the ideological spectrum, Tyler was also supported by left-of-center amici that included Public Citizen, the American Civil Liberties Union and its Minnesota state chapter, and the Constitutional Accountability Center.

Still, home equity theft appears to have attracted more substantial criticism from the right than the left, and a political pattern reflecting this was evident among some of the amici. The states of Minnesota, New Jersey, and Oregon—all through their Democratic attorneys general—filed a brief supporting Hennepin County, while Utah, Arkansas, Kansas, Kentucky, Louisiana, North Dakota, Texas, and West Virginia—all through their Republican attorneys general—filed one supporting Tyler. Minnesota’s entire Republican U.S. House delegation—Representatives Tom Emmer, Pete Stauber, Michelle Fischbach, and Brad Finstad—filed in support of Tyler, while none of the state’s four Democratic representatives submitted a brief either way.

Government as a Special Interest

When people think about “special interests,” they tend to envision the private sector attempting to influence public policy in some manner. This can be a good thing, and special interests play a crucial role in fostering an active civil society and a responsive government. On the other hand, the term carries negative connotations when it refers to preferential treatment from lawmakers or in the law itself, perhaps through obtaining or protecting some advantage to the detriment of other interests or society as a whole. For better or worse, special interests are a feature, not a bug, of a free and democratic society.

Government can be a special interest too, insofar as it seeks policy advantages in much the same way and for many of the same reasons that private sector interests do. But because government enjoys unique powers—the ability to levy taxes and foreclose on someone’s home, for instance—its efforts to influence the scope of those powers should be subjected to the highest levels of public scrutiny. Americans with a variety of motivations and ideological backgrounds might well find their constitutional sensibilities offended upon performing such an examination. The practice of home equity theft—which could soon meet its final judicial end—and the amici in Tyler v. Hennepin County, illustrate this well.